Whether Offshore or On, Call Centers Should Solve Customer Problems

Ann All

A friend of mine who works for a large insurer recently told me her employer (company name withheld) is going to outsource large chunks of its phone-based customer service to India to cut costs. I'm not an MBA, but I question this decision, especially considering that many of the calls will come from older clients with fairly complicated questions about their Medicare coverage.


While offshoring call centers is a common cost-cutting tactic, it's one that can end up costing companies more than they'll save, as I've written several times in the past. I shared 2004 data from consulting company ContactBabel that showed British agents could answer 25 percent more calls per hour than their Indian counterparts and resolve 17 percent more problems during an initial call. Not only that, but ContactBabel estimated that the total savings from shifting 1,000 call center jobs from the UK to India could easily vanish if the move led one-third of 1 percent of a (hypothetical) company's customers to take their business elsewhere.


I attended an event in 2008 where a VP of a large U.S. retailer described how droves of customers complained about poor service when the company outsourced its call centers to India, prompting it to switch to a different Indian provider, then to Canada, before moving customer-support positions back to the United States. Cultural and language issues associated with offshoring can obviously present customer -service challenges. But outsourcing to U.S. providers may create problems as well.


Also in 2008, I interviewed Jonathan Whitaker, an assistant professor of management in the Robins School of Business at the University of Richmonith, who along with two academic peers studied the offshoring and outsourcing activities of 150 U.S. companies and business units from 1998 to 2006 and analyzed the implications of those activities on customer satisfaction. Somewhat surprisingly, they found similar declines in satisfaction for companies that offshored customer service and companies that outsourced customer service to domestic providers. Whitaker told me:

While we find that customer satisfaction declines with offshore customer service, the decline is similar to the decline with domestic outsourced customer service. This suggests that there may be other reasons why customers are dissatisfied with outsourced customer service, and these reasons may be common to both offshoring and domestic outsourcing.

It's somewhat telling that a recent Detroit News article relating the story of Burroughs Payments Systems, a Michigan company that decided to return some of the call center jobs it had offshored to India to its headquarters in Plymouth, Mich., plays up the offshore angle. But in reading the story, it's obvious the Michigan-based employees provide better service not because English is their first language, but because they have deeper knowledge of the products they discuss with customers. Burroughs staffs its call center with employees who have actual hands-on experience with its products.


Since the switch, customer-satisfaction levels have risen sharply and fewer units are being returned for repairs. Plus engineers are not being dipsatched to fix problems in the field nearly as often. Says Burroughs CEO Alan Howard:

Customers prefer to talk to people who know what they are talking about.

Howard also says Burroughs' cost savings is "greater than 10 times" what it could achieve with offshore customer service. I think this is impressive and hope it encourages companies to quantify their supposed cost savings and qualify any other benefits before moving business functions offshore.


However, I'd venture to say most people don't really care where assistance comes from, as long as they get it. Whether a call is answered offshore or on, the key to satisfaction appears to be resolving customer problems during an initial call. That's what Dell found when it shifted focus from keeping calls short, a common call-center metric, to resolving customer issues. While the average time of a technical support call increased from 22 minutes to 32 minutes, the number of incidents resolved on the first call rose from 44 percent to 65 percent. It took some time for the move to pay off, but it ultimately did, because total call volume fell, said Dick Hunter, Dell's former VP of global consumer support services, during a September DataInfoCom webcast.


While employing folks with deep knowledge of products and services to staff call centers is a logical approach, it won't be scalable or cost-effective for many companies. Call center metrics are tricky, as I wrote in December, with a need to balance quantity vs. quality and cost vs. effectiveness, among other factors.

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Mar 2, 2010 10:40 AM Answering Service Answering Service  says:

New analysis from Frost & Sullivan (contactcenter.frost.com), Latin American Contact Center Outsourcing Services Market 2009, finds that the market earned revenues of $6.8 billion in 2008 and estimates this to reach $13.7 billion in 2014. For greater revenue inflow, contact center outsourcers have to develop new ways to offer services. A good example is the virtual contact center, which can be used to popularize the 'home-agent' model. The result is better customer service as the agent will feel more comfortable working from home.

