Call Center Outsourcing
This section of our technical library presents information and documentation relating to Call Center technology including software and products.
Since the Company's inception in 1978, DSC has specialized in the development of communications software and systems. Beginning with our CRM and call center applications, DSC has developed computer telephony integration software and PC based phone systems. These products have been developed to run on a wide variety of telecom computer systems and environments.
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Outsourced Contact Center Locations
The following is an extract from the article "Outsourced Contact Center Locations" written by David Myron of CRM Magazine:
"The appeal of low-cost labor outside U.S. borders is hard to resist. In India, for example, salaries for customer service representatives (CSRs) can be 80 percent to 90 percent less than those of U.S. agents. To boot, most CSRs in India have college degrees, whereas in the United States most CSRs have only high school diplomas. These low labor costs are spurring more and more companies to consider outsourcing their contact centers to service providers in offshore and nearshore locations. The areas experiencing the most rapid growth are India, the Philippines, Canada, and Mexico, according to Datamonitor.
Paying a fraction of the cost for more highly educated representatives is compelling, but alone it's not compelling enough to make the move. There are hidden costs that make the decision of where to outsource much more challenging. Travel, training, telecommunications, infrastructure, and dual management expenses can severely erode total anticipated cost savings.
There are also intangible costs to consider--mainly damage control and the loss of business associated with the move if customers reject it. It had been recently reported that Dell, for example, was contemplating a departure from India because U.S. customers had difficulty understanding the India-based CSRs. In addition, some customers may simply abandon a company for what they consider an anti-American business decision.
This was such a big concern for J.P. Morgan Chase executives when the company moved its credit card-- bill payment service facility to India in March 2002 that agents were forced to be evasive when prompted for their whereabouts. "For a long time we were not allowed to tell customers where the customer service reps were located. When agents were asked, they were told to respond: 'For security reasons we can't tell you,'" says Diana Kyser, a former vice president of eCustomer support for credit card services at J.P. Morgan Chase.
It was a small outsourcing effort involving only about 30 agents in India, but it was necessary. In January 2002 Chase had launched its online bill-payment site, Chase Bill Management Center, which enables Chase customers to check balances, pay bills, or change address information, all online. However, there was no dedicated support for the site, according to Kyser. The company considered ways to keep the staff within the country and company, but she says it would have taken too long. "It's a big company and it takes time to do large projects," she says. Kyser adds that flexibility, a quick startup time, and costs were big factors in Chase's decision.
At the time Chase had already been working with The Mphasis Group, a Web site--development company with offices in Mumbai and Bangalore, India. So it made sense to send online bill payment inquiries to Msource, a wholly owned subsidiary and business process-- outsourcing arm of The Mphasis Group.
As would be expected, getting everyone on board with the idea wasn't easy. "There was a ton of resistance, mainly because of the loss of [U.S.--based] jobs," Kyser says. "But, if companies like American Express and Citibank are doing it, then we can't afford not to do it."
Despite the resistance from within the firm, Chase's offshore outsourcing decision has yielded significant returns: By moving bill payment services to India Chase's eCustomer support for credit card--services division saved at least 50 percent on overall support costs, Kyser says. Productivity has ballooned from a few hundred calls per day to 23,000 per month.
Last December Chase also gave Msource all its email support business for online bill-payment inquiries, which total 16,000 emails each month. Chase had been paying a Milwaukee company $2.75 per email for email support. Msource is charging Chase only $1 per email response.
Chase is certainly not alone in making its offshore efforts pay off. But integral to this success is selecting the right location to begin with. What follows are the pros and cons of the fastest growing offshore and nearshore contact center-- outsourcing locations.
Datamonitor estimates that there are currently more than 63,000 agent professionals in India devoted to offshore outsourcing, and that from 2002 to 2003 that number grew 23.5 percent. India is the fastest growing offshore outsourcing hub for U.S. companies, but it is not the only one. The second largest offshore location for U.S. companies is the Philippines. Circuit City, for example, recently signed a contract with TeleTech Holdings to provide telemarketing services in the Philippines.
Call centers exist all over the world, so what makes these offshore locations so desirable for U.S. companies? Mainly, analysts say, lower labor costs for highly educated agents. "Wages for labor in countries like India and the Philippines, which have large workforces, can be 80 percent to 90 percent lower than [those] of U.S. labor," says Daniel Hong, an analyst at Datamonitor.
Kyser saw the sharp drop in salaries firsthand. "The average customer service representative in India makes about $2,400 a year," Kyser says. "It's [about] 10 percent of what a CSR in the U.S. makes, and that gets them a nice apartment, good clothes, television, and more. It's your typical middle class existence."
In addition to lower labor costs, telecommunications infrastructure and related costs are finally at a comfortable level for U.S. companies. Thanks to international private leased circuit networks (IPLC)--undersea cables that connect the U.S. to locations like Asia and India and provide reliable, fixed-bandwidth telephone connections--the cost of telephone calls has dropped from 30 cents per minute a few years ago to 8 to 12 cents per minute today. "As a result, people are moving from satellite communication to IPLC," says Amit Shankardass, solutions planning officer at ClientLogic.
Don't let these cost savings fool you, though. Shankardass warns that while international telephone calls cost considerably less than what they used to, they still pale in light of the 3-cents-per-minute rate in the U.S. So although salaries in India compared with the U.S. may be significantly less, some of the savings is lost due to increased telecommunications costs. "A lot of people misunderstand that if labor cost is one sixth of the U.S. cost, then they think their total cost of service should be one sixth if they move customer service to India," Shankardass says. "However, the net-net is, if you move the same work to India it would cost you about 35 [percent] to 45 percent less than the U.S."
Industry pundits agree: "You'll run to India because of the cost of labor and amount of labor and education level of the employees. You'll want to turn around and run the other way when you find out what it costs to build the physical building and the infrastructure costs," says Dennis Ross, general manager for global services at Convergys....."
To view the entire article, visit www.destinationcrm.com.
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