International Outsourcing
of
Call Centre Operations
Lessons for Canadian Marketers
White Paper
Prepared by: Contact Centre Council
Released: March 2004
International Outsourcing of Call Centre Operations
Executive Summary
Onshore and offshore outsourcing have now become part of the North American business
vocabulary, but so has another new business idea – the loss of what have traditionally been
considered ‘white collar’ jobs, many of them in information technology.
Just as automotive and electronics manufacturing jobs have moved to low-wage
environments, so too have many knowledge worker positions. IBM calls this ‘global
sourcing,’ and companies of all types are now doing it. Our ability to transport data and
information over vast geographic regions has made it possible to move more white-collar
type work to locations like India, Philippines and China. There are some great examples
that exemplify the cost and service advantage of leveraging the knowledge worker
hierarchy. Overall service delivery to the end customer is enhanced as work can be
completed offshore through the night while the rest of North America is sleeping. The
turnaround time is expedited without incurring the cost of speed, thus, providing a
competitive advantage to North American companies. Examples include overseasqualified radiologists reading an x-ray of a North American patient’s suspected broken
ankle or East Indian paralegals completing casework research in the middle of our night
and forwarding results and findings to North American firms who will have this
information available at the start of their day. Promises made at 5 p.m. can be delivered by
9 a.m. the next morning.
Early in 2004, Toronto Star writer Richard Gwynn reported there is growing resistance to
job exports, particularly in some low-wage parts of the United States. Gwynn commented
the job exodus will eventually result in net economic gain for the U.S., but only after
adjusting for the dislocation caused by permanent job loss.
China is a good example of where offshore outsourcing has had a positive economic
benefit to North America. Offshore outsourcing in China has created more jobs, bringing
greater affluence to its people and creating a healthier middle class who is hungry for
North American products.
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The goal of this paper is to provide a balanced perspective for those considering locating
operations abroad, however, during the research process, interviews did capture some
opinions and perspectives around the impact to domestic operations when some parts of
business was portioned off overseas.
The participants of this study revealed that no one lost their job as a result of portioning
some business overseas. The North American “noise” came mostly from management
levels who tried to understand and were grappling with the possible implications of this
business decision. There was acknowledgement, however, that as more and more
operations move overseas, some people will not be able to make the transition to the
different roles that become available.
The offshore outsourcing of some jobs is often picked up in comments about the U.S.
economy experiencing a ‘jobless’ recovery. Articles and media reports on the subject of
international outsourcing are clearly becoming apparent on our collective economic ‘radar
screen,’ and not just as a popular cost-reduction strategy but, increasingly, as part of a
larger socio-economic issue.
The issue of real long-term economic benefits to North American businesses as a result of
offshore outsourcing will be debated for years to come. The range of perspectives about
the implications to North American economy and culture are broad and wide, and many
times rooted in emotion. It will also be interesting to see over time if there is any “first
mover” advantage for those who were pioneers and located their centres overseas.
Our participants have been open in sharing real life examples of challenges and successes
when operating overseas. The area of our research centered around three specific topics:
starting up overseas, impact of cultural issues, and regulatory issues.
Some companies have chosen to partner with established overseas outsourcers while others
like GE and Amex have started up their own independent operations. The key learning for
starting up overseas is not surprising. By exercising basic best practices when managing
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any outsourcer (local or offshore), positive results will follow. This “best practices”
summary provides a framework for any due diligence:
•
Formalize the decision process through RFP (Request for Proposal)
•
Liaise with government agencies to get statistical information, understand local
legislation and regulations
•
Validate the choice of location, infrastructure capabilities and government statistics
with other foreign companies in that country
•
Assess the skill level of the outsourcer’s management team and be prepared to fill
the gaps
•
Ensure that you install your own senior personnel on location for at least 4- 6
months
•
Develop a project plan with timelines longer than one would typically expect
•
Ensure that the campaign management by the outsourcer is reflective of the client’s
culture, service philosophy and values
•
Set clear and measurable campaign objectives
•
Develop a solid escalation process when things go wrong
•
And lastly, communicate, communicate and communicate!
One cornerstone to “executing with excellence” is successfully managing people.
Interaction of people with diverse cultural backgrounds can be challenging at the best of
times. The typical and reported North American focus when going overseas has been to
have other cultures assimilate North American colloquialisms and cultural nuances.
