Offshore, nearshore, ensure: quality customer service
With more markets beginning to embrace outsourcing, Sitel’s Vice President, Global Marketing Joe Doyle highlights how many multinationals are looking to consolidate vendors and geographic sites into two or three multi-lingual hubs in order to gain economies of scale, gain greater consistency and improve vendor management.
While cost-cutting is the leading priority for companies of all sizes, management is not usually happy to sacrifice the quality of their customer service. In the current economic downturn where share of wallet is so important and competition rife, quality of service is often the key differentiator for many companies. Many are therefore following a strategy of offshoring or nearshoring, which results in significantly reduced cost (through lower labour, property prices) but also offers advantages of scalability as well as access to a work force that is commercially sophisticated and in tune with Western culture. Previously, there was a perception that you either did it all onshore or you did it all offshore, but, with new markets opening up, companies are looking to maximise efficiencies by starting to spread certain services across different locations.
The range of destinations that can be called upon to offer outsourcing services is increasing rapidly. Companies looking for low-cost English-speaking agents have a choice of India, South Africa and the Philippines, among others. While India offers the advantage of an extremely large educated labour pool, countries such as the Philippines use English as the official language at university and for business.
Morocco and Egypt are equally practical for French-speaking customers, while Mexico, Panama, Chile, Columbia and Nicaragua have huge workforces that offer Spanish language services to customers based in Spain and the US. Moreover, the cost of living in the Scandinavian countries is prohibitively high, which has led to London, Lisbon and Barcelona becoming outsourcing hubs for the Nordic languages.
The main advantage of multi-shoring is the price. Within a call centre operation; often around two-thirds of the total expenditure relates to labour, and agent-related costs are typically 20-40% lower if a company goes offshore. On top of dramatic labour-related cost savings, commercial property is significantly cheaper in offshore and nearshore destinations than in Western Europe. Moreover, emerging markets often have attractive incentives for companies looking to outsource, such as subsidies and tax breaks.
The rapid rise of the Philippines
The Philippines recently overtook India to become one of the world’s top destinations for business process outsourcing (BPO), a significant feat given that the country only began operating contact centres in 1997. One of the major draws for multinational businesses in that the Philippines is one of the largest English-speaking countries in the world and Filipinos speak English with a fairly neutral or North American accent. There is also a strong cultural affinity between North America and the Philippines and Filipinos are familiar with American idioms and culture.
The Philippines offers a large pool of well-educated talent. In Sitel’s new Eton, Manila centre, more than 90 per cent of agents have college degrees in IT, communications, business and science. Because of this high level of education, Sitel is able to provide businesses with a range of outsourcing services from basic customer care to skilled technical support. While the Filipino agents’ neutral accents command higher wages than their Indian counterparts, overhead costs remain low.
Increasingly attractive Central and Eastern European markets
Central and Eastern European countries are increasingly attractive outsourcing destinations. Economic growth and an increased liberalisation of trade and the financial markets are partly driving this trend, but demand from Western European countries is also on the rise. Many West European multinational organisations are looking to take advantage of central and Eastern Europe’s low overhead costs. Countries in the region, such as Poland, Bulgaria, Romania, the Czech Republic, Hungary, Slovakia, Latvia and Serbia are also seeing that there’s an opportunity to make money by capitalising on the outsourcing trend and are offering grants to companies to locate call centres there.
Last year, Sitel opened the first non-domestic contact centre in Belgrade. We chose the location because of Serbia’s highly educated, computer-literate workforce, robust ICT infrastructure and favourable wage rates. Serbians also have strong linguistic capabilities, so within one centre you can have a good mix of languages. Grouping many languages in one hub can significantly reduce clients’ costs through a technique known as ‘call blending’, where one multilingual agent handles two or three languages and by offering economies of scale.
There’s also a relatively close link between Eastern and Western Europe from a cultural perspective. Many major clothing brands have outlets there and on television, viewers watch all the famous US and UK sitcoms and films, often in English with subtitles for the local language. As more Eastern European nations start to join the European Union, companies can also benefit from increased transparency and uniformity in terms of laws and currency. The deregulation of the financial services, telecommunications and utilities markets gives new players the opportunity to move into those regions and improve on areas such as customer care.
Establishing a successful BPO strategy
Flexibility and scalability are two significant benefits of outsourcing, and the scale offered in offshore destinations is impressive. They have a large labour pool to draw on and agent attrition is often lower, meaning that recruitment and training costs are reduced. It is therefore easy to ramp up for a particular seasonal campaign and find an additional 100-200 staff relatively easily at a reasonable price. The commercial sophistication of outsourcing locations is also growing. Whether it’s related to languages or handling different types of software, the gap between developed and developing nations is narrowing, particularly in EMEA destinations.
When considering a multi-shoring strategy, there are several factors companies must take into account, not least implementing a rigorous recruitment and thorough screening process. After an initial telephone screening, comprehensive testing and evaluation should be followed by a job preview. Once a candidate has passed this stage, a formal interview and background checks need to be carried out.
That’s when the training comes in. Corporations need high-quality trainers for cultural affinity and skills training, and sensible companies would then implement an ‘on-boarding process’ for one or two months throughout which new employees have constant support from their supervisor or team leader. Keep in mind though: training is key, but if your recruitment policy is poor, training will be much less effective and more expensive.
Even before the recruitment process, choosing the right mix of onshore, offshore and nearshore destinations is a significant challenge for companies. There are three boxes that must be ticked: process affinity, cultural affinity and vertical market experience. For example, if you’re looking to do technical support, you must choose a destination with high technological literacy and agents that are familiar with the products and services delivered by their company, which will lead to high levels of empathy. With so many factors to take into account, it is often beneficial for organisations to team up with a quality outsourcing partner with established centres in key locations.
Looking to the future
Outsourcing is on the rise. It is not uncommon for first-time outsourcers to dip their toe in one particular type of service or consumer group and start to see quickly the cost benefits available, and that they can begin to focus on their core competencies. They’ll then start to outsource other things such as back office activities, which are closely linked with call centre operations.
For pan-EMEA and global organisations, the future of outsourcing is to use two to three multilingual hubs. These organisations may be delivering their customer services across ten languages via eight or ten different countries with as many separate vendors, but they are seeking to consolidate in order to reduce management staff while attaining economies of scale.
During this complex process, many organisations find it beneficial to team up with a quality outsourcing partner that has established centres in key locations. A BPO partner can help you navigate your choices of emerging markets and identify the most important hubs for your business, manage recruitment and multi-lingual agent training programmes, and maintain high levels of efficiency and service at your centres. With all of these factors carefully and strategically managed, you will be able to truly reap the benefits of outsourcing directly to your bottom line.