Foreign Studies Despite the anxiety of handing over call center operations to a third-party outsourcer, organizations are still

quietly off-loading their customer support efforts. And in spite of cultural, technology, and proximity issues, there is a significant movement toward overseas outsourcing. The call center outsourcing industry has become big business, according to Frost & Sullivan. It says the outsourced call center industry reached $22 billion in 2002, and projects the industry to climb to $25.7 billion by 2009. "More companies are looking to outsource their call center operations as they realize that in most cases, they are not core to their business," says Robin Goad, a managing analyst at Data monitor. While today's biggest brands, from Time Warner Inc. to Hershey Foods to The Wall Street Journal, really heavily on outsourcing to deliver around-the-clock service, few companies readily admit it. They want to give the impression they are always ready to field questions and take orders, but most can't justify the expense of supporting their own call centers at all hours. Instead, they outsource some or all of their call center activities. "There may be a small number of orders coming in, but you don't want to miss that call, so outsourcing makes good economic sense," Barry says. Most catalog businesses, for instance, may outsource just 5 percent to 15 percent of their transactions, using outsourcing for call overflow during the peak hours and for after-hours and weekends. But if the job is done well, companies often expand the contract to additional parts of their businesses or renew their existing contracts. The most common concerns raised by customers used to be the system and technology barriers, as well as cultural barriers, particularly anxiety over language differences. But lower labor cost was always the intrigue, says Dennis Ross, general manager of offshore operations at Convergys. Regarding technology concerns, Ross says, "Our international private

lease circuits all deploy the same technology. " To address cultural concerns, Ross encourages clients to visit Convergys' offshore call centers. "Once they see the operations, talk to agents on the floor, and meet with the management team--that quickly seems to bridge the gap in terms of cultural differences." One of the most challenging aspects of offshore outsourcing is getting reps to understand American slang. Typically used American phrases like out here in the sticks and strip malls can confuse even the best-educated telephone rep, so outsourcing companies must spend large chunks of time on role playing exercises. Venkat Tadanki, founder and vice president of sales and marketing at Daksh, a call center outsourcing firm based in Haryana, India, says India has the second-largest number of English-speaking graduates next to the United States. All 1,700 of Daksh's employees speak English. "They've had fourteen years of English-speaking practice. For us, the main language is English," he says. The accent, however, is a bigger issue. Therefore, Daksh agents receive 80 hours of accent neutralization training to help them neutralize their accent to something that can be clearly understood globally. Another concern in deciding whether to outsource call centers is the loss of U.S. jobs. A 2002 Datamonitor study found that a 150-seat call center that costs $5.6 million to run for a year in the U.S. costs just $2.2 million in India. The research firm predicts that the number of people working as outsourced call center agents will double by 2007. It expects these agents to increasingly come from offshore locations. The pride in the work in India and other regions is another advantage of offshore outsourcing, says Elizabeth Herrell, an analyst at Forrester. "There is a large offshore source of multilingual personnel, higher- educated agents and you can get lower salary levels depending on where you are located," Herrell says. "They are also frequently providing some form of technical expertise, and many companies already have the

technology in place, especially in India." Herrell warns that in addition to cultural misalignments, there are other risks in offshore outsourcing, for example, lack of consistency between call centers and lack of control over management. Industry experts agree that outsourcing does not absolve an organization of its responsibility to customer service. If you're skittish about bringing your customer service solution overseas, Herrell says there is another option. "Outsourcing is growing because of the high cost of setting up call centers. But I wonder why more companies don't look at alternative choices like voice automated systems and voice over IP to handle very basic types of transactions?. Companies are slowly warming up to advanced speech recognition (ASR) technology solutions. ASR technology enables customers to speak entries to navigate through an automated telephone system, rather than punching numbers on a telephone keypad. Basic ASR systems recognize single-word entries like yes-or-no responses and spoken numerals, making it easier for people to navigate through automated telephone menus. Sophisticated ASR systems enable users to enter queries or responses, such as a request for driving directions or the telephone number of a hotel or retail store in a particular town. This shortens the menu navigation process by reducing the number of decision points. ASR marks a categorical improvement over manual keypad entry technology that requires people to punch in telephone keys, because it helps to eliminate errors caused by pressing the wrong key, contributing to customer frustration. When this happens customers either press zero for a live customer service rep or abandon the call altogether. The remaining call center reps can then be trained for more rewarding jobs, which include sales, complaint resolution, or customer retention. Customer care outsourcer Sykes Enterprises, for example, formed a partnership in April with NetByTel to incorporate its advanced speech recognition solutions into business process outsourcing

services. "Advanced speech recognition and voice-enabled applications are key," says William Sokol, senior director of strategy and marketing at Sykes. "To date the biggest obstacle preventing it has been the ridiculous amount of cost and time it takes to adopt. That's why we formed the relationship with NetByTel." Sokol says an ASR system can be billed on a transactional basis for 35 cents per minute, with a typical set-up fee of less than $50,000, which he says is a reduced cost-of-entry of approximately 90 percent below previous ASR system implementations. Sykes and P&G plan on partnering--and using speech-recognition technology--to handle some of the more than 6 million customer service inquiries annually on nearly 300 P&G brands worldwide. P&G said it would use Sykes's IT infrastructure and global network of support centers to enhance its consumer relations services, as well. "Our relationship will better enable P&G to serve consumers with excellence around the world and better utilize vital consumer data to further improve our products and services," says Charlotte Otto, global external relations officer for P&G. The global implementation will begin and expand to all designated locations worldwide over the next few years. Sykes expects to manage about 70 percent of P&G's global consumer contacts. Convergys also uses ASR technology to attract customers. "Our voice solutions platform is state of the art," Ross says. "It's about getting clients comfortable with automating that part of their business. Whether considering an offshore or a U.S.--based outsourcer, the financial and operational advantages of partnering with an outsourcer are compelling. "It comes down to economics," Barry & Company's Barry says. "In this environment some companies just do not want to spend the money on systems, facilities, and people."