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Customer Interaction Management Feature Article

March 24, 2006

Call Centers Balancing Costs and Quality

David Sims, TMCnet Contributing Editor

According to recent research from Best Practices, LLC, some companies are rethinking their “cheaper is better” approach to call centers.

“Although many companies see the instant gratification of outsourcing thanks to lower labor costs, drop in service quality, retention, product knowledge and customer satisfaction can eat up the profits from what seemed to be a wise investment,” the research firm concludes.

They point to a major computer manufacturer who recently chose to divert all support calls away from its contact center in Bangalore and towards its domestic call center in Texas. Costly, yes, but considered a necessity after corporate (note the adjective) customers kept complaining of low service quality.

Quality concerns of outsourcing have been around for years. In 2003 a report by analyst firm Datamonitor found that near- (Canada and Mexico) and offshore (India and the Philippines) locations are gaining traction with US outsourcing firms, showing that one out of every 24 call center agents serving US customers, is actually working from a near- or offshore bureau.

At the time, however, Daniel Hong, Datamonitor CRM analyst, said that “quality concerns over labor and management,” among other considerations, were present.

And last year industry observer Kathleen Kiley wrote that, worried about cultural differences and possible lost sales, “many companies are relocating call centers domestically.”

"With foreign-based call centers, U.S. companies are losing sales and customers," Esteban Kolsky, research director at Gartner told Kiley.

Cost savings have been a big incentive to outsource, Kolsky noted, "but the culture clash is a big reason call center jobs are coming back."

Kiley notes that in addition to concerns over the quality of customer service provided, “cost savings are not as great as they once were. As the standard of living improves in India and elsewhere, workers salaries are increasing. Experienced foreign workers often jump from company to company to increase their salaries.”

Hiring American customer service agents who work out of their homes, instead of expensive infrastructure, is one way companies are trying to balance cost savings and quality.

Tim Houlne, Working Solutions' chief executive officer, tells Kiley that “during the dot-com period, it was all about going to the Internet and helping yourself, then it was outsourcing, and now I think it's getting back to the customer.”

David Sims is contributing editor for TMCnet. For more articles please visit David Sims' columnist page.

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