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

The current economic climate has been providing both an opportunity and a challenge for business process outsourcers (BPOs).

To cut costs clients are focusing more than ever on their core competencies, which has led more of them knocking on BPOs’ contact centers. At the same time they are seeking more in the way of service and quality from BPOs at competitive pricing so that they can retain and attract more of their clientele and maximize the value from them: with the limited resources available.

To get a handle on how BPOs are responding to this call to do more/for less CIS interviewed several of these leading providers. We posed these questions on:

*          The impacts on the BPO industry from economic trends, their projections and how they think BPO firms will be responding

*          Changes in the demand of specific types of services

*          Pricing and terms trends

*          Responses, such as new services, technologies and practices to client demands and trends

Sitel

Bert Quintana, president and chief operating officer

The BPO industry continues to transform in the face of the evolving economic landscape. Consolidation has whittled down the number of significant providers. Customer demand is a lot more sophisticated: and call [contact] centers are pressed to cost-effectively align their resources, agent skill sets, processes and technology with client needs for ongoing improvements. While this introduces challenges never seen before, they also provide a real opportunity for BPO providers to be more innovative, and to truly stand out as a strategic weapon for large businesses leveraging outsourcing. 

The dynamic of customer relations is also shifting. Demand is as unpredictable as ever – with customers expecting a lot “more” – even as budgets become “less.” BPO providers are tasked to meet the fine balance in any way possible. This requires BPOs to attract even more skilled employees, who possess the judgment and wherewithal to solve the most complex problems.

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We’re seeing increased growth in customer engagements – beyond the telephone. Emerging social media channels are opening new opportunities for call centers to proactively and intelligently engage with customers in more meaningful ways. This includes leveraging a broader set of communication channels – such as e-mail, text messaging, online interactive chats and Twitter – to capture the voice of the customer, and optimize the return on customer investments.

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Three trends we are seeing include more customers looking to variablize their operating expenses, tie expenses to results and considering the total cost of ownership (TCO). All of them share a common theme of better aligning the goals of the outsource provider and the company outsourcing.

Outsourcing has often been labeled as being better, faster and cheaper. Better for its ability to provide solutions that leverage experts focused on their core competency. Faster for its ability to deliver an expedited speed to market and cheaper for its ability to bring efficiency and labor arbitrage. But today many CFOs see it as a way to avoid tying up capital and to turn fixed labor into a variable operating expense.

The second trend, tying fees to results is not new per se, but the applications are redefining in some cases the relationship between the outsourced provider and the companies that use them. By basing fees on results, subscribers, or some other business driver, outsourced providers have realigned a natural imbalance of the outsourcer who wants to make more money and the company outsourcing who wants to cut costs. The new focus is on the result: managing to the output instead of the input.

Lastly, TCO is an evolving discipline that looks beyond rates for services to the actual forecasted business case for making a change or improvement. An effective TCO model will take into account the tangible costs of change and the forecasted return on the investment. The return is based on specific solution elements such as new technologies, agent skills, management improvements and associated efficiency gains.

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To create more value for our customers we have expanded and created new product offers that focus on intelligent engagement. We are working without customers to redefine the rules of customer communications. Using advanced analytics and defined business rules we are determining when to proactively engage customers to sell them new products and services, to notify them of important updates or to offer them service before they even ask for it. We are creating value by increasing revenue, removing unnecessary support cost and improving the customer experience with the brand.

We are also implementing advanced call routing, customer feedback, neural networks, and social CRM tools that expend the leverage of our pool of trained customer subject matter experts. Sitel’s expanded product suite brings a balance between cost, quality and the revenue increase that comes from having the right agent, talking to the right customer, at the right time.

Teleperformance USA  

Dominic Dato, Executive Chairman

We, along with most industry analysts see the BPO industry continuing to grow in 2011 at a rate in the low to high single digits. The growth rate will vary based on geographic region and individual provider capabilities as usual. We remain in a counter-cyclical global economy, and the BPO industry traditionally outperforms most industries in this type of climate. Contact volume levels will remain relatively flat, so we expect more industry consolidation and a shakeout of medium to small players.

You can also expect to see continued vendor streamlining efforts by clients. This should result in more volume for the larger players and niche-oriented boutiques assuming they have high performance results and the financial strength to invest in their clients.

