To Outsource or Not to Outsource

By Dr. Jon Anton and Cory Gideon Gunderson

Feb/Mar 2005

This year alone, American consumers will make more than 13 billion contacts with the companies from which they buy products and services.  These contacts will be made primarily through channels such as the telephone, e‑mail, Web self-service, and Web chat.  That's roughly 45 contacts a year for every man, woman, and child in the country!

As if managing this volume alone isn't challenging enough for call center leaders, consider the expectations of today's consumers.  Our studies have shown that customers expect accessibility to information.  Providing prompt, polite, accurate information — no matter what channel the customer chooses or when they access it — is an essential feature of a successful customer service and support program.

It is no wonder then, that increasingly more companies are taking a strategic look at outsourcing.  Companies that opt to outsource do so because they believe the third-party company can meet a portion or all of their customers' needs more effectively or more efficiently than they can do in-house.

While each organization must weigh the costs and benefits of outsourcing based on its own unique circumstances, we believe that contact center leaders can benefit by learning from those who've already taken the plunge.  To that end, we recently surveyed contact center leaders about their experience outsourcing their inbound customer service calls.  Our intention was to gain insight into what they've learned about the benefits and costs of outsourcing.  The key questions that framed the survey were:

• What can contact center leaders who currently outsource inbound customer service calls teach those who are considering it?

• How satisfied are these organizations with their outsourcing partners?

• What can we learn about outsourcing from those who once sent a portion or all of their inbound customer service calls to a third party, but would not consider it a viable option in the future?

Contact center leaders, representing a wide variety of companies across 29 major vertical industry sectors responded to our survey.  As shown below, more than one-third indicated that they currently outsource at least some of their inbound customer service calls.

Of those who currently outsource inbound customer service calls, almost one-half (49.09%) indicated that their calls are handled by a teleservices partner.  We asked them to indicate which calls they found most suitable for outsourcing; they could select as many choices as applied.  Their responses were as follows:

• Almost 73% said they found simple, informational questions requiring easy-to-find answers best suited for outsourcing.

• Just fewer than 55% cited campaign-specific questions having highly predictable answers as call types also well suited for outsourcing.

• Moderately complex questions requiring agent knowledge are suitable for outsourcing according to 54.55% of respondents.

• Only 18.18% of respondents indicated that very complex questions that required extensive agent training were suitable for outsourcing.

Those respondents who outsource appear to understand the importance of measuring the performance of their outsourcing partner.  The criteria they use to measure the outsourcer's performance varied, and many use more than one.  The criteria are usually encompassed in a Service Level Agreement (SLA) between the company and its teleservices partner. 

The following criteria used are listed in order, with the most-cited criteria first: 

• Service level

• Caller satisfaction surveys

• Average speed of answer

• Average handle time

• First contact resolution

• Quality assurance monitoring program

• Sales rates

In response to a question regarding their level of satisfaction with their outsourcing partner relationship, nearly three-out-of-every-four said that they were either "very satisfied" or "satisfied."  Just over 24% indicated that they were "neutral," and only 3% said they were "dissatisfied."

One of the most interesting findings of our survey was that a company's level of satisfaction with their teleservices partner didn't necessarily correlate with cost savings.  Half of those who currently outsource indicated that "outsourcing had not resulted in any cost savings."  The other half said that they achieved an average of 28.5% savings through outsourcing.

For feedback on outsourcing experiences from another perspective, one need look only as far as those who once outsourced inbound customer service calls but are not currently outsourcing.  Of the 64.58% of survey respondents who do not currently outsource inbound customer service calls, almost 21% indicated that they had previously outsourced inbound customer service calls.  When these respondents were asked, "Overall, would you consider your previous outsourcing experience worth the investment," a whopping 69.23% said it was not. 

When this same 21% was asked if they would consider outsourcing inbound customer service calls in the future, almost 43% said they would.  For those approximately 57% who said they would not, the following reasons were cited in this order: 

• "I don't want to lose control of my customer contacts."

• "Outsourcing does not allow enough quality control."

• "For reasons other than those listed."

• "The cost is too high."

"Other" reasons why call center leaders would not consider outsourcing inbound customer service calls in the future included: 

• "Frequent product and process changes don't lend themselves well to outsourcing."

• "In-house product knowledge is too important."

• "Our business model is fairly unique and the training required for the outsourcing partner would be continuous and therefore, expensive."

• "It would cost too much to outsource the small number of calls our center handles."

• "Our products are too technical in nature; they would be too difficult to explain to an outsourcing partner."

One respondent stated their bias quite clearly, "Customer service is a core business and you should never outsource your core business."  For those call center leaders who are still wondering, "To outsource or not to outsource," we invite you to learn about additional critical considerations on this topic - especially those considering outsourcing offshore.  We recently published a White Paper titled "The American Consumer Reacts to the Call Center Experience and the Offshoring of Service Calls."  This Purdue University's Center for Customer-Driven Quality paper was based on a study sponsored by Kelly Services.

Dr. Jon Anton is the Director of Benchmark Research at Purdue University's Center for Customer-Driven Quality.  He has published 23 books and 96 papers on customer service and call center methods.  His education includes a Doctorate of Science and a Masters of Science from Harvard University. 

Cory Gideon Gunderson is a communications and project manager for BenchmarkPortal and can be reached at corygunderson@benchmarkportal.com.  For more information about BenchmarkPortal, call 805-614-0123.