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Outsourced call centers: Is money the only motivator?

There are savings associated with call center outsourcing, but will your business end up with unhappy customers with an outsourced call center?

Like any profit-driven company, Largo, Md.-based Liberty Wireless wanted to cut costs when it elected to outsource its contact center. But, as surprising as it may sound, improved customer service was also a motivator for sending work outside the company.

"It was more than just cost," said Don Charlton, Liberty's president. "We thought we could get a better level of service for what we were paying."

Liberty divided up its call center work. It outsourced call center functions like call routing, interactive voice response (IVR) and automatic bill payment to Mountain View, Calif.-based BeVocal Inc., a managed call automation provider. Agents man Liberty's call center from the Philippines, a country expected to triple its contact center capacity this year to 60,000 seats.

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"In certain instances it makes sense to have [the call center] all in one shop, but it also makes sense not to be dependent on one provider [for] too many core functions," Charlton said. For instance, having different providers for IVR and the call center prevents the outsourcer from steering more traffic to live agents, where it makes more money.

While it's still too early in the outsourcing process for Liberty to calculate the benefits, the company hopes to cut its call center costs in half and improve service. Still, not everyone buys the argument that outsourcing is good for service.

"You're kidding, right?" said John Ragsdale, research director with Cambridge, Mass.-based Forrester Research. "I would still say the driving force [for outsourcing] is cost cutting."

In fact, a 2002 Datamonitor study found that a 150-seat call center that costs $5.6 million to run annually in the U.S. costs just $2.2 million when operated in India.

Yet, some companies turn to outsourcing as an easy fix. Ragsdale said that many companies that outsource do a poor job of monitoring customer service internally. An outsourcer may be able to reduce the average answer speed or cut down on call times, but often customers are more interested in getting an agent that speaks fluent English and having their problem resolved on the first call.

High-volume call centers often find it beneficial to turn to outsourcers to handle their overflow, according to Ragsdale. For instance, they keep calls requiring a great deal of training in-house and outsource simpler inquiries, where expertise is less important.

Convergys Corp., a Cincinnati-based contact center outsourced provider, said outsourcing's savings are so significant that high-level executives are increasingly involved in the decision to offload the work. And it insists that cost cutting isn't the only reason to do so.

"We believe we can increase things such as first-call resolution and customer satisfaction," said Bill Rieke, director of Convergys' customer management group. "We can reduce your cost by reengineering some of the process flow."

Rieke said his customers are focused more than ever on improving service and have placed a greater emphasis on strategic metrics to track gains.

If companies are sold on outsourcing, Ragsdale recommends that they identify service levels early on and include them in the contract. He said it's wise to begin with outsourcing peak volume to determine the outsourcer's service level.

"The key is all in the contract," Ragsdale said. "There's a huge amount of work you have to do. It's understanding the current service level, the current customer experience and working with the outsourcer, making sure they can meet those demands."

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