Declining Dollar May Ring in Price Increases at Offshore Call Centers

Ann All

We've blogged before about the effect that a declining dollar can have on outsourcing deals.


One area that tends to be hit especially hard by a weak dollar, as reported in a recent CRM Buyer article, is offshore call centers. Because their billing and payment processes tend to be so closely tied to labor hours, the centers are less able than other service providers to cope with wage increases and currency fluctuations.


Even without the added financial pressure of a weak dollar, call centers are costly to operate. Some Indian service providers have cancelled call center deals because they were losing money on the deals, while other Indian firms will take on call center business only if it is part of a larger and more lucrative contract, reports BusinessWeek.


In Canada, wages for customer service agents in big cities now exceed salaries paid to agents in some areas of the U.S., while the Canadian dollar is worth nearly as much as the U.S. dollar, according to CRM Buyer. These factors are cushioned somewhat by the fact that the Canadian call center industry tends to benefit from government subsidies, a shift from outbound telemarketing to inbound customer support calls, and U.S. clients' willingness to pay more for call center management skills.


Two other popular destinations for call centers, the Philippines and India, are experiencing wage increases and growth in valuation of local currencies. Not only that, but Indian call centers will likely no longer be exempt from minimum alternate tax requirements.


Though U.S. companies in the midst of long-term call center contracts will likely not be affected by these changes, those facing negotiations for new contracts or contract renewals or extensions may face higher pricing.

Add Comment      Leave a comment on this blog post
Jun 18, 2007 2:29 AM BizDev BizDev  says:
The declining dollar will definitely have an impact on those companies that are delivering services from an offshore location whose currency has appreciated vis-a-vis the US dollar. On the bright side for the US economy is the fact that now US goods and services will be more competitive in those markets and will help with the trade balance. How well companies handle this change in the fortunes of the dollar remains to be seen; and how effectively hedging and other strategies will play out is also a topic for which the jury is still out. - The preferred preferred destination for mortgage outsourcing. Reply

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