Though the recovery is continuing more slowly than we would all like from a macro-economic standpoint, Teleperformance (News - Alert) continues to see a bigger growth component each year. If you believe the analysts, fully recovered growth rates can be expected in 2013 for the industry as a whole.

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We’ve noticed that customer self-service inquiries or customer self-help has actually generated, and continues to generate an increased number of trailer calls. The impact of social media is not eroding voice channels; in fact, it appears to be the opposite. The more we do the more interactions we have.  

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Traditionally, the BPO industry has always experienced pricing pressures and tight margins; that’s just the business.  But right now the more enlightened customers are looking for long-term customer value rather than shortcuts.  

Our chairman, Daniel Julien, is known for the line, “Cheap is actually expensive” and [these words are] more true today than ever before.   

Apart from pricing, over the last decade, buyers have become more sophisticated in areas like procurement, contracting and risk management as the industry has evolved. They are weighing criteria such as vendors’ financial security and the stability of management teams to using complex and specific KPIs (key performance indicators) in applying risk and reward clauses in contracts.  

There was a distinct period of time, especially in the dot-com era, when IT people had procurement control of CRM outsourcing; 10-year contract terms bundled with data outsourcing was not uncommon on the very biggest deals. That approach was often found to be a bad idea and is now pretty much a thing of the past, with most CRM outsourcing contracts now ranging from three to five years. Also the numbers of vendors providing services have been reduced: which is one of the primary reasons why the industry has been consolidating.

Physical and data security have become a significant and critical component within terms and conditions. Because Teleperformance clients are made up of the Global 500 we tend to see security trends first, and we anticipate or identify emerging requirements early. This means we become the first to innovate and adapt to meet new client needs and continually set the pace for the industry.

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Here are just a few breakthroughs for services we announced in 2010:

*          Raising the bar customer service with our Platinum service, a customer service concept combining state-of-the-art technology and infrastructure with highly trained agents to provide premium service to high-value customers. Platinum delivers superior results with affordable pricing to attract, retain and grow our client’s very top customers and prospects

*          An enhanced Fraud Risk Assessment Solution. It’s a new service intended to help identify and quantify the business impact of fraud risks within many phases of a call [contact] center agent’s work.  It reviews processes, applications, daily monitoring and reporting activities to provide comprehensive risk assessments.  Its primary goal is to identify detectable vulnerabilities so that they can be removed or to implement early detection indicators for those that cannot 

Teleperformance holds all the key advanced security certifications and we lead the industry with security measures in contact center information defense. The feedback we are receiving from our clients regarding this has been nothing short of sensational. They see it as an exceptional value added service and a real differentiator.

TeleTech

Judi Hand, Chief Marketing Officer

The BPO industry business is a real-time indicator of the economy as opposed to a lagging or leading indicator. What ultimately will bring the global economy out of this recession will be an increase in consumer spending; a number of factors including significant global unemployment and a depressed housing market has resulted in lower spending and, therefore, reduced volumes with clients across the industry.

This backdrop exists while at the same time the BPO industry is at an important inflection point. Major shifts are taking place in both the customer channel and technology front.

The last decade was characterized by growth primarily driven from product innovation in the U.S. and Europe. During that time, our greatest market opportunity was tied to outsourced front office solutions, while cost optimization was driven largely by offshoring.

As we look to the next year, and even the next decade, we believe growth will come from the online population and Asian markets as well as maturing U.S. and European markets as they shift their focus to customer loyalty initiatives to retain, capture and grow share. We believe cost optimization will come from outsourcing more front- and back-office processes as well as some technology and cloud-based solutions replacing large highly premise-based implementations. We further believe that late adopters of outsourcing, such as the financial services and health care verticals, along with fast paced new-economy companies will increasingly leverage outsourced providers to achieve their business objectives.

Companies are seeking stable BPO partners to drive improved outcomes e.g. grow revenue, more efficient operations and better customer experience. We are prepared to respond to continued demand for outsourcing and hosted technology with cloud technology solutions that offer a significant opportunity to reduce costs while enhancing capabilities and with innovative and integrated revenue generation solutions.

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The top priority we’re continuing to hear in current and prospective client meetings is maximizing lifetime customer value. As a result, clients are increasingly focused on driving revenue by being ranked number one in service and satisfaction. In the eyes of their customers, never before has this been so important given the changing competitive landscape and the transparency created by social media. We are [therefore] at the forefront of a customer revolution.

