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April 2009 | Volume 27 / Number 11

Offshoring and Homeshoring

By Brendan Read
Senior Contributing Editor, Customer Interaction Solutions

There has been a lot of fanfare about contact center work being brought back to the U.S. from other countries, most notably India. Yet unless the additional demand is managed effectively, the result could be higher costs, less service, and more automation and fewer jobs.

The key reason for this return is the apparent inability of offshore agents to provide high quality customer-satisfying-and-retaining service that trumps cost arbitrage. The market for qualified affordable offshore English-speaking labor that are willing to work in contact centers appears to be shrinking, leading to rising compensation, turnover, and overall operations costs.

India's workforce elite are leaving the contact centers and entering higher-level BPO and IT fields that are better paid, have more sociable hours i.e. daytime rather than night shifts, and are more prestigious. Consequently contact centers have had to drill deeper into the labor markets and many of the individuals hired may not have as solid English language skills and are less able to relate to those of American, British, Canadian and other cultures as their predecessors. The Philippines is at risk of risk of contact center saturation because its labor market is much smaller. The nation's appeal is based on low costs coupled with a more customer-service-oriented culture and a greater exposure to and affinity with Americans compared with India thanks to a long and recent history with the U.S. Yet even there at a certain point firms will have to draw from less qualified labor pools that will result in customer service issues.

A few words on culture or cultural affinity are in order. It is not, as others may perceive, about nationality or race. It is instead about understanding and empathizing with others derived from shared experiences. You can't gain this from watching TV or training videos, or linguistic classes which some Indian outsourcing firms have utilized to in attempts to resolve this issue. You can only obtain this insight by living amongst others and immersing yourself in their culture. That is why many immigrants to the U.S. face difficulties returning home even for visits: they have become 'Americanized'.

There is another side of the issue, though, and that is American customer service is often not worth having a flag-waving parade about. There are many horror stories about customers' experiences with poorly selected, educated, trained, and motivated U.S. contact center agents. U.S. contact centers suffer from high turnover, much more than one would expect in a difficult economy because they are not often managed and supervised effectively. Yet customers are rightly demanding better quality agent-delivered service to handle more challenging issues, now that self-service has taken over the simpler matters. The saving grace for the American industry, for now, is that self-service has not become as popular as projected thanks to poor IVR DTMF implementations and expensive and slow speech recognition technology development and deployment. Deployments will grow though thanks to new processes like outbound notifications, standardized language libraries, speech becoming parts of UC solutions, and to value-rich and affordable speech outsourcing. And when the choice is between dumb machines and well…the machines win because they cost less to operate.

To manage and deliver high quality yet cost-effective live agent customer service and sales organizations are increasingly turning to 'homeshoring' i.e. home-based agents. The homeshore option has proven its ability to attract better-performing agents while lowering costs by slicing facility expenses, resulting in higher productivity than bricks-and-mortar operations. The net benefits range from $10,000 to $20,000 per agent/year. And it is part of the environmental, energy, and traffic solutions by eliminating commuting.

All the key issues with homeshoring: voice/data connections, security, monitoring, supervision, training and staff communications have been sufficiently resolved to remove them as barriers. There is now no reason not to move agents from bricks-and-mortar centers back home.

Going forward there will still be offshoring, though at lower levels because many firms are satisfied with its cost/quality equation. There will also be if fewer live agents because self-service cannot replace people where high thought and touch are needed. And some of those individuals will be traditional centers mainly because some organizations don't want to change. Yet more agents will be at home, because there is no place like it to supply quality, cost-effective customer care and sales.

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