An End to Outsourcing?
By Bernice Hurst, Managing Director, Fine Food Network
Perhaps customer preferences do matter after all. And perhaps the cost savings made by outsourcing call centers to Asia are not as great as the cost of losing customers unhappy with the service they get. In the past week, both Powergen, a German owned UK utilities company and American giant, Apple, have announced that they are closing down their centers in India. Even before them, British bank, Abbey, announced plans last October to close its Indian call centers and bring 1000 jobs back home.
As complaints reached record levels, companies have decided that their customers are important and that their satisfaction is paramount. Nick Horler, Powergen’s managing director, said, “When customers contact us they need to be confident that their query will be resolved quickly. Although the cost of overseas outsourcing can be low, we’re simply not prepared to achieve savings at the risk or expense of customer satisfaction.”
Apple, on the other hand, may have other plans for its overseas operations which are more backend than customer facing. Although its captive center is going to close, Apple recently contracted HCL Infosystems to provide sales, distribution and service for iPods in India. There is also speculation that outsourcing will continue in a country where labour costs are even lower.
Moderator’s comment: Is this the beginning of a trend? As globalization grows, and more retailers open stores in new countries, will people living in
those countries become more accustomed to Western ways and, therefore, better at relating to and solving problems? Can b2b call centers be more successful than b2c? Or will there
always be barriers due to distance?
Call centers, wherever they are located, have long been considered the 20th century equivalent of working in a mine or a factory. Conditions have never
had good press and the jobs rarely considered desirable. There has been a high degree of turnover and burnout. Calls are timed and employees pressured into achieving as many as
possible during their shift. Satisfactory conclusions to customer complaints were not viewed, by customers at least, as high priority.
Add to this difficulties in communication because of accents and sometimes limited vocabulary or familiarity with products and lifestyles, and you can see
why both customers and operators can get frustrated. Bottom line, problems are not resolved and customer satisfaction levels sink ever lower, unless, of course, the center operators
are dealing with technology and processes that are mutually understood. Perhaps this is the answer; restrict outsourcing to business to business applications and everyone will
be happy, including the accounts department. –
Bernice Hurst – Moderator
Regardless of where a call center is located, it can be poorly managed. It’s not reasonable to claim that (1) all outsourcing is automatically low quality or (2) all overseas call center work is done worse than domestically. Furthermore, if a call center can’t be trusted to perform b2c work well, why trust it to perform b2b? Call center best practices are the same, whether the location is Bangalore or Omaha. Several large Indian outsourcers have projected sales increases of 30%+ this year. There’s no reason to believe they won’t achieve their projections.
I agree with what Mark had to say about the projections of these call centers back in India. I am from a large book store chain, but we are facing a problem in attracting quality manpower, as so many of today’s just out of college workers land with a job in a call center. They have also become a place where people spend some time and make decent income before choosing their real career.
IBM, HP, Ford and Citigroup have company managed call centers and BPO units. They don’t face any major problem because the same culture and the values of the organization are passed on to these employees back here. That, to a great extent, solves the problem of the quality of service provided. Most of the back end operations are not the core function of these companies which get outsourced. As a matter of fact, Citigroup’s e-Serve (call center and BPO unit of Citibank) has over 15,000 employees performing all their worldwide processes. That shows the commitment by these organization in saving costs and at the same time deriving value for their work.
IBM has recently announced its mega expansion plans in India with a $6 billion investment over the next 3 years. Read the latest Time Magazine. That clearly shows that India is the big growth market and the focus is here.
I agree with Camille. The theme that comes through is that almost all of us have had at least one negative experience with a call center that is blatantly outsourced and has no clear escalation points. When I encounter this, most recently with Delta and with a young man that I couldn’t even understand, what I hear loud and clear is “I don’t care about you and just want to up my profits at the expense of your experience.” I’ve been booking all flights with AirTran since.
The point is, a brand relationship is based on trust and respect and, like a relationship, every touch point has the power to win, retain, or lose a customer. If, based on offshore outsourcing, you can’t provide a great customer service experience when someone calls and needs help, don’t do it. If you continue to do so, the long term repercussions will be clear…lost business.
Outsourcing of call centers is never going to go away. However, you have to understand the evolution of the call center industry. In the past 20 years since the modern birth of call centers in Omaha Nebraska, we’ve seen them evolve about every 4 – 6 years based on changing technologies, societal needs, etc. The move to open call centers in India and now close them in India is nothing more than the continued evolution. Keep in mind as the ability for people to access the web for critical information in a timely manner grows the need for live operators will only decrease. Finally as we have now seen in the US the ability for companies to use “home-based” operators rather than call-centers and the overhead associated with them we’ll see the cost spread between India and the US narrow.
The level of training and monitoring required to ensure a successful call center in another country is extremely high. Without it, customer service suffers. With it, the cost savings are reduced. If cost savings are the only reason a company chooses to set up an off-shore call center, then the company will see a decrease in customer satisfaction. Choices to use off-shore centers need to be made based on strategy, not just cost effectiveness.
Being done very well, and growing in India especially. These two corporations may have pulled out for other reasons.
I’ve talked to Dell, Discover, Sony, and Bose service reps that all handled my needs extremely well. All from India.
Developing countries’ populations are hungry to succeed, and have a better life. They are determined and care about doing well; and have drive.
