Domestic Centers Are a BetterMany U.S. marketing executives are considering a switch from domestic to offshore call center service providers to save money. However, a growing number of executives are realizing that the superior sales results and customer satisfaction offered by domestic call centers outweigh the short-term savings of offshore alternatives.
In the call center business, higher cost savings don't typically translate into better program results. Outsourced domestic call centers have proven more productive mainly because they provide greater workforce quality, accountability, control over daily operations and data security. They also offer cost savings in terms of travel, communication and training costs.
At first glance, the argument for working with call centers offshore may seem compelling. U.S. companies may save 10 percent in countries like Canada and Australia and up to 50 percent in countries and regions such as India, Southeast Asia, the Caribbean, Africa and parts of Eastern Europe. They may obtain similar savings in Latin American countries such as Argentina, Chile, Costa Rica, the Dominican Republic, El Salvador and Mexico.
But these upfront savings usually are negated in the long term by reduced productivity and limited results. Some outsourcers report that agents in foreign countries can't close sales, cross-sell or upsell as well as U.S.-based agents. Customer satisfaction is lower because of communication barriers and lack of cultural affinity. For example, some cultures are less sympathetic than the American culture, and the agents have difficulties relating to and understanding the callers' needs. In addition, some foreign accents and forms of expression are difficult for Americans to understand.
Some offshore outsourcers who have tried to overcome these cultural barriers by investing in training for foreign agents have reported that the investments have not paid off. They cited various reasons, including that the cultural differences were too wide to be bridged in a short time.
Moreover, differences in forms of government, business practices and political conditions can create myriad problems for U.S. companies trying to work with offshore service providers. In many countries where the costs are lowest, U.S. companies are likely to encounter corruption, political instability, inadequate infrastructure, crime and war. Managing issues at call centers is tougher in remote locations that are difficult to access. U.S. companies that have contract disputes or legal issues with outsourcers in foreign countries may get caught in a tangle of litigation that takes years to resolve.
Companies also face risks when sharing their customers' personal data with foreign outsourcers. The companies must invest in added measures to prevent critical information from being stolen by foreigners.
"There are real security risks," said John Guinasso of Data Systems Security in California. "Corporations here don't have control over who has access to information once it gets out of their hands."
Recent studies have found that security concerns and vendor viability are the main reasons that only 5 percent of U.S. companies with $100 million to $4 billion in revenue have outsourced or intend to outsource offshore.
Another reason many U.S. marketing executives are choosing to partner with domestic call center service providers is that offshore outsourcing leads to the losses of American jobs. Forrester Research has estimated that by 2015, 3.3 million U.S. service jobs and $136 billion in wages will have moved abroad, up from 400,000 this year. This loss of jobs represents 2 percent of all U.S. jobs.
"Critics worry that such moves will end up doing more harm to the American economy than good," Steven Greenhouse wrote in a recent article in The New York Times. And though many executives claim that offshore outsourcing lets them assign existing employees to handle more important work, Gartner has reported that fewer than 40 percent of employees whose jobs are moved to foreign markets will stay with their current employers.
"The latest migration of jobs overseas is more stark because it takes the most desirable positions out of the U.S. economy," wrote Jeff Ostrowski, a reporter with The Palm Beach Post. "Florida economic developers might worry whether they'll lose call center jobs - a linchpin of local economic development - to India."
Many critics are pushing for laws to stop projects funded by tax dollars from being shipped overseas and to create tax incentives to keep businesses on U.S. soil. Some states are considering legislation to prevent the export of call centers, such as by requiring offshore agents to reroute calls to U.S.-based agents at the callers' request and by preventing the awarding of local contracts to non-U.S. citizens or legal residents.
"The worry: Increasing profit pressures and the ease of information exchange provided by the Internet will turn the wave of companies shipping out work into a tsunami - potentially affecting every sector of the white-collar labor force," wrote USA Today reporters Stephanie Armour and Michelle Kessler.