Business Process Outsourcing (BPO) has had to become a fundamental part of business life for most large corporates.
But wholesale BPO for the front and back office, without consideration for the quality of the relationship with the customer, has been shown to be a ‘high risk’ strategy from which many – including some high profile, high-street names – are now retreating.
This is because such strategies fail to utilise the right staff, with the right skills, for the right jobs – and undermine business value as a result. Offshore staff offer fantastic skills but cultural and dialect differences undermine their value in key customer facing roles such as call centres. The differences are often too great to overcome and lead to significant customer dissatisfaction.
If organisations want to reduce the risk associated with outsourcing and retain control over a core business area, namely customer service, they should eschew the offshore customer call centre and instead focus on non-customer facing areas where real business value can be captured.
It has been proven that real business value can be obtained by outsourcing software development work to India. It is also becoming clear that offshoring back office functions will have a similar effect and is gaining popularity. By exploiting the skills of the offshore provider in this way, organisations can reap the required cost benefits while achieving continual service improvement by learning from each customer interaction.
Cost, control, resources
Offshoring activities can deliver significant benefits from refocusing energies on strategic and core issues to reallocating capital. Organisations looking to reduce time to market and operational expenses are using offshore facilities for software development. They are also turning to BPO in their droves – the market is set to grow a further 20% each year until 2008 according to Meta Group. But one of the most cited reasons for opting to go offshore is to gain access to skills and services.
But are these organisations actually achieving this latter objective? Without doubt key offshore centres such as India have a fantastic population of highly skilled, highly motivated and well educated people, many of whom have excellent technical skills. But are organisations globally using these skills to the best advantage?
Certainly many organisations are increasingly discovering that offshore call centres are failing to deliver the expected value and benefits. Dell, for example, no longer sends US technical support calls for two of its corporate computer lines to Bangalore after receiving a number of customer complaints. The calls are now handled once again at US facilities.
The fault does not lie with offshore staff. They are often well trained, well spoken and committed to delivering good service. However the world may appear to be shrinking, the way in which people of different nationalities articulate is set in childhood. While accents and idioms can be addressed in training programmes, attitudes and perspectives are very different. The problem lies with the cultural differences between customer and operator – the humour, the football scores, the soap operas, and other key cultural indicators that can smooth a difficult customer interaction.
Such cultural differences can be overcome, even harnessed, but not during a single customer transaction lasting only minutes – however experienced the operator may be. Of course, no company is actively measuring the customers lost due to a poor experience with an offshore call centre – but the anecdotal evidence of frustration caused by misunderstanding, dialect confusion and a lack of joint cultural reference points is compelling.
Relevant skills
So why are so many organisations looking to get rid of all the highly skilled call centre personnel trained at great expense in their home territory? Simply in the hope of reducing costs? Yet many organisations in the UK, for example, had already moved from Wales to Ireland and then Scotland prior to going offshore in search of cheaper staff. In five years time, China will be the new call centre hot spot. Where next? What will be the business cost of redeploying call centres across the world every five to ten years?
More critically, what will be the cost in lost customers? It is business suicide to outsource your customer contacts to India or anywhere else! The customer interface must be maintained as a core in-house skill. External call centres simply do not provide the right infrastructure to maximise the skills and lower costs of offshore organisations.
The most effective and well proven model is to outsource software. Many UK companies have established relationships with Indian providers to enable them to increase operational efficiencies by developing and enhancing software that drives their business and increases service levels to the customer. Underpinning the business process is the development and maintenance of application software, which is delivered offshore.
Rather than short, transactional tasks, it is within truly iterative software development projects that potential misunderstandings can be addressed as part of an ongoing dialogue to keep a project or specific job on track.
During the software development process there are clear and proven approval mechanisms in place. This further reduces the risk associated with offshore activities and provides an organisation with a clear view of the quality of the outsource provider. The outsource provider will assume complete accountability for the quality of delivery.
Like software development, back office processing is well suited to the skills of the offshore provider. Any problems are addressed as a standard part of the service delivery process, ensuring all parties are committed to the same, verified end goal with agreed SLAs (service level agreements) in place. Using offshore skills in this way not only reduces the risk associated with BPO but also enables an organisation to harness the skills required at the lower costs offshore providers can deliver.
It is in the back office processes, such as handling insurance claims, that organisations can truly leverage offshore skills. With no requirement for customer interaction, there is no risk of alienating a customer or making a mistake through miscommunication. Highly trained, ‘best of breed’ staff can deliver increased value and the speed products and services reach the market, while enabling organisations to keep control of their customers in-house.
Accountability is becoming increasingly critical in a market where wholesale outsourcing to one vendor is rapidly being replaced by the use of ‘best of breed’ suppliers within specific areas, from application development to hardware maintenance. This approach provides clear accountability and measurable benefit with defined and realisable penalties for failure to deliver.
Right people, right place
It may be cheaper to run a call centre in Mumbai than Glasgow – but at what cost to the business in lost customers, goodwill and reputation? Good skills are required at every level of the business, and organisations have spent years honing recruitment and training policies to deliver the right skills to the right place. So why are they persisting in abandoning these proven strategies in search of low cost nirvana? Offshore staff cannot possibly deliver the quality of customer service simply because of the cultural disconnect.
They can, however, deliver excellent application software development. A high level of technical expertise combines with the long project duration cycle to give both organisations an opportunity to work together to create a synergistic relationship – irrespective of differences in language, geography and culture. Critically, they can provide these skills within a clearly accountable model that ensures that quality of service is achieved within an agreed, consistent and cost-effective manner.
Outsourcing software development is well established and proven to deliver results. Yet now the trend towards outsourcing back office processing is fast gaining momentum too.
Don’t outsource operations that have contact with the customer, its core to your business. But if the function is not core, outsource it!