Mar 11, 2010 1:18 PM Terry Marleter Terry Marleter  says:

It all comes down to the competency of the outsourcing company that they're going to hire in India. Call Center Answering Service has been around for quite sometime now. If they utilize this wisely,things won't be all bad. It is true that there will be clients who will want to ask hard questions, but it'll be up to the big fishes in your company to determine what style of ...

prior to the outsourcing of CSRs.

Mar 14, 2010 10:30 AM Honest Truth Honest Truth  says:

Outsourcing/off shoring is a terrible solution. I have worked in several large organisations who have attempted this as its seen as a money saving exercise while being increasing head count. It sounds good on paper. But in reality, combine the cultural differences (caste system, dislike on individuals from the North and South - which can lead to some individuals being ostracised from the team and leads to that employee leaving) , the corruption (managers not giving low marks to any employees to give a picture that everything is well, no-one in a global organisation ever being dismissed, but being given the option to resign as this is seen as not losing face - even for gross misconduct), the lack of ability to use common sense (it's a very common occurrence - in many experiences if something is not written in a script like format it is not attempted when it seems obvious), trouble with employing people in the first place (having people turn up to a face to face interview, who clearly isn't the person on the CV or who was spoken to on the phone). The amount of days taken as sick leave - the list really does go on. Its a false economy, to think that off-shoring is cheaper and as productive. The cost of employing an employee from India compared to Europe must be getting closer every month. I'd love to see some 'real world' figures. The organisations I have worked in suffer from the Management not accepting failure in outsourcing as this means they have failed. Everyone knows the problems but its swept under the carpet. 

Apr 12, 2010 9:42 AM Appointment Setting Appointment Setting  says:

Dealing with people via the telephone or through other technology creates special challenges since the element of face-to-face communication is removed. To be effective, call center representatives and their supervisors must have the ability to listen effectively, gather and analyze pertinent data, then make appropriate decisions on a course of action.

Apr 26, 2010 9:41 AM lead verification lead verification  says:

I'm not really familiar with statistics, but I still believe outsourcing call center work to other countries-like the Philippines-is better than outsourcing it to India. I have heard a lot of horror stories about India customer services.

Jun 13, 2010 5:49 PM Mark Tale Mark Tale  says:

People have stereotyped notions that if they hear the word call center agents, whether as full time employees or freelancers from virtual call centres, their objective is to fix any customer problems. If we talk about customer's problem, it is to broad to be discussed because there are tons of different concerns and problems of customers. Not all problems of a customer or customers can be solved by one agent. Actually, the agent's role is to assist the customers regarding their concern by giving instructions; and the agents also ask other concerns so they can inform the company that owns or sells the product or offers the service. Many businesses avail outsourced call center services because it easier for them to find potential customers and the latter can fix the concerns of their customers right away with the help of agents.

The main role of agents is to assist customers but not really to fix the whole problem. They're like a bridge between the businesses and customers. That's why an outsourced call center company makes sure that it hires good agents.

Oct 19, 2010 1:11 PM Outsourcing Call Center Outsourcing Call Center  says:

Why we hire offshore call center just because we want to make our customer happy, want to resolve their any query on first call any time they call, so if your offshore call center not working as per your requirement then move it to next.




Dec 6, 2010 11:52 AM rthomas rthomas  says:

Remember and please do keep this in mind:-

1. Before you speak to a customer on the phone, remember to smile. It keeps your tone friendly and upbeat.

2. As a reminder to keep smiling, place a mirror where you can see yourself smiling.

3. Use the Golden Rule as your guide: Give all the customers the respect and courtesy that you'd like to receive.

4. Keep your cool with tough customers. Listen patiently, apologize for their inconvinience, and work to fix the problem.

5. Take a deep breath if needed so you can refocus on providing the best service you can.

6. Leave personal issues at home. When your at work, let your professionalism shine.

7. Get plenty of sleep each night, exercise regularly, and eat well-balanced meals in order to keep stress in check.

8. Use mistakes and challenges as opportunities to learn.

9. Keep within sight a picture of something that makes you smile.

10. Remember to count your blessings often. Write down something each day which you are grateful.

Feb 5, 2013 9:46 PM PJ Boothe PJ Boothe  says:
This is pretty fantastic if you ask me. There are some outsourced call center services that really are the best of the best. Thanks for sharing this! Reply
Oct 17, 2013 10:52 AM Micheal Bian Micheal Bian  says:
Great rthomas, I agree with what you have said. Reply

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