Here, You Do It

Nov 01, 2001 10:30 PM  By

Just as insects rely on cooperation and delgation to build complex social systems, business must rely on partnerships to build complex operations. Today’s multimedia call centers are not do-it-yourself projects.

Outsourcing once meant giving up control of business functions. These days, however, it is a collaborative effort that strengthens all the parties involved. Advances in technology and the downsizing of many organizations have fueled the growth of third-party providers, and proponents says that this will continue for the foreseeable future, noting that:

  • Outsourced call centers are often used to handle seasonal and overflow business, but there is also considerable growth in outsourcing the entire in-bound call center function.
  • Companies who choose to outsource want to reduce head count and avoid staffing issues — the single biggest challenge with call center operations, in-house or outsourced.
  • Perceived cost savings is the primary driver in making the decision to outsource — either to eliminate the need for ongoing capital and technology investment or to move the costs from overhead to expense.

Size does not define call center providers. Companies may have resources ranging from one to thousands of seats and present varying levels of sophistication in both technology and staff. Some large providers offer extensive analysis of information gained in the course of call center activity. Such analysis is an increasingly important revenue generator for the call centers, which have notoriously low margins.

Far away

The profile continues to morph, as many providers are aggressively promoting English-speaking call center facilities in India and the Philippines, promising lower transactional cost — sometimes from one-third to one-half below the cost of North American operations. Declining to be identified, several consultants say, however, that there can be trade-offs. Said one, “Higher-priced network technology and a lack of comfort with the spoken idiom frequently offset the labor savings in offshore operations. This is not the way to go for the risk-averse. The distance remains an issue, and clients continue to show great skepticism.”

The consultants do agree, however, that when text-only responses are required, the offshore option can be a very acceptable alternative for some firms considering outsourcing, particularly for help desk functions. The educational level of representatives is generally higher than that of their North American counterparts, their spelling and grammar are often better, and there appears to be less staff turnover. To bridge the idiomatic gap, a number of firms based in India are using American dialect coaches to help train their representatives in the hope that this will broaden their acceptance.

Clear cut

Don Van Doren, call center consultant and president of Vanguard Communications in Morris Plains, NJ, says that a company must consider just how strategic the call center function is to its business. “Transactional numbers and costs are not the whole story. If the incidental information that could be lost has the power to change the business dynamic, then the call center should be seen as part of a company’s core business. That’s when an in-house call center makes the most sense.”

Van Doren also encourages in-depth evaluation of outsourcing options, particularly if the information handled is sensitive or if a company is looking to create a lifetime relationship with a consumer. He recommends a trial or pilot program before making a long-term call center commitment. “When possible, allow at least six weeks to evaluate RFP responses during the actual selection process,” he says.

Harvey Garrett, director of solution planning for ClientLogic, a third-party call center provider in Nashville, TN, notes that while all companies need to focus on their expertise, many — because of legacy systems — are unable to implement and integrate the call center technology that can make them more successful. “The cost of managing customer support is skyrocketing,” Garrett says. “Outsourcing allows a company to take advantage of a pay-as-you-go pricing strategy.”

Many hands

It’s important to remember that the ability to outsource call center functions does not equate with outsourcing management responsibilities, according to Dave Shepherd, director of catalog operations for Sears in Hoffman Estates, IL. Although Sears operates a sizable number of in-house call centers with state-of the-industry technology, the company has outsourced the call center for its Wish Book since 1995. ClientLogic has been the outsourcing provider for two years, fielding about one million inbound calls from late September through late December.

“We use this strategy to accommodate a seasonal peak,” Shepherd says. “It helps to prevent undue stress on our in-house call center operations, but we never see it as a hand-off to an isolated third-party supplier.”

To assure a high level of quality, Shepherd’s in-house team and technology providers do extensive training for ClientLogic’s trainers. Sears and ClientLogic’s supervisory team conduct weekly conference calls, and Sears maintains management personnel on site at call centers for a quick response when any questions arise.

Although turnover is a fact of life in call centers, Shepherd says that effective outsourcing suppliers need to cultivate a strong core of consistent sales staff as a base. “Ideal locations for call centers change along with the population and the economy, and providers should be aware of shifts in location that can improve quality.” Shepherd is not sold yet on offshore call centers. “I’m old school,” he says, “and there is still a strong need to be able to walk around and measure the pulse of what is happening in a call center facility. It tells you a lot that remote monitoring can’t.”

Rich Hebert, CEO of iSKY, a global provider based in Laurel, MD, says that one trend that is driving the growth of third-party call center providers is that customer service can differentiate a company even more than product. iSKY was recently named as the provider of Amazon.com’s inbound call center functions.

“The business is changing,” Hebert explains. “About half of our revenue today is generated through integrating customer data management — including multichannel activity — for our customers.”

iSky’s business model is designed to work well for companies with substantial call center requirements. To be a good fit, iSky’s customers should require a minimum of 50 full-time seats, Hebert says.

The value of outsourced call center facilities is not limited to business-to-consumer operations. Owens Corning in Toledo, OH, uses iSKY’s capabilities for supporting some business-to-business functions, providing information and materials to contractors who resell and use the company’s products. Sharon Feeley, process leader for call center operations, explains that the company operates large, centralized, in-house facilities to handle transactional calls and direct sales to large customers.