Although this is done to make North Americans comfortable with interaction, additional
consideration should be made to ensure that the assimilation is reflective of the
demographics and nuances of its client’s customer base. Within North America, depending
on product and industry, there are differences when marketing to the Baby Boomers versus
Gen X.
Interestingly enough, our participants openly stated that it is equally important to ensure
that there is a North American understanding of the other culture’s norms and paradigms to
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enable successful management of local tactical and operational issues. Entertaining stories
for us were real life learnings for our participants.
When embarking on a new endeavour, it is critical to gather as much knowledge and
learning before moving forward. As one of our participants stated, “You educate yourself
on (the regulations), you plan for it, you manage it, and you can handle it.” This applies to
all facets of offshore outsourcing, not just the legal and regulatory aspects. Our
participants reported that legal and regulatory issues did not impede the start up or the
success of their operations. It was a matter of understanding the rules, the operational
impact and ensuring that compliance was interwoven into the overall planning and
execution. Having an outsourcer who is networked and knows how to maneuver through
government bureaucracy is definitely an asset.
In summary, participants overall were positive about their experiences overseas. The
general enthusiasm in each host country to do business as well as the “state of the art”
technology in many centres coupled with good quality people were the general positives
that were reported. In some cases, cost savings were not realized as quickly while others
indicated that they are seeing a return on investment. It was all dependent on the
complexity of the campaign and the unanticipated challenges. The effort that was required
in “starting up” was greater than anticipated but still worthwhile for most of our
participants.
Afshan Bye
Executive Committee Member
CMA Contact Centre Council
Senior Vice President, Sales and Service
ING DIRECT
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Introduction
Over the past few years, Canadian marketers have heard many reports of the substantial
savings to be gained by outsourcing their call centre operations offshore, to destinations
such as India, the Philippines, Mexico, Barbados, Europe, China, or some other equally
distant location.
Most of these stories have focused on India, for its inexpensive labour, highly educated
workforce, familiarity with the English language, and its rapidly expanding call centre
industry. According to a 2003 Datamonitor estimate, there are currently over 250 contact
centres and 51,000 agent positions in India devoted to offshore outsourcing.
But are the stories accurate? Are the savings real? And is moving your call centre function
as easy as it sounds?
To get a clearer picture of this important phenomenon, the Canadian Marketing
Association called together some experienced contact centre professionals and marketers to
review their experiences and document them, in order to help those considering a move
offshore understand the costs, the benefits, and to anticipate some of the detours along the
way.
Our intent is not to help businesses determine whether their companies should or should
not go offshore. Neither is this document intended to be a guide to which location to
choose, nor which business model works best. These are questions best left to an
individual organization’s situation.
Instead, our intent has been to compile some useful comments and reflections from those
who have gone overseas, and to present them in a context of some of the larger issues
facing companies that do venture offshore. We hope these observations will help Canadian
marketers interpret what they hear and see about international outsourcing and whether it is
right for their companies and their customers.
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Some background
To date, most of the impetus for outsourcing call centres offshore appears to have
originated with very large corporations in the US and UK, companies such as GE,
American Express and BT Group (the former British Telecom). Few Canadian companies
have achieved this kind of scale and, of those that have, many are financial institutions,
which face regulatory pressures for keeping their customer relationships very close to
home.
For those companies that have located operations offshore, the savings earned have
prompted others to follow. Many of these companies are third party service providers,
who have led the way due to pressure from existing and prospective clients.
Our process, our participants
To gain a broad understanding of the dynamics involved in facing an international
outsourcing question and then – if positive – making it work, the Canadian Marketing
Association first gathered together some senior people with significant experience.
We selected three major topics:
•
Challenges in starting up;
•
Cultural nuances;
•
Legal and regulatory issues - and the impact on North American operations.
We assembled a panel of experienced marketers to discuss each, through the mechanism of
a conference call. Our conference call moderator for each of our sessions was Afshan Bye,
Senior Vice President, Sales and Service, ING Direct, Canada, who also serves on the
Executive Committee of the Canadian Marketing Association’s Contact Centre Council.
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The calls were recorded, transcribed and then assembled in broad general areas by an
independent writer-editor.
This document was assembled, then reviewed by the Executive Committee of CMA’s
Contact Centre Council, and finally, vetted by the participants themselves.
A note on editorial policy
Our approach has been to modify the language used during the moderated discussions as
little as possible, so that we could let our participants speak for themselves to the greatest
extent.
