Outsourcing Customizes Customer Care Worldwide

By Outsourcing Center, Bruce McCracken, Business Writer

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Outsourcing Customizes Customer Care Worldwide

Outsourcing customer care is rising worldwide, particularly in Europe. Buyers are enjoying cost reduction — thanks to labor arbitrage in lower-cost countries — and improved customer satisfaction despite the increased call volume.

Brian Huff, lead analyst in Datamonitor’s New York office, says a mix of offshore and domestic call center agents who provide quality service at a cost-effective price is a major key to the growth of customer care outsourcing. “You can perform the same duties at a high quality for less money. Smart companies move the low value simpler transactions offshore, leaving the complex transactions at home. It is hard to find quality agents for low cost, and that is what is driving outsource migration,” he says.

Double Digit Growth in Europe

While labor arbitrage for American markets has seen growth in recent years, offshore outsourcing for customer care for the European market is only now beginning to take off; where depends on the buyer’s country.

For Germany, the locales are in Eastern Europe, notably the Czech Republic, Hungary, and Poland, according to Robin Goad, managing analyst for Datamonitor, a research firm based in London. Eastern Europe currently has 10,900 outsourced call center agents — 14.9% of the European total. Goad predicts the number of agents will grow at a compounded annual growth rate (CAGR) of 19.2% over the next five years; by 2007 Eastern Europe will have 24.5% of the total.

For France, the locales are Morocco and Tunisia, Goad continues. Datamonitor estimates that agent wages there are between one-third and one-quarter of those in France. South Africa is popular for Dutch and British firms.

The Netherlands is a favorite European outsourcing choice due to the number of languages spoken at its call centers. Goad says outsourcing allows companies in one country to speak to their customers in another country in their preferred language.

Christopher Fletcher, vice president/managing director of Aberdeen Group, a Boston, Massachusetts research firm, sees an evolution in selecting call centers. “We have gone from contact centers in-house/in-country to contact centers on the other side of the world. Now companies are selecting some average between the two. The language strength, wage differential, and perception of value versus quality all come into play,” he says.

The Middle East and Africa

In the June 2003 report, Call Center Outsourcing in EMEA — Surviving the Offshore Assault, Datamonitor says that 150,000 (12 percent) agent positions are currently outsourced to a third party within the Middle East and Africa (EMEA is an acronym for Europe, the Middle East, and Africa). By 2007, Datamonitor predicts this number will almost double to 290,000; the region will experience a CAGR of 14 percent. The growth is illustrated in the figure below.

Outsourcing Call Centers Will Increase

Aberdeen Group reported in its September 2003 report, The Outsourced Customer Contact Center — Key Findings in Global Contact Outsourcing Services: 2003-2004, that 21 percent of the executives responding expect their use of outsourcing call center providers to increase in the next 18 months. Why? Because of its critical importance.

The major reason for the increased reliance on outsourcing is that they expect call volume to increase. Economies of scale allow service providers to handle growth in a more cost-effective way.

Globally Connecting to the Customer

A major challenge service providers face is ensuring call center staffers meet customers’ concerns quickly the first time.

Huff notes, “The biggest complaint customers have is being passed around.” This is not a good thing for the service provider either because each contact person adds to the cost.

Fletcher says the essence of successful customer care is to connect the customer to the right person the first time. Service providers are turning to technology to do that. “Technology makes it easier to get a consistent single view of the customer as well integrate the in-house and outsourced call center activities,” he explains.

The U. S. still accounts for half the customer care market. Huff nonetheless believes U.S. enterprises need to adopt a global strategy for customer care. He predicts the most successful outsourcing organizations will have operational facilities in four places where people speak multiple languages. They include:

  • A western storefront in the U.S., Canada, or Western Europe to alleviate concerns over lack of control
  • India to offer high quality at low cost
  • Latin America to service the Spanish speakers
  • East Asia for Asian Americans

Established outsourcing service providers like EDS and IBM are now entering the customer care arena. Huff says they can provide high-quality integrated customer care at an attractive price because “they have the funding to chip at the margins as well as the technology and managerial expertise.” He says outsourcers “invest more money into call center technology. “

Goad explains the strategy. “Systems integrators are finding themselves moving into the call center space. They will gain access to larger accounts and C-level executives, which gives them the opportunity to sell higher-value services based on customer satisfaction and retention rather than just simple transactional services,” he explains.

Firms like EDS and IBM have a strong background to fuse separated components into an efficient network to eliminate redundancy, bottlenecks, and bungling. Huff adds, “It is the quality of the labor using the technologies that is important.”

Lessons from the Outsourcing Journal:

  • Tier one service providers like EDS and IBM are entering the global customer care market. Their advantage: they can provide managerial and technological expertise to connect customer care across the enterprise.
  • Outsourcing provides companies with the capabilities to communicate with customers in the language and channel the customer prefers.
  • European service provider will experience double digit growth in the next five years.
  • Global players will have to have as many as four centers world-wide to effectively outsource customer care.

About the Author: Ben Trowbridge is an accomplished Outsourcing Consultant with extensive experience in outsourcing and managed services. As a former EY Partner and CEO of Alsbridge, he built successful practices in Transformational Outsourcing, Managed services provider, strategic sourcing, BPO, Cybersecurity Managed Services, and IT Outsourcing. Throughout his career, Ben has advised a broad range of clients on outsourcing and global business services strategy and transactions. As the current CEO of the Outsourcing Center, he provides invaluable insights and guidance to buyers and managed services executives. Contact him at [email protected].

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