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February 2009 | Volume 27 / Number 9

Asset Acquisition: Smart Outsourcing For Hard Times

By Keith Dawson

Call center outsourcing is more than just hiring a company to handle your overflow. It’s a complex and intimate relationship. The core of that relationship is the tension that exists inside a lot of companies who come to realize that though their customers are their most important asset, handling their interactions is way beyond their core competency. That’s when you bring someone else in, preferably an expert with robust infrastructure and solid experience.

In recent years, outsourcers have been growing larger. The biggest ones sport broader geographic footprints, many more agent stations, and a wider range of services offered beyond simple call handling. Of late there is also a new collaborative model emerging that brings outsourcers even closer to their clients: asset acquisition.

Asset acquisition is simply the purchase of one company’s non-core functions by another. In the outsourcing world, that means that a large and well-financed outsourcer would literally buy part of its client: the call handling infrastructure, including facilities, technology and staff. In an asset acquisition scenario, that means that the outsourcing partner buys a company’s call center, wherever it is located, and then operates it as an on-site adjunct to the client’s business. It may seem extreme, but it has several advantages for both parties.

On the client side, the primary benefit is cost savings. Not only are they offloading the process of the interaction, as they would in a traditional outsourcing relationship, but here they are offloading an entire cost-structure, complete with salaries, benefits and site costs. And on top of that, the asset is actually monetized: the outsourcer is paying for the call center. In difficult economic times, that injection of cash can be very useful.

Dallas-based ACS (News - Alert) has been a pioneer of asset acquisition as a strategy for growth. Darin Wright of ACS told me that his company has engaged in asset acquisition projects with some major clients, including Motorola (News - Alert) , GM and GE. In Motorola’s case, ACS took on more than 700 employees and about 16 global locations from that company, including some HR functions that were outside the tech company’s core focus.

“They were needing to get out of the transactional HR space, and we were able to go in and monetize it, provide forward pricing and really look at process improvements that we would be installing.” He says that one of the advantages for Motorola was that they could eliminate those functions and see the benefits from Day One, because they were getting paid by someone who would run the facilities, instead of having to pay to shut the units down. The second major benefit is what many companies look for in the first place from an outsourcer — relief from the cycle of buying and upgrading technology to stay competitive. Outsourcers, by definition, have a greater investment in having leading edge tools at their disposal. For them, since handling customer interactions is their core business, it’s a competitive necessity. And the scale on which they buy that technology across multiple centers and thousands of agents means that they can support a higher level of tools than their clients can. For the clients, asset acquisition represents a serious CapEx avoidance.

And the outsourcer benefits just as firmly. Outsourcers need capacity, but they don’t need the uncertainty and risk of having to build greenfield capacity in hopes that there will be business to support it. In this model, they buy the assets that they know they can use (spurring client lock in along the way). And once bought, the call outsourcer can use their expertise to optimize the center’s processes and leverage the center for more than just that one client.

Even the staff of the acquired center can benefit. Instead of being part a tangential, non-core group at a company where there may not be a career path or a future, they become embedded in a company that is expert at doing the things they have chosen to do; the managers and supervisors become peer professionals in a company devoted to the global, horizontal practice of what they do.

Wright says that the practice helps his company cope with growing demand for ACS’ services. He cites another deal with the client was trying to rationalize the call center assets it had, and considering consolidations. “We were able to say rather than you trying to figure out how to do that, or having us come in and shut it down and migrate offshore, a better solution was why don’t we come in, deploy our best practices, and our technology and processes.” He says that ACS bought the 500-seat capacity center, where 400 agents were working.

Through process improvements, ACS reduced the client’s actual requirements to about 250 seats. “That let us take 250 additional seats and bring in another client from our portfolio who had been needing a domestic call center, and back-fill in,” Wright says.

This model is reminiscent of the practice seen in the 1990s where an outsourcer would try to win a client by building a call center in close proximity (or onsite with) a client. There were instances where service providers would locate airline reservation centers on the main airport of the client, in or near a headquarters. The new model has a lot more going for it. For one thing, it’s a lot more collaborative. And for another, it has a slimming effect on the client, rather than a bulking up.

In this economy, asset acquisition has direct financial advantages for the client, Wright says. It takes costs off the books, of course. But it also adds an initial sum that drops straight to the bottom line. Being able to monetize the process very quickly can make a big difference to a company that’s struggling with resource allocation issues — and in a way that doesn’t compromise service quality. That’s a win-win for everybody, including the customer.

Keith Dawson is a Senior Analyst with Frost & Sullivan (News - Alert).

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