In addition, we sometimes compressed parts of a participant’s comments together for
clarity, even though they may have been spoken a few minutes apart. These comments
provide insight and should not be taken as generalizations about this topic.
Our participants
As some of our participants came to these calls with a variety of sensitivities, there are
those that have not been identified by name, in which case, they are noted by the industry
in which they work.
Our participants included:
Two financial services providers and a business services organization; the following
customer care, direct marketing, consulting and outsourcing businesses; listed by company
name and followed by our study participants.
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ICT Group
A leading global provider of outsourcing and customer relationship management (CRM)
solutions that help clients identify, acquire, retain, service, measure and maximize the
lifetime value of their customer relationships. ICT offers its services on an outsourced, cosourced or hosted basis, from 47 contact centre facilities located in 8 different countries
around the world.
Tim Kowalski, Executive Vice-President, Planning
Jack Kerins, President, International
Minacs Worldwide Inc.
Minacs provides customized business process outsourcing (BPO) solutions focused on
three core areas of capability: Contact Centre Solutions, Integrated Marketing Services
and Back Office Administration. By combining expertise in these areas, Minacs creates
industry segment practices that improve revenue, customer service, and operating margin
for clients.
Steve Weiler, Director, European Business Unit
Pitney Bowes
Pitney Bowes engineers the flow of communication. The company is a $4.6 billion global
leader of integrated mail and document management solutions headquartered in Stamford,
Connecticut.
Scott Fuller, Vice-President Globalization
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Teletech Canada, Inc.
A provider of eCommerce-enabling customer management solutions (eCRM) for large
domestic, foreign and multinational companies around the world. Teletech helps clients
acquire, serve, retain and maximize their revenue from customers by strategically
managing inbound telephone, email and internet-based inquiries on their behalf.
Ron Chmara, Executive Director, Canadian Operations
Tiger-I International
Tiger-I provides comprehensive, professional international relationship management
services that includes strategic planning, cultural guidance prior to transitioning,
leadership development, management consulting and international sales and marketing
services. Tiger-I is headquartered in Toronto, Canada.
Dan Sinclair, Managing Partner
SMT Direct Marketing Inc.
A leading service provider for Fortune 500 companies, offers decades of collective
experience specializing in multi-channel contact centre services, including both inbound
and outbound, customer care, acquisition, recovery and retention programs, market survey
and help desk services through its network of best-in-class facilities in Canada, USA,
India, Costa Rica and Ghana.
Lou Forget, Vice-President Sales and Marketing
Michael Hart, Executive Vice-President and Managing Partner
Tony Nadra, President and CEO
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Vertex
Vertex is an international business process outsourcer with particular expertise in
customer management. Its head office is in Manchester (9000 employees in 30 UK
locations); internationally, it has operations in India and Canada.
Anthony Horton, former Canadian Vice President of Business Development (at the time of
this study)
Zach Lewy, President, Vertex North America
Watts Communications Inc.
Watts Communications is a leader in Outsourced Contact Centres supporting Contact
Centre and Customer Relationship Management (CRM) initiatives. From its roots in 1965
as Canada's first Call Centre Company, Watts has grown based upon a commitment to
excellence and innovation. Through superior people, process and technological
innovation, Watts provides an effective and efficient customer support service channel.
Colin Hume, Director, Client Services
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Lessons for Canadian Marketers
1. Challenges in starting-up offshore
For many marketers, the decision to outsource a call centre function offshore is based on
the anticipation of significant cost savings.
As a major business event, however, such a decision is the result – or perhaps more often,
should be the result of a formal and comprehensive business analysis. As our participants
discussed, just about everyone has learned something vital about the process the hard way
– issues or challenges that probably would have been uncovered by a more rigorous
planning and ‘due diligence’ process.
Many participants advocated a formalized approach, starting with Requests for
Information, followed by Requests for Proposals, followed by in-country and on-site visits,
before committing to a program.
These participants typically realized the hard cost savings anticipated by their plans, but
were not always prepared for additional soft costs.
When going offshore, many of the fundamental build/buy or partner questions become
tangled in other issues, such as telecommunications infrastructure or labour availability.
One participant whose company has started in several international locations said:
“You really start something in the area of deciding which country you want to be
in… And then once you get to the point of saying, ‘A country like X may make
sense,’ a series of events takes place.”
