This article originally appeared in the October 2010 issue of Customer Inter@ction Solutions

There is growing evidence showing that when all costs are considered having contacts handled in the U.S. may be finally competitive with offshore outsourcing, most notably to India.

BPO outsourcer Genpact president and CEO Pramod Bhasin (News - Alert) was reported in Hindu Business Line saying that his firm is doubling its U.S. workforce to 2,000 in the next two to three years to provide BPO, help desk and other services.

“The unemployment level in the U.S. has created a situation where you can hire good professionals, cheaper,” Bhasin was reported to have said.

Site selectors report that India has been moving to saturation levels for high offshore quality (well-educated, superb English-language skills) contact center workers as it climbs up the IT chain, resulting in higher turnover and increased wage pressure. Serving North American and U.K. customers is less desirable in India than at home because the agents and supervisors there have to work graveyard shifts to take/make these contacts what with time zone differences.

The real kicker is a deteriorated customer experience. The fourth annual Contact Center Satisfaction Index from CFI Group reveal that offshore contact centers score 27 percent lower in customer satisfaction than those based in the U.S. Meanwhile American agents are 34 percent more likely to resolve problems on the first call than those handled offshore. Offshore agents’ soft skills i.e. courtesy, empathy are relatively close though to their domestic counterparts.

“If a customer hangs up mad, it isn’t the agent they are going to blame, it’s the company that put them in that position to save a buck by sending their call overseas,” warns CFI Group CEO Sheri Teodoru.

At the same time steadily improving voice (IVR, speech recognition) and web self-service are reportedly capturing an increasing proportion of calls once offshored. The flip side is that the ones requiring live agent attention are the most difficult: from upset customers who went through the automated solutions. There is no room for the cultural-difference-driven misunderstandings and repeat questions that happens all too often with foreign agents. Not when with a few clicks annoyed buyers can carve virtual fresh orifices out of firms via social media, which means potential lost sales from others who read and sympathized with their stories.

Does this mean happy days for American contact centers? Only if companies tell their senior managers and management consultants who have been recommending axing front-line staff, slicing wages, cutting hours and benefits to lay these hacks off and not renew their contracts instead.

Johann Hari, a columnist for the Independent, wrote in the Huffington Post (News - Alert) points to the folly of what he calls people off payroll or POP snake oil that these consultants have been peddling.

“Professor Wayne Cascio of the University of Colorado has studied the relative costs and benefits of POPing your workforce [and] has shown that, most of the time, the costs outweigh the gains. Obviously, you have to immediately find large amounts of redundancy and severance pay…Your workforce becomes very nervous - and a nervous workforce is dramatically less productive and less innovative. The best people leave. The service to the customer deteriorates – so they abandon you even more.”

Companies are risking with these strategies higher customer churn that drives up marketing and acquisition expenses. Why stay loyal when the customer service choices are computer-delivered voices or poor quality offshore or domestic live agents? With self-service being less expensive than even offshore it doesn’t take a Ph.D. to figure out what will happen next to live agent centers.

There is another option: having customer-focused high-productivity contact centers. The formula has been mentioned frequently in this page: shifting to work-at-home from expensive employer-subsidized premises, selecting and training the right people and treating them right. It also making available other employees as informal contact center agents and tapping them as experts via unified communications.

How about instead we give these concepts a real try now that we have the golden opportunity to do so?  Before we lose contact centers and the opportunities for customers, workers and suppliers they provide for good...