Operations and Management: Marketers Hear Overseas Call

American Express is doing it. Ditto for Dell and General Electric. Increasingly, major U.S. corporations are outsourcing call center functions to third-party providers in overseas locales such as India and the Philippines.

Using offshore call centers isn’t new for U.S. marketers. A few years ago, companies such as Amazon.com hired call centers in Northern Ireland to handle customer service and ordering. But now U.S. companies are finding they can further reduce costs using providers as far away as Asia, in countries where English is not the native tongue.

Geri Gantman, senior partner for New York-based call center consultancy Oetting & Co., says that by farming out a portion of their calls to the Philippines, marketers can save 30% in labor costs. Have a call center in India handle calls, and you could save 40% on labor.

Clearly marketers are enamored of the savings involved. According to research firm and consultancy Contact Center Federation Philippines, the call center business in the Philippines alone will increase nearly 400%, from $173 million in 2002 to $864 million in 2004.

Long-distance relationship

“If you watch the progression of companies that have farmed out services” overseas, notes Gantman, “they started with back-office operations, such as credit-card processing and data entry, then have slowly begun to outsource some of their inbound calls and customer service functions.”

Hackensack, NJ-based Cyber City Teleservices, which has a 2,020-seat contact center facility in the former Clark Air Force Base in the Philippines, counts Aerosoles, Haband, and California Style among its clients. According to Erv Magram, managing director, catalog division of Cyber City, foreign-based CSRs are educated and proficient in American English. And, he says, most employees have college degrees and view contact center representative as a career path.

In fact, Cyber City continually trains its employees to the nuances in American English. Besides, he says, “even in this country, consumers come into contact with foreigners in service situations, like gas stations and convenience stores.”

But not all in the catalog industry are enamored of farming out even a portion of their call center services to a provider so far away. Curt Barry, president of Richmond, VA-based operations consultancy F. Curtis Barry & Co., relates a horror story about a gifts cataloger that contracted with an overseas call center. The offshore services provider miscalculated the peak transaction times, and by the time the holiday season was over, the catalog’s call center had a whopping 24% call abandonment rate.

“While call center problems can happen anywhere,” Barry says, “this particular situation was made worse by having the call center in another part of the world. Even when you outsource, you have to be in control of the business from a planning and management sense.”

Many call center service problems can’t be handled via the telephone or e-mail, Barry says. In a third-party call center relationship you should visit the provider’s offices at least once a month, and preferably once a week. Remember that you are letting another entity deal with your customers, Barry advises. “It’s all about the service.”

Indeed, says, Kurt Goodwin, senior vice president, sales and support, for Charlottesville, VA-based electronics cataloger Crutchfield Corp. “We thrive on the live contact with our customer. It’s important that we can control that aspect and really service the customer,” he says. Known for its stellar customer service, Crutchfield operates call centers in Charlottesville and Norton, VA.

There’s also the public relations aspect to consider: In these days of rising unemployment, customers may resent a company that has evidentally transferred jobs overseas, says Kathleen Peterson, chief vision officer of Bedford, NH-based call center consultancy PowerHouse Consulting.

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