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Even in approaching a start-up situation, cultural differences – between potential offshore
host countries – are relevant to the wider discussion. As one participant noted:
“We ran into several performance challenges in the Caribbean. In Jamaica, it’s very
difficult to get them to be aggressive. Not too aggressive, of course, but to ask for
the sale or to assume the sale was very difficult. The quality of the people was
phenomenal, and the accent actually helped them build a rapport with the customers,
so we thought it would be easier to teach them, but we found it very difficult in the
long run.
In India, however, we found exactly the opposite, in that we can go in and quickly –
within 90 days -- get the supplier up to the level of our (U.S.) or Canadian
operation’s performance.
On the flip side, for India, we actually have to rein them in just a little bit where
they’re being a little bit overly aggressive going after the sale.”
Generally, our participants said that challenges were specific to cultural nuances. Some
overseas locations had call centre personnel who required more training than anticipated
while other locations needed more orientation to the client company’s expectations and
reinforcement of the notion of “doing what’s right” for the customer.
In India, one participant noted, his company spends an additional two weeks (in-country)
doing representative assessments and conducting role-playing assignments, on top of its
normal company-specific training.
The various options to get into a country are starting up from ground level, partnering with
an existing third party provider (in-country outsourcer) or acquiring an outsourcer.
Choosing the right option is critical for marketers seeking a cost reduction or other
advantage through offshore outsourcing.
Too often, one observer noted, the ‘marketing department just wants to know about the
numbers, they’re not interested in working to enhance the customer experience, or to
achieve ‘customer delight.’
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One participant said:
“One of the first things we had to decide, as an organization is, ‘how much control
do we want over an offshore centre?
We came to the decision that we wanted to control it, because we were more
concerned about the quality of the centre… and the image of the centre, and making
sure it would fit within our current organization.”
For this participant, finding the right answer to these questions came before choosing an
offshore location.
Another participant reviewed the question this way:
“Cultural fit, work fit, quality of the available workforce, average education – these
were all very important to us, because we knew what we could deliver and we
wanted a partner who could deliver that as well.
“We were really looking for a centre that looked like us.”
A participant offered these important thoughts that really apply to consideration of any
prospective outsourcer, whether located in India or Indiana:
“Looking back, I believe we could have spent a lot more time on – not so much the
processes on paper – but the actual expertise of the people who were going to
implement the processes for our program, as well as running the technology.
I was really surprised. In an apples-to-apples comparison on technology, our Indian
partner versus our Canadian centre, in some cases the Indian centre is far superior.
They have excellent tools and my biggest surprise was that they had a lot of trouble
using them effectively – understanding dial-up parameters and understanding how to
manage the dialer dynamically.
We really didn’t expect to have to get that deep. Our expectation was that they
would have a dialer and know how to use it, and we would provide them with the
expectations about what the dialing outcome should be.
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I also found that the specifics are critically important. We have an enormous
operations guide that lists everything you could possibly imagine about our program.
But I would have spent way more time actually walking through it page by page, and
making sure that it was fully understood.”
Technology and the capability to use it is key when dealing with an offshore outsourcer.
One participant found that, in India, the local call centre’s technology was at least a full
generation ahead of the technology typically deployed by North American call centres.
One example of technology leverage was the speed with which data could be mined and
reporting provided back to the client. In the Indian case, the supplier was able to provide
detailed reports on two months’ worth of data in 25 minutes, while the domestic supplier
required two weeks.
In this particular instance, the technology advantages were further leveraged by the Indian
supplier’s lower labour cost, which enabled him to apply more personnel resources to the
task as well.
As one participant concluded:
“It’s a balancing act, and the balance changes, depending on the calls and the
customers you’re dealing with. Some may see it as a price issue, where the offshore
resources look far more attractive, due to the amount of resources and technology
you can get for the same money. But then, they (in India) don’t have the same
expertise and can’t bring the same experience. Which is where we spend a lot more
North American time helping them out and bringing them up to speed. It’s always a
trade-off.”
Getting detailed instructions to the front-line personnel was also a challenge:
“We found very quickly that we needed to get more involved in a broader span of
people to make sure our information was going down the pipeline and maintaining
its accuracy. We expanded our conference calls with the point contacts and account
managers to include trainers and team leaders. Our hope was that it would have been
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really easy, with a couple of points of contact, but we had to have a lot more calls
than we originally planned.”