Communications over the last decade were predominantly a one way channel with companies controlling the message to their customers via mass advertising. That has all changed with the explosion of social media. The digital population has actively embraced the two way channel of global communication. BPOs need to master the integration of traditional and social channels to elevate customer satisfaction and reduce costs.

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Nearly every deal we're working on today has a technology component to it, and this continues to differentiate us in the marketplace. We have implemented strategic partnerships to deliver large scale and SMB hosted technology offerings (with Cisco), and to deliver integrated social monitoring and CRM solutions (with Lithium Technologies (News - Alert)).

Thomas L. Cardella & Associates

Thomas L. Cardella, President and CEO

We have not seen a negative impact on our business due to the current economic client. We have actually seen solid business growth which we believe is a derivative of the quality of service and performance we provide our clients. We are also seeing many of our clients moving there off-shore business back on shore for a reasons that include quality, brand preservation and a longer term strategy.

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We have seen trends which continue to drive technology and operational process to be the trigger of trends in the industry for privacy and compliance purposes.  Because of these drivers, we have invested in becoming PCI- and SAS (News - Alert)-70 compliant.  --

Trends in relationship to pricing continue to become more competitive and we believe the true metric is ROI per client seat.  We measure and manage by KPIs that revolve around criteria that have direct impact on our clients’ investments or back-end performance results.   --

We continue to expand our business in a controlled manner and recently were named the Fastest Growing Local Employer by the Corridor Business Journal. Along with this growth we are adding a Hispanic bilingual center in El Paso Texas to complement English-language consumer and business services.

[Sidebar]

Maximizing Conversions With Targeted Routing

Whether one is selling, soliciting donations or seeking support for elected office candidates, there are two lock-step objectives: generating leads and then converting them into bottom-line results.

It is in meeting this last goal that savvy quality-and-results-focused BPO firms can make the difference between expectations satisfied and those surpassed.

InfoCision Management Corporation wanted to test a theory it had for its one of its direct response clients, a DRTV firm specializing in portable heating units. This was whether callers are willing to stay on hold longer to talk with someone because they have a higher level of interest in the product they are calling about. And would these callers, if sent to higher performing agents, convert at higher rates?

Roughly 200,000 inbound calls in total are generated monthly for the client from print advertisements in national publications such as Parade magazine. As one of three contact centers, including one in-house center utilized by the client, InfoCision (News - Alert) set a goal to become the leader in conversion rates among the three centers. With conversion rates hovering around 22 percent, the InfoCision client management team began to look at various aspects of the program to see where adjustments could be made.

InfoCision’s team began by looking at call arrival patterns. They noticed immediately that the client’s audience had higher than average wait times. The account management team theorized that because callers had exhibited a high-interest level in the product, they were willing to wait longer than the average hold time, approximately 45 seconds, before speaking with what InfoCision calls “communicators” i.e. contact center agents. 

In late 2008 and early 2009, InfoCision put together the test program, which involved 650 Communicators who then took the calls from January-March 2009. They had been selected from those tenured staff that had direct response experience and were ranked based on their conversion rate. Communicators also received specialized training by way of product demonstrations, best practices call reviews and intensive role playing.

InfoCision’s account management team worked with its Command Center contact center management team to rank the Communicators by their conversion rates. The Command Center then set parameters on its dialers that had callers “hold for the best converting communicator,” distributing more calls to better performing personnel. The objectives for meeting client’s expectations were to increase sales and the client’s return on investment without increasing the abandonment rate. 

The Command Center monitored arrival patterns and hold times and adjusted wait time thresholds as needed to maintain abandon rates. The center provided real-time and daily reports to the account management team who relayed the tests progress to the client.

The targeted routing program proved its worth. InfoCision improved its conversion rates by 2.17 percent and increase ROI while substantially decreasing the abandon rate: by more than nine percentage points. InfoCision’s elite Communicator team also surpassed the client’s in-house staff on conversions by nearly three percentage points.

The program paid off in other ways too. InfoCision moved from third place to first place in conversion rates. InfoCision is now the only outsourced contact center supplier used by the client.

“This test was the first time we used the targeted call routing strategy,” explains Steve Brubaker (News - Alert), InfoCision’s chief of staff. “Because of its success, it has been rolled out successfully to other clients, especially direct response clients.”