October 2010 | Volume 28 / Number 5
On The Line
Short Message Service (SMS)
How will the healthcare debate impact contact centers?
By Tim Searcy
Between the approximately 86 percent of the contact center work that is done in-house and the rising tide within the outsourcer market, health benefits are being offered to the vast majority of contact center employees and at least in part, are paid for by employers. The debate continues to rage in Washington, D.C. and at dinner tables about the course of action the government will take concerning expanding healthcare coverage. I am not an expert on this topic, but it is clear that everyone has an opinion. Let’s take a look at how potential healthcare changes can impact different aspects of the contact center space.
Although outsourcers make up a smaller portion of the total pool, they will be the focus of much of the discussion. Because labor makes up the lion’s share of expense, and because they have no other offsetting revenue streams, outsourcers are a pure play for cost consideration. Additionally, because outsourcers have a large portion of variable costs located in fixed components like salary and benefits, it is much easier to analyze solutions they would have to employ. The choice of healthcare solution is less important than the mandate. If employers must pick up some or all of healthcare costs, or if they have option to be rid of those costs, their options are very similar. Three groups deserve closer consideration including employers, business strategists and entrepreneurs.
Employers – This group will not have an unlimited number of choices. If they offer health insurance now, should they continue? If the quality of their benefits was attractive in a competitive labor environment, what will they have to offer once everyone can receive some level of coverage? For many employers it will make little or no difference that healthcare is going to be offered. However, the issue is not going to be the offer of healthcare. The issue will be the indirect increase in “tax” like expenses to pay for the health care. Nobody can see far enough out to figure out what this will mean. However, one thing is for certain, wage increases in any form make the domestic option for contact center operations less attractive.
Business Strategists – So as a strategist, you have to determine where your tipping point is. Do cost increases associated with either payment for or mandated provision of health insurance cause you as a firm to make a decision to go overseas? This equation is not as straightforward as it used to be. Consider all the variables that are now part of the dialog:
Wage increases are obvious as a cause to go overseas.
The strength of the dollar has varied by market dramatically over the last year or so, and some overseas locations are not as attractive as they once were. For this reason, currency exchange rates have to be factored into the thought process.
Future regulations are most certainly going to attempt to increase the attractiveness of being onshore versus offshore. There could be tax incentives or penalties, or possibly new location disclosure language that is dictated for inbound calls. Additionally, as the government takes a more obvious hand in the economy through ownership of failed assets and funding, the likelihood exists for “buy American” provisions to be included in their corporate mandates.
Consumer sentiment has certainly focused on a U.S. contact center solution as a simple knee jerk reaction to inconsistent international experiences.
Although “card check” is dead for the time being, unions are certainly going to be focused on revitalizing a pro union stance in the contact center space. With their efforts comes renewed interest on work rules such as silent monitoring.
Entrepreneurs – One of the most interesting possibilities for the teleservices professional is the potential for business that new health care regulations may create. I envision the possible repeal of the McCarran Ferguson Act of 1945 that left the regulation of the business of insurance to the states. For any of the proposed options for national health insurance to work, the Act would have to be repealed to make it possible for firms to compete nationally. Right now, insurance companies have to manage to a hodge-podge of state rules, guidelines, registration rules, and other guidelines. Because of this, companies are not able to compete across state lines. These restrictions on competition have been debated almost since the Act was first put into place. However if it were repealed, competition would not rely as heavily on employer sponsorship, and for the uninsured, it is easy to see a world like the property casualty insurance environment. In this situation, although firms are subject to rules dictated by states, there appears to be a more open market of ideas and commerce. Think about the possibility of direct sales by all direct channels to millions of consumers. This could be the next boon to the industry in terms of all types of teleservices traffic.
There is a lot to think about, and without a doubt, my e-mail box will fill with opinions. The point is that healthcare is going to drive change in our business, and we will be changing as a result of it. Until next time, I am on the line.