Another participant added:
“There’s a series of steps that I’ll call due diligence required to understand the
capabilities of any country, as well as the true cost of running your operations there.
And we found that our competitors are often willing to share information.”
Our participants advocated an in-depth intelligence gathering process designed to amass as
much information as possible, from as many sources as possible.
Talk to the government to get an understanding of labour, grants and incentive programs,
but balance that information:
“You’ll find, for example, the government telling you that the cost of labour is X,
and then you go out and talk to somebody who’s actually hiring, and you’ll realize
the cost is going to be a little bit more than what the government told you and it’s
also going to be a little bit ‘different’ from what the government told you.”
Here again, the benefit of experience is clear: the more information you can collect and the
greater the number of information sources, the more accurate will be the information on
which you base your outsourcing business decisions, and the less likely you will be to
make a mistake based on inadequate data.
Even within a given city marketplace – such as Manila or Mumbai – there are likely to be
significant differences in the costs and availability of labour, facilities and infrastructure –
these factors vary depending on the location.
Establishing a local legal/financial entity, if desirable, will probably occupy four to six
weeks of your project timeline.
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Just getting going in another country can be a major eye-opener:
“We didn’t appreciate the difficulty of establishing operations in another country.
We’ve been in the U.S., Canada, Europe and Australia, but now we were going to
the Caribbean. And I think we felt, ‘Ah, the Caribbean’s close! This should be like
opening another centre in Canada or the U.S. And in reality it wasn’t. We should
have had a more senior person on site to really pay attention and work through the
inevitable issues.
Most of us are familiar in North America and even in Europe, if we were to talk
point-to-point communications lines, that it will take four, six or, maybe eight weeks
in the worst case scenario. In the Caribbean, you stop talking in weeks and you start
talking in months.”
Sometimes even the smallest details can cause headaches: identifying U.S. states and
Canadian provinces that don’t switch to daylight saving time – and thereby violating donot-call time restrictions – and having to go over every setting and set-up issue with dialer
personnel in India; the list is seemingly endless.
Even the presumed benefits of a common language can be overestimated, as industry
jargon and local terms can have different meanings, sometimes with serious, customer
consequences. In India, for example, our participants found that the expression ‘recycle a
list’ was understood to mean re-using a complete list, including completed records, which
would have meant re-contacting customers – a situation which our participant avoided by
having his call centre representatives describe their intended actions step by step before
actually implementing them.
In a less serious instance, a North American manager was confused by the term “buddy
jacking” (a representative in training); the confusion ended when he found that the activity
described what he knew as “Y-jacking.”
Said one participant:
“I think people just use their own paradigms from their own world and just
transplant them, unknowingly.”
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Another added:
“The way to get past some of these issues is to involve more people in the due
diligence process and do it in the host city, so they can at least experience the culture
a bit. It takes time, because it means actually being there and spending time there
but, in the end, you can save a lot of headaches and delays because you understand
the people better.”
This participant also stressed the importance of developing a comprehensive business plan,
including taking a longer-term view of the financial payback.
“Often you look at some areas and it seems like a good idea to go there – stability,
incentives, labour supply. But, as you project out over a number of years, it can
become less and less attractive. You want to make sure that you can have a decent
rate of return for your investment over a period of time. It is part of the due diligence
process.
“We worked hard to sort out the information we gathered, as much as we possibly
could; separating out what was fictional information provided by the government or
other sources – it just can’t be as accurate as it is in the real world. And, as another
participant noted, ‘you have to get to reality.’”
Dealing with an offshore outsourcer requires the same attention to detail and hands-on
approach as dealing with an outsourcer nearby. What typically makes this management
task more difficult is that the offshore outsourcer is half a world away.
Said a participant:
“You can’t just go and expect to spend the morning. The travel time alone means
you have to be prepared to spend much more time – whatever it takes – to get the
message across about the way you want your work managed. Maybe that takes a
couple of days or a week. You have to commit yourself and your company on the
basis of the results you want, not the inputs you normally provide an outsourcer at
home.”
Time and again, participants who had been generally more successful offshore stressed the
need for a long-term perspective, rather than a short-term focus on getting costs out of the
business.
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Our conclusions
Unless your research and planning are unusually thorough, or your company already has
experience, starting up in another part of the world will take longer than you expect, and
the challenges you encounter will be specific to the country, or possibly even to the city
and area in which you want to operate. Although some participants achieved their expected
gains, others did not.
