To Outsource Offshore or Not. That is the Question…

Geoff Tweddle

Should you outsource your call center and implement an offshore call center? Of course, the first thing that comes to mind is cost. And rightfully so.

Nick Jiwa, founder and president at CustomerServ, discussed in a LinkedIn blog post earlier this year the costs associated with running an on-site call center vs. an outsourced call center. You must consider factors such as wages, benefits, taxes, facilities, rent, chargebacks for HR, accounting, IT, and the list goes on, according to Jiwa.

There are countless — and necessary — ways to explore cost comparisons for in-house call centers vs. offshore call centers.  It’s also important to understand the basics of offshore call centers and their pros and cons.

What Is an Offshore Call Center?

Offshore call centers operate offshore or outside of a region of regular business operations, typically in different time zones or areas that offer cheaper labor, according to McKay Bird, chief marketing officer for call center solution provider TCN.

“As services have shifted to the cloud, it has allowed data to travel freely around the world,” Bird added. “There are no borders or boundaries to how businesses can operate. Now businesses just need to decide what call center model is best for their operations.”

Alternatively, “nearshore call centers” have been up and coming. They are call centers that operate closer in proximity to the service country, according to Bird. For example, Australia, a fairly sophisticated consumer-based market, leverages cheaper nearshore call center services in the Philippines for cheaper labor and quick telecommunication connections. Mexico and other countries in Central America are growing outsourcing capabilities to serve the United States and Canada.

Related Article: Call Centers vs. Contact Centers: Understanding the Key Differences

Captive vs. Outsourced Call Centers

Rick Britt, VP of Artificial Intelligence for conversations analytics provider CallMiner, breaks down the types of call centers into captive (owned by the enterprise) and outsourced (contracted but not owned by the enterprise).

  • Captive: Not in the primary geography. A facility or call center outside the operating borders of the home office.
  • Outsourced: Covers all of “offshore.” Some companies will use “nearshore” and “onshore.”

“The best overarching definition (of an offshore call center) is a contact center that is in an external geography where there is a wage arbitrage opportunity for a talent similarity,” Britt said. Generally, companies contract an offshore call center in another country. To a company in say, California, where wages are very high, places like Texas and Tennessee might be ‘domestic offshore’ opportunities to find lower wages and consummate talent, Britt added. “But,” he said, “the vast majority of the time it will be in another country that offers similar talent levels at lower wages.” 

Related Article: 6 Essential Call Center Agent Skills and Traits

Pro: Money-Savings and Growth Opportunities

Cutting costs is at the top of everyone’s list for the case for an offshore call center, according to Bird. Also consider: proper agent onboarding and training, dealing with higher turnover rates, hiring logistics, labor costs, office space restrictions and capital outlay. Bird contributed some benefits of an offshore call center:

  • Saves money by reducing labor costs associated with hiring, training and onboarding
  • Reduces overhead expenditures: minimal capital outlay of office space requirements for growth
  • Allows for quick growth: great for organizations looking to scale rapidly

Pro: Competitive Call Center Market

Britt cited the Philippines as a case study for the pros. There, he said, young professionals often aspire to earn a call center job. It is a competitive marketplace to hire and seen as a full career. “That is quite different from the US,” Britt said, “where it is not nearly as attractive.”

The Philippine government is aggressive in offering incentives and infrastructure deals to make the market attractive, which only occurs sometimes at the local level in the US.

Due to the size of the industry and concentration, there is a deep talent pool upon which to draw. From new college graduates to those with 20-plus years’ experience, there is a rich market of talent, he said.

Pro: Always-on Support, Multi-Lingual, Diverse Content

Lesley Heizman, product manager at customer and employee experience provider Lucidworks, said the ability to provide more around-the-clock support because people are available in a variety of time zones is a plus for offshore call centers.

Companies can also offer multi-lingual support compared to US-based agents who may not be proficient in multiple languages.

“The one other pro is that sometimes there are people in certain locations who might be specialists in specific content areas that you might want to draw on if you can’t find enough specialists in the U.S. to meet your needs,” Heizman added.

Related Article: What Is Predictive Dialing and How Can It Help Call Centers?

Con: Language, General Disconnect, Privacy Concerns

According to Bird, come potential drawbacks of an offshore call center include:

  • Barriers in the areas of language, culture, product uses time zones and political background
  • Overall disconnect from an agent providing the customer experience
  • A disconnect between manager and staff; less control over the hiring process
  • Lack of total visibility of call center and of call analytics and reports
  • Concerns about client data privacy having information traveling to other regions

Con: Politics, Cultural Understanding, Infrastructure

Moving any contact center offshore has customer and political ramifications, according to Britt. There is often pushback to American jobs going offshore.

Further, no matter how well trained and talented offshore agents are, they are not completely culturally aligned with Americans or other hosts countries for which they provide services, according to Britt. Each country has its subtleties in communication. “That,” Britt said, “can frustrate customers who aren’t from the same place.”

Further, a country in which an offshore call center resides may not have the best technological and infrastructure support, Britt said. “Third world countries have less reliable infrastructure,” he sad. “Routing a call halfway around the world and back in milliseconds is a solved problem, but not things like transportation and reliable power. For example, generators are not back-ups in many geographies; they are a necessity. Also, worker strikes by related industries that impact delivery, like taxi drivers and shipping companies, are common.”

Con: Mismatched Values

Companies want to make sure they partner with an offshore organization that aligns with their company’s values and customer service strategies to ensure the company offers the level of service that customers expect, according to Heizman. “Sometimes,” she said, “there can be a negative connotation to offering offshore services because of bad experiences consumers have had in the past where these expectations and values were not aligned.”

Bottom Line: Should You Outsource Your Call Center?

In consideration of implementing offshore call center operations, look at current data to see what clues you can draw from it, according to Heizman. Here are some examples:

  • Analyze your support data: If your teams have trouble meeting service needs during off hours where they consistently miss SLA’s, it may be time to consider outsourcing.
  • Consider the complexity of your requests: According to Heizman, if 80% of your requests are something that include standard answers easily provided by a trained agent? This might be a starting point to consider. “Or, are you having trouble finding personnel who are specialists in certain content areas? You might be able to outsource to a region that has experts in that area more readily available,” he said.
  • Consider talent acquisition costs: When the cost of acquiring new talent in the existing operation becomes unsustainable and support of the customer is no longer practical or possible, that’s when companies will consider offshore call centers, according to Britt.

“Having executed the search for a supplemental location to sustain the basic core of support, I can say it’s expensive in the short term, but wage and talent arbitrage are real benefits the company can enjoy pretty quickly,” Britt added. “Another strong consideration is when an operation is not core to a company’s success. When the operation is a cost item, organizations may consider taking it to a low-cost geography more quickly than an item that is revenue oriented or core to the business.”

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