Is this New Delhi?

Haband is doing it. So are Home Decorators Collection and Creative Irish Gifts. Dell’s still at it — even after customers told it to stop.

What are these merchants doing? They’re outsourcing all or part of their incoming calls to overseas call centers.

Call it “offshoring” or “near-shoring,” the politically sensitive practice is now commonplace. The worldwide market for customer service outsourcing hit $12.2 billion in 2007, compared with $8.4 billion in 2004, says Gartner Research.

And the reason? One factor is cost. Marketers can save about 40% of their call center bills by outsourcing overnight or overflow calls, says Art Hall, principal with management consulting firm Marsel and Alvarez.

But the decision shouldn’t be based solely on cost. In fact, that’s a prescription for failure, Hall warns.

Perhaps the most famous offshore flameout was Dell’s. The computer giant wanted to lower its IT and customer support expenses in 2001, so it opened a call center in India. Two years later, it opened another one. And by 2006, Dell had three facilities there, with a combined staff of 7,000.

But the company pulled back after a slew of complaints about accents and scripted responses. (It hasn’t totally abandoned the practice, however.)

How do you avoid a debacle like this? Manage it like you would any other kind of outsourcing arrangement, says contact center consultant Liz Kislik.

First, evaluate “the matrix of quality, control, and cost,” she states.

Your customers should get “a satisfactory experience that is a reasonable match for your brand promise and image.”

And you don’t have to outsource all your calls. Many firms do it only for overnight calls or for overflow during peak periods, says Erv Magram, managing director of Cyber City Teleservices, which operates a call center on the site of the former Clark Air Force base in the Philippines.

All it takes is careful time management, says Magram, the former president of shirt cataloger Lew Magram. For example, you will need more reps during the first week of a catalog drop than in the second and third weeks.

The Philippines are a good location because people speak English and are knowledgeable about American culture, he adds.

Overseas outsourcing has worked well for Creative Irish Gifts, and language has not been much of an issue.

“Some customers are aware of the language barrier and some complain,” says Debi Rauckhorst, general manager for the catalog company. “But for the most part, these types of complaints are minimal.”

Creative Irish Gifts outsources overflow calls Monday through Friday and all evening and weekend calls, using Cyber City. Orders are entered into the firm’s order management system via a VPN connection.

Apparel mailer Haband also outsources calls to the Philippines. The local accent is barely detectable to customers, says Jay Baney, vice president of technical services for the firm.

In fact, some sources say that the language issue has been overstated.

“Keep in mind that there are language barriers in this country between Northerners and Southerners, and we manage,” Kislik notes.

But there’s a bigger issue than language. “Be careful with telephony,” Kislik adds. “A timing lag between when the speaker speaks and when the hearer receives the transmitted sound can be much more off-putting and more disruptive to understanding and conversation than a slight accent.”

How can you get the most out of your offshore partners?

Haband, for one, conducts weekly “calibration calls” with the overseas managers. This ensures that the callers are getting the same service they would get from Haband’s Athens, GA, contact center.

Baney and his team use a Web-based browser to see how many calls are in the queue, and they then determine how many calls it outsources.

Haband outsources overflow calls during peak season, and any that come in between 10:30 p.m. and 8 a.m. But it handles customer service and some order calls in Athens.

EMERGING NATIONS

Not all call centers are in Asia. The Caribbean is closer to North America, both physically and culturally, and the number of facilities there has more than doubled in two years to 25,000.

What’s driving this boom? Telecom deregulation, according to Marsel and Alvarez’s Hall.

The cost of connectivity between Jamaica and the U.S. was $30,000 per month in 2000, making it cost prohibitive. Since then, the barrier has been removed, and the result is that Jamaica has the most call centers in the area with some 13,000 agents.

The second most popular location is the Dominican Republic. It specializes in calls coming from the U.S. Hispanic market. But the region has one downside — the fact that labor and telecommunications costs can top call center expenses elsewhere.

And the pay for Caribbean agents ranges from $14 to $18 per hour, compared with $9 to $11 in India, and $12 to $13 in The Philippines.

Another problem is the lack of a big labor pool — firms can’t staff mega call centers like they can in India or China.

Botswana is another emerging location, says Hall. The country offers a stable, democratic government, and English is the official language. What’s more, you can get a 200% credit on employee training.

What’s that mean? That for every dollar you spend teaching call center workers, the government pays them two. This, in effect, has turned training in Botswana into “a revenue source for some foreign companies,” Hall says.

	BEST PRACTICES

Whatever you do, choose your site carefully. “The physical location of your contact center is a consideration because you want to be physically present to have your offshore CSRs recognize you as the client and feel some connection, loyalty, and responsibility, toward you and your company.”

Frequent videoconferencing may “be a great way to get around the time and travel hurdles,” Kislik adds.

	Here are some other tips:

• Be prepared to invest time and effort.
• Check references.
• Listen to live calls. Creative Irish Gifts often reviews random recordings, Rauckhorst says. “We queue and review all of their orders so we’re able to catch any obvious errors,” she says. And if the customer has a problem? The offshore agent can add notes to the order or put the order on hold. “If a customer refuses to call our customer service for further assistance, it gets e-mailed to us and we follow up with the person,” she says.
• Look for companies with experience in serving catalog clients.
• Be certain that the center can support your needs. There’s no point using a firm that will be overwhelmed in a crisis.
• Select the host country wisely. It’s preferable to consider countries which the population is Westernized, where the labor force speaks American English, and where there is a familiarity with American culture. It also helps to chose a country in which there is a favorable attitude toward Americans in general.

	Dark Days for Offshore Service?

Kathryn Jackson, Ph.D, founder of Ocean City, NJ-based contact center consultancy Response Design Corp., shares a recent experience with an offshore call center.

On this particular dark and stormy night, the rain had been falling for days; the Northeast U.S. was flooded. Internet sites were down. Call centers were overrun with needy customers accustomed to self-serving on the now-crippled Websites. I was one of these customers.

I know it’s ironic that a contact center consultant is phone adverse, but I would rather self-serve on the Internet than call a company. So when I needed to order a new piece of luggage for an upcoming trip, I went straight to the Internet. But the site I wanted was down, so I had to call.

At first, I could hardly hear the agent because the weather was interfering with the line quality. Even when I was able to hear him, I could not understand what he was trying to say: His English was bad.

Determined to spend my money, I told the rep I wanted to buy a $400 “wheelie,” and I had a coupon to apply to the purchase. He took my name and item number, then he gave me an order confirmation number. I was a bit startled. He had not asked for payment or shipping information.

I asked if he worked for the company, explaining my question by reminding him he hadn’t ask for seemingly required information. He confirmed that he was an employee rather than an outsourcer or temporary worker, but that he worked in El Salvador.

“We don’t usually get these calls, but our U.S. call center needs help so they are sending some customers to us,” he said. Truly a dark and stormy night, for him and me. Frustrated with the poor connection, line quality, language, and sales process, I told him I would hang up so I could attempt to reach a U.S.-based call center and agent.

These days, we talk a lot about offshoring. We write about the potential pitfalls (such as accents) and obvious benefits (such as costs). We discuss how to align the offshore strategy in order to benefit the company’s value proposition. My recent experience taught me we still have room to grow: Our customers expect us to perform rain or shine.