“We anticipated a 50 per cent saving and a three-month ramp-up. We found we got a
40 per cent saving – maybe 50 per cent – but our difficulty has been the ramp-up,
which has been a significant challenge. We’re probably nine months into the project
and still not getting the performance we had domestically.
We attribute this to both the complexity of our system and the lack of experienced
management personnel offshore. We just have not been able to get them.”
Another participant concluded:
“The call centre industry has only been operating in Manila for about six years, so if
you want somebody with 20 years of experience, you can’t find one; they don’t
exist, they can’t exist yet. So we have to send people over to train local people in
basic management.
The bright side is that the people are very well educated, very intelligent, dedicated,
hardworking (and they look on a call centre as a good job). And that’s sometimes
contrary to what we find in North America.
At least in Manila, we anticipated having to do a lot of culturization and accent
training and after meeting the people, we found we just don’t have to do that. But, as
the size of the call centre workforce doubles (30,000 to 60,000) over the course of
the next year and we have to get deeper into the labour pool, we will probably have
to bring back some of those programs.”
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2. Cultural differences matter – both ways
Our participants universally named effective management of cultural differences between
Canada and the offshore host country as a significant factor in making international
outsourcing work to their company’s benefit.
At the simplest level of understanding, this can mean adjustment to the host country’s
religion, customs and holidays. In one case, our conference call participants discussed how
an Indian call centre’s operations were disrupted by the death of a representative’s family
member – the whole centre was effectively shut down for three days of mourning.
In another instance, call centre operations were cut short when the staff worked an eighthour day (instead of 14 hours) for the observance of a major religious event.
A more mundane cultural difference arises in the case of meals, as participants noted that
Indian call centre representatives don’t typically have sandwiches or some other light meal
for lunch. Instead, they have a more formal meal, which forces a longer break in the
working day.
Many countries also have a tradition of much more active political involvement at the
grass roots level, which we in North America may view as political volatility. In India,
some parts of South America and elsewhere, it’s routine for workers to be swept into
organized and planned mass demonstrations, rallies or walkouts – and to be actively
encouraged to do so, whether by unions or political interests – with personal consequences
if they don’t go along.
None of these is particularly disastrous to a call centre’s operations, however all must be
planned and accommodated if the centre’s operations are to run smoothly, and without a
reduction in customer service.
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“It’s not so much just going out there and finding out when (their religious holidays
occur), it’s more them understanding that our expectation is that when they occur,
they are going to be at least partially staffed – that’s our requirement.”
Although outsourcing call centre operations to another country poses many challenges, the
issues and potential disruptions are equal when considering the situation from the
outsourcer’s perspective – in one case our participant noted that his Indian call centre had
to be provided with a list of North American holidays to ensure that local representatives
didn’t call (outbound) on a religious or other holiday and inadvertently cause offence.
Understanding the motivations of the outsourcing host nation’s workers is also challenging
for North American companies moving operations overseas. In one instance a North
American company wanted to offer its call centre representatives in the Philippines and
Mexico branded sweatshirts and similar products as a low-level incentive, not recognizing
that such heavy apparel would be seen as totally farcical. In addition, some familiar, North
American brand names carry unhelpful connotations in other languages, and lavish
incentives, such as awarding a vehicle, pose problems themselves, as none of the
prospective winners had the financial resources to buy fuel or insurance.
CSR attrition is a fact of life for call centre operators everywhere. Anecdotal evidence
suggests attrition in India is currently high, perhaps 20 per cent annually. However, this
may be due, at least in part, to the rapid growth of the call centre industry there, and the
resulting demand for labour. Certainly, our participants noted that CSRs will change jobs
there for very small wage gains – often just a very few thousand dollars annually.
Our participants also noted that India produces millions of college grads annually, and that
call centre work is widely regarded as a good way to begin a career, and that unlike North
America, it is not regarded as menial, or being of low status.
While our participants identified numerous ‘nuts-and-bolts’-level challenges to smooth
operations, they also discussed more serious challenges arising from cultural differences –
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issues that lead to potentially serious performance problems: integration of North
American ways of running a business with those in another country.
Here again, our participants identified most strongly with their experience in India, where
local supervisors and managers sometimes have difficulty dealing with North American
approaches.
Referring to one Indian manager, our participant noted:
“We naively assumed that because he understood the way we run business in North
America, that’s the way it would run in India, and that’s where we tripped up a bit.”