“In 1996 we created a separate, outsourced call center function. We evaluated providers based upon our specific need for flexible technology.” Owens Corning reevaluates its outsourcing decisions regularly to check cost effectiveness and relevance to its long-term strategy. Current requirements include handling about 180,000 to 200,000 calls per year, which requires the equivalent of about 25 full-time seats.

Keys to the company’s successful program, Feeley says, are a clear understanding of the complexity of Owens Corning’s business, the supplier’s scriptwriting capability, an acceptable turnover rate for representatives, product and system training that is coordinated by Owens Corning and iSKY and conducted on a consistent basis, technology that is best-of-breed, and a demanding monitoring standard.

Standard reports include hit rate and source, and additional information is provided to the specific businesses. This program is not used for lead generation or to increase sales specifically, but it does provide customers a great deal of information.

Social culture

Elizabeth Ahearn, president and CEO of The Radclyffe Group, based in Fairfield, NJ, says that the strength of a company’s corporate culture may help to determine whether outsourcing is the answer. Ahearn, who spent years managing outsourced call center suppliers for Levi Strauss, says, “We need to remember that no one ever wakes up and says, ‘I want to grow up to be a call center sales representative.’ Most people go into the field by default, and even those who work for a great firm are apt to say that they love the company but hate the work.”

Ahearn points out, “As managers, we say that people on the front line with our customers are the most important when it comes to creating our image. Then we look at call centers simply as a cost of doing business and continue to keep representatives among the lowest-paid people in the business structure. We accept lower levels of education than we willingly would for comparable jobs with customer contact. There is a production mentality attached to the job. At our worst, we often set them up to fulfill our expectations for turnover and mediocre performance.”

One provider that trains representatives to meet more strategic goals and draws upon a different labor force is Alpine Access, Inc., of Golden, CO. The company has grown from two seats in late 1998 to an anticipated 1,500 by the end of 2001. President and co-founder Steve Rockwood says that one objective for the company was to create “a business where we were going to be most comfortable with performance pricing. While we still do project and transactional pricing, we prefer an agreement that rewards results.”

To accomplish this, the company made all of its representatives home-based. All meetings and training are Web-based, saving client companies the cost of a complex infrastructure. According to Rockwood, “Reps reflect the customers that they speak with. We audition and match them up so that there is an exceptional fit. Then we treat them as though it’s a great professional job — because it is.”

Alpine’s representatives are drawn from the nine counties in the greater Denver area — a population of 2.2 million. (The company’s customers are located throughout North America.)

Most agents are drawn from four groups: retirees; stay-at-home spouses with a need to work flexible or seasonal hours; physically disabled people who cannot easily work in a traditional call center facility; and independent entrepreneurs who use this as a way to supplement the earnings of their own fledgling business ventures.

“When we describe our labor force,” Rockwood adds, “we say that we are not looking to hire students, we are after their parents and grandparents.”

Day-Timers, Inc., based in East Texas, PA, is an Alpine customer currently completing a successful pilot program. According to Glenn Large, vice president of both customer contact centers and the information technology group, the company has a successful in-house call center with several hundred seats. There is no plan to discontinue or reduce the role of the in-house operation, but there is a continuing need for staffing from 4 p.m. to 7 p.m. EST, when local people are less available. The time difference between Pennsylvania and Colorado means that Alpine’s agents can take Day-Timers calls between 2 p.m. and 5 p.m. Mountain Time, a slot that is easier to fill in the Denver area.

To facilitate the program, Day-Timers’ already considerable training materials were given to Alpine, which digitized all of the material for its agents. Agents were trained on the complex Day-Timers product line so they could easily refer to training materials for a refresher course. Regular monitoring assures quality.

The success of the program is due to the cooperation of both the technology and human resource staff at Day-Timers, says Large. “They fully embraced the project. The internal network people dealt effectively with security, traffic, and technology issues to make a seamless connection between all of the company’s relevant systems and Alpine’s home-based agents. Orders generated go directly into Day-Timers’ order entry, billing, distribution, and fulfillment operations.”

Although the operation in some ways is a pioneering effort, Large says, “the Web-based training materials are so successful that we now have them for all of our in-house staff as well as our outsourced team.”

Small world

Even small firms find that outsourcing call center functions can fit their business objectives. Virtually every region has local call center providers who concentrate on inbound coverage in a confined market area.

Typical of a small, local call center provider is Hastings Communications of Austin, TX. CEO Mark Hastings describes the firm as a niche player serving Texas-based customers with 24/7 inbound requirements. Many of these companies have no capabilities of their own. Some are start-up firms with no more than a few products and even less staff and infrastructure.

Most of Hastings’ customers require one to five seats — some as many as 20 — and Hastings Communications provides a combination of long-term programs and promotional closed-end projects. It can take a call center like this as little as a week to adjust staffing and train people to meet customer requirements, Hastings says.

One of the firm’s customers is Coaster Thrills & Spills, which bundles Texas attraction tickets and markets them exclusively through inbound orders. The business is seasonal from spring to fall and this is its second year of operation. “Staffing up is our major challenge,” says owner Mickey Moffett. “An outsourced provider makes us seem larger than we actually are and helps us to establish our credibility and reputation with excellent customer service.”

Linda Water Nelson, an Austin, TX-based writer and founder of The Writing Source, a consortium of writers, regularly writes articles on a wide range of business topics. She can be reached by e-mail at waternelso@aol.com or by fax at (512) 238-8198.