The New Roles of Customer Service Outsourcers

For years, economic pressures drove many companies to outsource their contact center operations overseas, allowing workers in Eastern Europe, India, or the Philippines to field their customer complaints or questions for a much lower hourly rate than they would have to pay Americans to do the same job.

Many now agree that this was probably penny-wise and pound-foolish.

"Decision-makers, when they're looking to move their contact center services, are lured by inexpensive employees overseas. They're not looking at everything else, to the detriment of their company," says Gabriel Bristol, president and CEO of Desert Call Connection, a contact center outsourcing firm with facilities in Las Vegas and San Diego. "There's so much more to look at than cheap labor."

For starters, companies that base their decisions about outsourcing destinations on price alone often fail to consider just how damaging the seemingly inevitable communications breakdowns could be.

Bristol worked with one company to bring its contact centers back to U.S. shores after a failed attempt at outsourcing to India. The company lost 1 percent of its customers within 45 days after moving customer service to India. Equally damaging, its average call handling time increased by more than a minute and a half, and calls that had to be escalated to supervisors jumped from 15 percent to more than a third.

Statistics like this are widespread, and they've been driving many U.S. companies to rethink their outsourcing strategies and how they staff their contact centers.

Pending legislation could force their hands even further. The Call Center and Consumer Protection Act, if passed, would mandate the U.S. Department of Labor to create a public listing of U.S. companies that send substantial portions of their customer service work overseas. Listed companies would be ineligible for federal grants and guaranteed loans for three years. The bill, introduced in the House of Representatives in August by Rep. Tim Bishop (D-N.Y.), would also require overseas call center agents to disclose their names and physical locations and give customers the right to be transferred to a U.S.-based call center upon request.

A companion bill was introduced in the U.S. Senate by Sen. Bob Casey (D-Pa.) in November.

The legislation comes in response to recent data that indicates that during the past five years, more than 500,000 U.S. call center jobs have been outsourced to foreign nations.

While some companies have started to bring jobs back home on their own or as a result of mounting pressure from labor unions such as the Communications Workers of America, legislators including Bishop and Casey believe government action is needed for more to follow suit.

And while outsourcers that run their operations from call centers within the U.S. still might not be able to compete dollar for dollar with overseas competitors, they can't be beaten on service quality, according to most industry experts."We see more outsourcing being done for reasons other than cost," says Andrew Kokes, vice president of global product management and marketing at Sitel, a Nashville-based firm that operates 110 outsourced contact center facilities in 23 countries around the world. “A lot more of it is now about providing better, faster service.”

Peter Ryan, Ovum's principal analyst covering business process outsourcing, has also observed a trend among companies using outsourcers "to have work done based on performance, when traditionally it's been done on a per-agent, per-hour basis."

Stephen Loynd, customer contact global program director at research firm Frost & Sullivan, says enterprises today are turning to 

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