Another participant added:
“You really do need to follow-up, almost overkill, because you get a lot of ‘Yes, I
understand, yeah, absolutely. Absolutely.’ And then they turn around and do the
same thing you were trying to coach for. The desire to please is very strong in India
and they’re more apt to agree than really get what you’re saying.”
Participants were equally concerned about the local manager or supervisor’s perceived loss
of prestige (or ‘face’) when saying ‘no’. Some preliminary evidence suggests that this
behavior is also apparent to customers, whose concerns may not be properly resolved – the
rep keeps saying ‘yes,’ when the issue should be escalated to a higher level.
Said one participant:
“You need an immediate escalation facility.
They might be saying ‘yes’ when they shouldn’t be: authorizing refunds, or
cancellations, whatever the deal is. It needs to be handled back in the West a lot of
times. This is one of the longer learning curve challenges.”
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In another example of being aware of cultural and business nuance, one participant referred
to an instance of a visiting North American manager actively participating in a training
class, alongside the local trainer. The trainer was very upset and felt he had ‘lost face’ with
the class, and nearly resigned as a result.
Said one participant:
“It’s all about relationship. And in India, relationship is a big deal. It is here, too,
although people don’t recognize it as much….
If you can build quality relationships with people – and it doesn’t necessarily take a
long time to do that – you’re going to have great success in getting across what you
need from them, and how they can feel free to operate with you. You don’t want to
minimize the importance of respect and authority, but at the same time they need to
feel free to come back to you and warn of issues that are coming, not thinking
they’re going to be criticized for it.”
Socio-economic differences, often not obvious to Western eyes, also play a role in building
the supervisory and managerial teams in the outsourcing host country.
Cultural nuance is the caste system in India, although it may also apply elsewhere as well.
In the Indian business context, a young person coming in from the same or higher caste
would probably be accepted, and without ‘office politics’.
“If someone comes in from a lower caste and yet a higher education, he may never
earn the respect he needs. And a lot of these guys won’t talk about it. It’s very real,
it’s very, very personal and it’s difficult to get into that discussion.”
Accent has generally not been a major issue for most marketers, as accent-neutralization
has been effective. However, one participant noted:
“I think when a customer is already annoyed, already at the end of their rope anyway
and they’re angry with the company, then, all of a sudden they realize they’re talking
to someone overseas, with an accent. Only then does it become an issue.
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Culturally, a lot of our (own) management perceived problems outsourcing our calls.
Their feeling was the quality of the calls was terrible, a disaster. And you know, it
wasn’t a disaster at all. They have pretty much settled down now, but their feeling
was that only we could do it right.”
Our conclusions
North American-educated managers need to be aware that there will be cultural differences
when dealing in another country, and be open to dealing with those differences. They also
need to recognize that their ways of doing business will seem just as ‘foreign’ to the host
country’s people, as the host country’s ways seem to them.
“What we have noticed is that companies have made errors going in, and have
minimized the issue of cultural differences; they haven’t really recognized it at a
high enough level.
And one of the real benefits of understanding the cultural issues is that it’s deeply
appreciated by those on the other side. Over in India, for example, they know if
you’re putting in the effort to teach them about you and your company and your
country. At the same time you want to learn all you can from them. They’re going to
work with you and make it happen.”
And, on timing:
“One thing we look out for as we outsource offshore is to expect a three-to-sixmonth learning curve. You have got to be able to make that investment and know
that you’re not going to get the results within the first couple of months. In the first
few months you won’t even get your costs down to where they’re competing with
domestic or even lower-cost options.”
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International Outsourcing of Call Centre Operations
3. Legal, regulatory and local market hurdles; and its impact on North American
operations
Not all business jurisdictions offer the same, or even similar labour codes governing call
centre operations. Successfully starting up in another country requires Canadian marketers
to adjust to the differences, not just on a micro level, but also on a broader, macro basis
that affects longer term issues such as resource planning.
One participant noted that in Manila, workers are customarily paid by the month, against
an expected number of hours or days and a 48-hour workweek, although this company uses
a 40-hour week. Work after 10 PM carries a regulated premium, and there is a mandated
13th month bonus, as well as 25 per cent incentive opportunity. In comparison, this
participant’s North American workers are paid hourly, with a five per cent or 10 per cent
(maximum) incentive award.