Something the U.S. has lost! Or are we spoiled after gaining a better life than our parents? Hmmmmmmmmmmm
If we’re talking about global relationships and business then, yes, these call centers will still be the future, for the most part (with improvements). On the other hand, if we’re talking domestic here in the U.S., unless there is dramatic improvement, there will be fewer and fewer overseas call centers being used.
If the point is made that quality is quality, whether the center is here or overseas, I would make the point that when you are frustrated and can’t understand what the other person is saying, customers hang up, whereas if at least the person speaks English – properly – the customer tends to try and work it out.
Outsourcing is a tricky business anyway and when it goes overseas, there had better be the right reasons and situation or customer satisfaction will suffer.
Outsourcing and the outsourcing of call centers will continue. It is their economic position combined with their function which enables them to fulfill an economic need in US business. Just because a few companies have stopped outsourcing does not signify the beginning of a trend. The US is a global economic power. It produces and sells products all over the world, and having support for these products at all hours, in all languages, is key for a multinational company’s success. Outsourcing fulfills this need, and does so with minimal cost. It is the best way to remain customer focused while supporting a global position on corporate business.
I would add that for many technical products, there is a larger pool of talent to be tapped into for customer service or call centers in India. But, if the training and the quality control processes do not match up, this talent will be no better than uncut diamonds. And, like diamonds, there are grades of talent available in India as in the U.S., and clients get what they pay for and what they are willing to invest in.
Even with many major companies cutting back from call centers in India, there is big growth out there.
While being a firm believer of outsourcing any function that is not within a company’s core competency, I always include the proviso that company’s should outsource only to the right outsourcers. There is no reason to believe that a US outsourcer is by definition better than one off shore. However, what has been done in the case of outsourcing the function of customer service off shore is to take a function that is so dependent on lingual communication, that farming it out to a country with strong foreign accents is a mistake.
There is nothing wrong with outsourcing software development to Tibet, the programming language is probably universal, but to farm out verbal communications with your consumer to solve a technical problem absent the technical knowledge on the part of the consumer, is playing Russian roulette…with the barrel full.
I have had the same amount of trouble getting answers to my questions by call centers here as I have had from call centers overseas. There is no way a call center operator can know answers to every question that you may have. The key is to have proper training to handle issues for which the operator may not have an immediate answer.
Outsourcing to India has always been an option for certain job functions. However, in my opinion the only time that it truly makes sense is when the function that you are dealing with is one with a universal language.
Now by this I do not mean the language of English. While an Indian accent can make things frustrating for some, so can a deep Louisiana accent too. But the fact is that the language that is not being shared is that of your everyday life experience. And when you are dealing with a support desk for a problem that you are having, the person on the other end of the line needs to be able to at least understand your problem, but for the best quality of support they need to be able to empathize as well.
Now there are certain job roles for which outsourcing makes a lot of sense — those in which there is a common language. Information technology and finance are industry segments in which there is a common, standardized language that can be accommodated by foreign, outsourced employees. Programming code and GAAP accounting standards need no additional interpretation.
However, ever since the C level executives of the consumer goods industry read Tom Friedman’s, “The World Is Flat,” they all think that they can respond to the pressures of Wall Street by lowering their overhead by outsourcing everything but the kitchen sink to India.
The latest in this craze had been the thought that sales analytics has a new home overseas. And yet, when companies have problems with analysts in Everytown, USA sitting at their desks looking at retailer databases deciding which segment to assign a new SKU of cheese to, who shop in that retailer’s stores everyday; why would they think that an analyst in Bangalore, India could do better no matter what the cost savings?
I’ve read that in India, the call center industry has caused social repercussions, in addition to the economic boom. Often situated in small towns, call centers employ a large segment of the local people and require that they work mainly during night hours to service North American customers. It’s had a major disruptive influence on family situations and their way of life.
With the money to be made in this business, the surest bet would be on these outsourcing companies to keep up with necessary quality improvements, but we may be seeing slower progress on training and human resource development due to lack of attention to lifestyle issues.
I hope more companies do stop outsourcing call centers. There is nothing more frustrating than speaking to someone who can only reply to you using cue cards. Some call centers are better than others. I’ve noticed that some have polite English speaking operators while others have no language skills and can only used canned repsonses.
On the other hand, I’ve encountered some US based call centers that fare no better.
This is really a quality issue. With today’s technology, it shouldn’t matter to the consumer where the call center is located, as long as they: 1. speak the caller’s language well enough to be heard and 2. solve the customer’s problem.
Just yesterday, I had a bad experience with my wireless provider (Verizon) in trying to make an overseas call that evidently was not provided as part of my plan. It got to the point where I said, “Well, if it’s not part of my plan, let’s change the plan.” The rep said, “You’ll have to contact your wireless carrier”. I said “But that’s you.” Click. They hung up, because they didn’t know how to handle the problem and didn’t care enough to try to find out. They spoke perfect English, though.
Call centres in India have grown fast and furiously, sometimes at a pace that is not comfortable. As a senior manager with relatives working as Supervisors in this business, I have seen that lack of adequate training and supervisory skills are the fundamental reasons why there is so much employee attrition and hence, poor customer service. In my mind, this problem can occur anywhere. For every example quoted in the article, there are numerous other reports of companies still outsourcing to India.
The key to a successful call centre operation is the same anywhere in the world – product knowledge, training and empathy with the customer. Any country with the volume of call centre operations like India would face the teething problems indicated. For the companies that exited the Indian option, we have to ask – Was enough training given? What was the quality of the local staff ? What were the local supervisors doing? What was the OVERSEAS management doing?