Newsroom

28 Feb 2006

ContactCenterWorld.com Q&A: Outsourcing

Author: Alton Martin, CEO
Company: COPC


Responses to Q&A on Outsourcing

1. What are the different types of outsourcing?

Different types of outsourcing include:

• Entire process outsourcing: As the name indicates, this involves outsourcing the total process. An example would be technical support from the initial call through the complete solution being provided via an on-site service technician.

• Partial process outsourcing: Outsourcing the entire process is not always the most effective solution for an organization. Some firms find that outsourcing only one or several aspects of their operation makes more sense, providing a more cost-effective and efficient solution. Outsourcing call screening or welcome calls, for example. A variant on this would be to outsource certain customer sets based on purchase characteristics, etc.

• Customer touch outsourcing: This type of outsourcing involves having a provider handle all customer touch activities including handling calls, chat, and email.

• Non-customer touch outsourcing: This type of outsourcing enlists the services of providers that specialize in specific business processes; credit analysis would be an example.


2. Why do you think companies outsource, what benefits does outsourcing provide them?

Overwhelmingly the main reason companies look to outsourcing is to save money. Outsourcing can have a positive impact on ROI by reducing both capital and operating expenses.

While benefits are primarily in cost saves, from time to time companies will gain access to a technology they couldn’t ordinarily leverage without a lot of time and associated expense. Outsourcing makes that technology available to them and without the added costs of training staff in its use.

Time to market for a particular function is another benefit. Companies may be able to achieve either greater economies of scale much quicker or enter a particular market segment faster by taking advantage of outsourcing opportunities. A good example would be an email marketing campaign. This typically requires some specialty processes and equipment, and it is much easier and faster to find a competent third party rather than to do it yourself.


3. Please provide brief comments, tips or suggestions to the following outsourcing issues:

a. Ownership of Information and b. System Access and Security

It is absolutely critical to establish, in particular, who owns any intellectual property such as software tools or databases, as well as system access and security. Get this established early on in the process by including it in the outsourcing RFP.

c. Facility Ownership and Control

Ownership - Be sure to examine the titles to the real property and the lease documents for leased property. It is critical to know who owns what. Terms and conditions outside the US are often very different and the requirements on lessees can be much more costly.

Control - Security is a major issue in many locales. Be sure appropriate security measures can be implemented before you release files, etc. to the outsourcing provider. Security also extends to key staff and managers. Kidnapping and ransom insurance exists for a reason, and we have seen situations wherein staff were forbidden to drive their own cars, had to take different routes to work at varied times of the day, and could not disclose travel plans. Be aware.

Transportation is associated with facility issues and needs to be reviewed. Many cities outside North America and Europe have very poor road systems and ineffective public transport. This means the company is responsible for getting staff to and from work. In some places, the call centers are hundreds to thousands of staff, this is a major logistics operation on a daily basis, which, in most places, is outsourced to a local transportation company.

d. Personnel Issues

Outsourcing staff is obviously critical to end user satisfaction, in particular if they are in direct contact with users. Consideration should be given to the type and intensity of training received; how staff is monitored for performance; and, attrition rates.

College degrees outside North America and Europe are very different from place to place, even more so than in the US. Individual competencies must be verified and tested.

Accents rate high in creating negative customer response and need to be measured for impact.


4. What would you say are the top risks of outsourcing?

The main risks involved in outsourcing are:

• Not knowing what you are doing in terms of managing service suppliers is a major concern. As in any business strategy, and perhaps even more so with outsourcing which involves handing off a portion of your operation to another organization, effective management is critical. Without a well thought out, executable plan for managing the outsourcing agreement, things can take a turn for the worse rather quickly.

• Over-estimating the management commitment and direct costs is another soft spot. Be sure you have accurately looked at this from all perspectives and have solid figures before you go forward.

• Be realistic and practical. Believing the assertions of suppliers, who mean well, but are totally driven by revenues and not customer satisfaction, except in an indirect fashion, is not the best approach to take.


5. Given the outsourcing risks, what pointers can you give to a contact center manager on how to manage these risks?

Yes, there are risks involved in stepping out to realize the benefits of outsourcing. The best approach is to take your time, get experts with experience to help, and focus on your needs, not a supplier’s asserted capabilities.


6. What are the top 3 questions a company should ask a potential outsourcer?

When dealing with a potential outsourcer, a few things to ask are:

• Show me the data that demonstrates you have an expertise in the functional areas I am interested in outsourcing.

• What is the end-user satisfaction with your services? Again, show me the objective data.

• What are the verified skills of your staff and how do you train to get them to practice these skills?


7. What industry sector outsources the most?

Consumer technical support and the consumer credit card sector are the most involved in outsourcing.