Re-Sourcing

By: George Spafford

October 11, 2006

A number of firms, including AT&T’s home Internet group, are bringing overseas call centers back to the United States. Essentially the hoped-for benefits did not materialize as expected and a customer backlash in some cases has made the ventures less than ideal. Organizations pursuing offshore outsourcing strategies must not forget to factor in customer service and compartmentalization of activities.

Poor Customer Service

Offshore outsourcing (Offshoring) can appear attractive from a number of perspectives. The relentless pressure to reduce costs is often a prime motivator and organizations may hope to also regain agility, bring in new skills, move closer to global customers and so on. While offshoring may bring these benefits, it is very important to remember to apply a holistic systems approach versus fixating on benefits in a limited number of areas. If primary motivator is to reduce costs associated with taking calls in the United States from domestic users, it is extremely important that customer service not be overlooked.

Customer service is often a differentiator used during vendor selection and contract renewal. Never forget the experience that a caller has with the offshore organization will be the basis on how the organization is judged. Customers are contacting a call center for a reason. If the call takes extra time due to language barriers and the caller realizes this the call experience will be negatively impacted and brand damage is risked.

There are three customer service challenges when offshoring call centers involving language, culture, and resolution that organizations need to take into account.

First, language can be challenge. Many Americans only speak only US English. When confronted with a non-native speaker with a thick accent, frustration can arise. While this issue isn’t as severe with written communications, it can become a large dissatisfier during verbal communications. In recognition of this, some foreign call centers have implemented US English training programs.

Second, cultural differences can further exacerbate the disconnect between the foreign call center employee and the American caller. As opposed to a more empathetic approach, the resulting communication may seem cold and uncaring to the caller. Alternatively the caller may make use of colloquial terms that the call center is unprepared to deal with that causes frustration.

Lastly, when callers make contact, they want their incident resolved or service request met. When they receive poor service and recognize that they are dealing with an offshore call center, then the two aspects combine and act as a multiplier negatively impacting the firm’s brand reputation to the caller. In the end, the customer doesn’t care that there is a push for cost reduction or whatever the strategy is. All they care about is that their needs are met in an efficient, professional and courteous manner.

Failed Compartmentalization

When a function can be readily understood in terms of inputs, outputs and tasks performed plus it can be extracted from the local area and transported, it is said to be “compartmentalized.” In other words, a function can be compartmentalized and moved when it is understood, there is sufficient maturity and the organization can perform productively wherever it is located.

The problem is that not all management teams have a perfect understanding of the requirements for the service that they want to outsource. Thus, when the contracts are drawn up with the offshore vendor they are inherently flawed from the inception. As a result, not only does the organization fail to attain expected benefits but the offshore firm is also put in the difficult position of trying to deal with a flawed contract. Just imagine expecting 1,000 calls per week on 10 commercial off the shelf applications only to find out that there are really 20 and the additional 10 are all custom legacy applications and the group supporting them was dismissed because management no longer thought they were needed. Similar situations happen all too often followed by a mad scramble to recover.

In short, compartmentalization problems are difficult for all of the parties involved. In some cases, the situation can be recovered while in others the damage may be irrecoverable in the context of an offshored function. It is very important that functions be thoroughly examined before any decisions are made. It may be that there are far more variables in play than what was expected and, given that additional knowledge, the decision to outsource or how to craft the contract may be radically different.

Root Cause & Re-Sourcing

Groups in the midst of problems with their offshore partners need to stop and look for the root cause(s) of their problems. The initiative may be salvageable based on what is learned or in some cases hard questions must be asked about whether offshoring can garner the hoped for benefits given demands from customers and other stakeholders.

Due to poor customer satisfaction and other missed expectations, firms are re-assessing their offshoring strategy. Some are opting to “re-source” their functions and bring them back in-house or find new partners to work with in an attempt to leverage the lessons learned and still push after hoped for benefits.

In closing, not all organizations have successfully offshored targeted functions. There may be concerns over customer satisfaction associated with call centers. There may also be failures associated with fulfilling the mission of the function and so on. Regardless of the problems, groups need to review their efforts, establish the root cause of the problems and take corrective actions.