To Outsource or Not to Outsource

By William McKinney, Theresa Enebo, and Michael Ringman

August/September 2005

Outsourcing and offshoring are two words that have become staples in household conversations across the United States and are part of daily life for more than 350,000 people who are employed in U.S. contact centers today.  According to the National Association of Software and Services Companies, the outsourcing industry is responsible for nearly $5.1 billion in annual revenues in the United States.  According the research and analyst firm Gartner, the industry will exceed $12.2 billion by 2007.  With so much discussion and conjecture about contact center outsourcing, how do you cut through the clutter and determine if outsourcing is right for your company?

There are considerable benefits to outsourcing your contact center services, including increased cost efficiency, access to cutting-edge technology, improved customer satisfaction, and greater functionality.  There are also some crucial factors to consider when making the decision to outsource, such as internal transition challenges, the potential for lost jobs, and cultural differences in some offshore contact centers.

When making the decision to outsource or keep contact center operations in-house, it is imperative that you take a realistic look at your organization, its current operations, and where it's headed.  As you decide what the right choice is for your company, consider the following list of dos and don'ts for successful outsourcing.  They might be the difference between just hiring an outsource supplier or gaining a trusted, comprehensive outsource partner who makes your business more productive and profitable.

Doing it Right: The Rules for Successful Outsourcing: To ensure success with your company's outsourced contact center services, consider the following:

Do Consider the Big Picture: Most companies interested in outsourcing their contact center services look to decrease the costs associated with labor and technology, but outsourcing helps your company do more than just cut costs.  Enlisting the help of an outsource partner can give your company access to the latest contact center technology without incurring the costs of purchasing, maintaining or upgrading expensive equipment.  Technologies such as Voice-over-IP (VoIP), computer telephony integration (CTI), and interactive voice response (IVR) may not be affordable for in-house contact centers, but they add great value in the customer relationship management chain.  Outsourcers can offer this technology at a favorable cost because of their scale, allowing for greater functionality and efficiency in the contact centers.

Also, most companies who outsource have core competencies that are distinctively different from customer care and contact center technology, ranging from manufacturing and retail to financial services.  When they partner with an outsourcer, they gain the freedom to focus on their core competencies.

Finally, the decision to outsource can mean lost jobs within your company as you cut staff to avoid job duplication; however, outsourcing doesn't always have to translate into inevitable layoffs.  Companies might choose to outsource only the technology component, keeping their current staff intact.  Also, when companies outsource their contact center services, they have the ability to more accurately predict their staffing needs so they can avoid overstaffing or duplicating job functions.

Do Look for the Latest and Greatest: One of the key benefits of outsourcing is deferring the costs of expensive, state-of-the-art contact center technology to your outsource partner.  Make sure to find a partner who employs the latest technology.  Companies can see substantial cost savings when their outsource partner has the latest and most powerful technology.

Do Ensure Company-Wide Support: Before outsourcing your contact center services, ensure that you have as much internal acceptance and support for the change as possible.  The number one factor in determining how well the transition to outsourced operations goes is the way the change is communicated and supported internally.  Here are some tips:

• Communicate openly with all employees, from executives to contact center and technology staff, about the transition and how it will help better serve customers, improve the company's performance, and make their jobs easier.

• Establish clear and realistic objectives, goals, and expectations for the transition.  Depending on the number of call types and complexity of services, a gradual, phased approach will help ensure success.

• Build a partner relationship with your outsourcer, as opposed to a supplier relationship.  The relationship will be most successful if you openly share all information, policies and tools to thoroughly train new agents, familiarize them with your company, and better serve customers.

• Know that you will face some challenges during the transition process, but, with the proper framework in place, internal support, and a trusted outsourcing partner, the benefits of outsourcing will certainly outweigh the challenges.

The Don'ts: Maximizing Your Outsource Partnership

Now that you know what you should consider when making the decision to outsource, here are a few equally important things to avoid:

Don't Consider Only Cost: As with any other product or service, cost is a critical factor.  However, in the outsourcing business, the old adage, "You get what you pay for," rings true.  Though most companies are looking to reduce contact center costs, companies should also look for an outsource partner who can help identify and open additional revenue opportunities, provide technology that improves efficiency and lends more insight into your business processes, and help serve your customers better.

Though it's sometimes difficult for companies to trust an outsource partner with their customers, the customer experience is almost always improved.  When companies are ill-equipped to handle customers efficiently - when customers are on hold too long, are transferred several times, have to repeat information, or their problems aren't solved - is when customer satisfaction suffers most.

Don't Give Up Control: The thought of giving up control of an integral part of your business, such as the contact center, may be a bit worrisome.  However, many companies find that when they outsource their contact center services, they actually gain more control of the operations because of the measurability outsourcing provides.  The contact center industry is likely one of the most measurable industries in the world and with advanced technology, companies can literally see how every minute in the call center is spent.

In the traditional in-house model, companies tracked according to budget and service level.  By using an outsourcing partner, companies can track these areas and how their contact center operations align with business metrics and objectives, providing a higher-level, full-scale view of how contact center operations affect the business as a whole.

Don't Outsource Just to Outsource: Outsourcing doesn't make sense for every company in every situation.  If a company is planning to retain contact center staff along with an outsource partner, the job duplication usually cancels out any significant cost sav`ings.  If the existing staff is essential to the business, outsourcing is probably not your best option.

One of the greatest challenges companies face when deciding whether or not to outsource is the human element - the potential for lost jobs and the cultural differences in some offshore contact centers.  Though outsourcing companies are taking numerous steps to improve these situations, even implementing accent neutralization programs, these concerns are very real and should be carefully considered in the decision process.

For companies around the world in virtually every industry, outsourcing can mean significant cost savings and increased efficiencies that directly impact the bottom line.  However, companies must be in the right position, choose the right partner, and properly manage the transition process to truly achieve outsourcing success.

This article was written by William McKinney, Theresa Enebo, and Michael Ringman of TeleTech, a customer management pioneer since 1983.  For more information contact: William McKinney, Vice President of Product Management and Strategy, William.mckinney@teletech.com; Theresa Enebo, Vice President of North American IT, Theresa.enebo@teletech.com; or Michael Ringman, Vice President of IT Infrastructure, Michael.ringman@teletech.com.