Dismissal for poor performance requires significant documentation of problems, corrective
action and opportunities for improvement.
“The government bodies are very pro-labour, so if a complaint is filed, it’s almost as
if you are guilty. You need to be able to document and demonstrate that you
followed an appropriate procedure.”
Europe presents significant labour relations challenges. While the UK and Ireland are most
like North American practice, additional procedures and requirements come into play.
“For example, in the UK, if you let go more than 20 people at a time, there is a
whole process you need to go through – so long as you know how to handle and
manage it, you are OK.”
In Germany, the probationary period is quite long – six months. After the six month
period, as one participant commented, “you can expect to retain them for life.” It is
extremely difficult to sever the employment contract once the probation period is past.
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International Outsourcing of Call Centre Operations
Very long employee notice periods are also typical in Germany, sometimes as long as six
months, although a minimum of four weeks is common, as are three-month notices to the
end of the quarter. Employers can also claim lost wages against employees who depart
without adequate notice.
This means planning recruitment well in advance:
“If you miss making an offer by one day, you’re now waiting six months to get the
person in the door.
When we go to India, the first person we hire is our HR manager. You have to spend
time on learning employees’ expectations and the legal requirements.”
Bonus and incentive compensation can also prove tricky, as in some jurisdictions, the tax
implications are significant, and workers may want to find alternatives to avoid taxation.
In Manila, senior executive hiring frequently also carries additional fringe benefits, such as
a car, driver and country club membership.
Several participants amplified recent media reports noting the high demand for call centre
personnel (especially managerial resources) in India, and the resultant raiding and cost
escalations that ensued.
“Everybody is a college graduate and, quite frankly, very energetic and very
intelligent. That’s just going to push more and more outsourcing (to India) and even
more activities traditionally considered in-house. I don’t think the ‘gentlemen’s
agreement not to hire one another’s employees is going to last. It’s not something we
think is to our benefit, not to the industry’s benefit and certainly not to the
employee’s benefit. I know, that’s a ‘law of the jungle response.’”
While many Canadian marketers confront different labour regulations wherever they go,
many choose a different route, and that is to deal with call centre employees through local
vendors, or as contractors.
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International Outsourcing of Call Centre Operations
While this approach minimizes dealing with nitty-gritty details, it also typically carries a
cost premium, and it can leave the client’s operations at risk.
Said one participant:
“You’re leaving yourself open this way and perhaps trusting the local manager or
contractor too much. This is fine if the local manager is on the job and ensuring that
your business is fully staffed when it’s supposed to be. If it isn’t, your customers
may be the first to find out, and that’s not good.”
Finally, it’s also important to recognize that moving call centre jobs offshore to reduce
costs may be unpalatable to domestic employees.
One participant noted:
“I think our employees right now view it as not impacting them directly, because it
will be done (the workforce reduction) with attrition. People are concerned with
outsourcing American jobs in general. We don’t have a union, but we have been
communicating, all along. The way we have communicated this is that we have to
outsource offshore to remain competitive and I think for the most part, it’s been
accepted; very few problems so far.”
Our conclusions
Different cultures and locations have different outlooks and expectations, and different
rules and regulations established to help them achieve or maintain those outcomes.
While there are many idiosyncrasies to deal with in any new jurisdiction, and many
strategies to align the marketers’ goals with both employee expectations and local
regulations, perhaps the larger message is to recognize that there will inevitably be
differences and to plan for them.
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As one participant noted, specifically referring to the UK:
“You educate yourself on (the regulations), you plan for it, you manage it, and you
can handle it.”
What we learned – Summary
International call centre outsourcing can provide significant and measurable cost savings.
On the basis of a mature operation, international outsourcing can deliver savings in the
order of 45 per cent.
A thorough research or “due diligence” process is vital. Many of our respondents noted
that more time and effort in up-front investigation would have benefited their operations.
Similarly, don’t take anyone’s word for granted – go and really look and talk to reps, listen
to their calls, check their performance. Reality is the only thing that will give you reliable
information for your business plan.
A number of our participants found that offshore call centre outsourcing did not meet their
immediate expectations, as savings are neither as large as anticipated, nor as quickly
achieved. Performance is also typically lower than target. Many participants also noted
they would ‘do things differently next time.’
Going offshore is a long-term commitment, and the greater the up-front investment of
management time in training, establishing expectations and other aspects of performance,
the smoother and faster the launch.
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