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Pros and Cons of Offshore Outsourcing Call Center Jobs

Pros and Cons of Call Center Outsourcing
March 21, 2018 / Evolve IP

“Onshore labor is too expensive.”

”We cannot find the right help for our call center!”

“We need to free up resources.”

The outsourcing movement has been one with serious teeth and an extended history. However, the trend may be losing its bite as customers are able to quickly amplify bad experiences faster and wider than ever on social media while new technology is improving customer engagements at a lower cost, onshore.

According to 2017 research from Statistic Brain, a significant amount of outsourcing continues to take place. In fact, 54% of manufacturing, 43% of IT services and 12% of call/help center jobs are being offshored. The leading locations of those jobs are India, Indonesia, China, Bulgaria and the Philippines.

The top reasons for offshoring are probably exactly what you would expect:

  • Reducing and controlling costs (44%)
  • Gaining access to IT resources unavailable internally (34%)
  • Freeing up internal resources (31%)
  • Improving business or customer focus (28%)
  • Accelerating company reorganizations / transformation (22%)

Meanwhile, signs of these jobs coming back onshore, at least in the United States, haven’t exactly been overwhelming. In 2015, research showed that just 16% of firms would move jobs back to the US and that:

  • 30% of firms noted that cost reduction was effective
  • 55% felt it was somewhat effective
  • 15% said it was not effective

However, of those that would move jobs back to the US, 70% said it would be due to poor offshore performance and nearly 50% of employers that outsource say the quality of their service providers and a reactive attitude are the most frustrating issues to deal with.

Those caveats to outsourcing/offshoring in regards to call centers are now hyper-critical for two reasons.

  1. Social media – customers are able to quickly vent and share bad experiences with thousands of people vs. just their immediate sphere of influence via a quick tweet or other social media post.
  2. Unhappy consumers can quickly and easily identify, research and contract with new providers in seconds.

These two factors have turned the front lines of customer engagement – the contact center agents, their managers and directors – into recon warriors, special ops, and field generals that are now, or soon will be, determining a company’s long-term success.

Think I’m overstating? Consider this …

  • By 2020, customer experience will overtake price and product as the key brand differentiator. (Source: Walker)
  • Companies focused on providing a superior experience across customer journeys realized a 10-15% increase in revenue and a 20% increase in customer satisfaction. (Source: McKinsey)
  • A 1% improvement in first call response = $276,000 in annual operational savings for the average call center (SQM Group)
  • After a positive customer experience, 69% of Americans would recommend that company to others
  • And from Esteban Kolsky, CEO of thinkJar, and ex-Gartner analyst:
    • 66% of consumers who switched brands did so because of poor service
    • 67% of customer churn is preventable if the customer issue was resolved at the first engagement.


If you’re still questioning those data points. Take a look at this snippet as reported in CIO, “The call center outsourcing value proposition has transformed over the years from labor arbitrage-driven cost containment to focus on delivering business outcomes such as high customer retention,” says Everest Group’s research program director Skand Bhargava.

“The focus on driving best-in-class customer experiences—along with technological advancement such as advanced analytical solutions, automation and multichannel solutions—is driving the move towards higher onshore delivery.”

While companies must pay more for onshore call center agents (offshore labor rates are typically 40 to 55 percent of onshore rates), increased automation has helped defray some of the extra expense of local labor. “While companies are ready to pay more for better quality services, increased technology leverage in a traditionally labor-intensive contact center space has offset some of the additional cost,” Bhargava says.


So, what technology are forward-looking firms turning to?

In a word … or at least a hyphenated word … omni-channel. According to PricewaterhouseCoopers, the demand for an omni-channel customer experience … and the number of companies that invest in it, jumps from 20% to more than 80%. Gartner concurs, in fact, they have predicted that in 2018, more than 50% of organizations will redirect their investments to customer experience innovations.

So, can an omni-channel solution really make such a massive impact? According to the Aberdeen Group Inc., yes! Their research shows that companies with the strongest omni-channel customer engagement strategies retain an average of 89% of their customers, as compared to only 33% for companies with weak omni-channel strategies.

A 1% improvement in first call response = $276,000 in annual operational savings for the average call center ( SQM Group)

Ultimately, I expect that the influx of contact center big data, married to the capabilities of omni-channel and sophisticated work-from-home agent solutions will create a hybrid offshore-onshore solution for the majority of mid-sized and large contact centers.

For example, integrated CRM tools will easily identify customers with high lifetime customer value (LCV), or at risk behaviors, to ensure routing to onshore agents with exceptional customer engagement skills. Meanwhile, those with simple issues, low-value purchases or a lower LCV can be effectively routed offshore to teams leveraging omni-channel tools for improved first call engagements.

Click here to download Evolve IP’s guide on maximizing an omni-channel contact center.

P.S. want some more info from Kolsky’s research on why businesses may be willing to pay more for onshore contact centers?

  • Customer frustration leads to the following: 13% tell 15 or more people if they’re unhappy. Conversely, 72% of consumers will share a positive experience with 6 or more people.
  • 67% of consumers site bad experiences as reason for churn.
  • Only 1 out of 26 unhappy customers complain. The rest churn. A lesson here is that companies should not view absence of feedback as a sign of satisfaction. The true enemy is indifference. 91% of unhappy customers who are non-complainers simply leave.

Additional stats from Kolskoy can be read here.

Categories: Contact Center
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