TeleSpectrum on Receiving End of Offshore Investment

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TeleSpectrum Worldwide, once a top U.S. teleservices provider, has become the subsidiary of a Pakistani firm in a case of an offshore company buying a domestic call center outsourcer.


The Resource Group, a teleservices conglomerate based in Lahore and Karachi, Pakistan, bought TeleSpectrum in October. Financial details were not disclosed. However, The Resource Group said that the addition of TeleSpectrum, King of Prussia, PA, raised its portfolio revenues to more than $125 million and its worldwide staff to 3,000.


"Offshoring" to most people in the U.S. teleservices industry means outsourcing overseas or investing capital in overseas operations, so the idea of investment flowing from Asia to the domestic market might seem like an odd reversal. However, for Art Schoeller, senior analyst at The Yankee Group, Boston, the idea of a Pakistani firm buying a U.S. teleservices provider isn't all that foreign.


"Actually, in the last year, a number of the foreign-based firms have raised capital, either privately or through IPOs because of their strong growth, so they are in a position to expand globally," he said. "So this is not unusual."


Nevertheless, The Resource Group's decision to move TeleSpectrum operations to Pakistan produced controversy. A group of workers at one of TeleSpectrum's now-closed U.S. call centers filed a federal lawsuit against the company.


Zia Chishti, the Pakistani-American chairman of The Resource Group, did not respond to an e-mail seeking comment for this story. In October, he told Dow Jones Newswires that The Resource Group intended to save on labor costs by shifting calls from centers it acquired in the United States to its operations in Pakistan.


Days after the announcement of the sale, TeleSpectrum closed a call center in Huntington, WV, laying off 70 workers. On Dec. 3, eight of the former workers filed suit in federal court against TeleSpectrum and The Resource Group, charging that they did not give them advance notice of the layoffs as required by federal law.


A TeleSpectrum spokeswoman referred questions to Kirk Dinkelaker, the company's chief financial officer. Dinkelaker did not return calls for comment.


TeleSpectrum's story is one of rags to riches to rags again. The company was one of many teleservices providers to go public in the 1990s and go on a buying spree of independent call centers. At its height, TeleSpectrum had 31 centers.


The economic downturn in 2001 struck TeleSpectrum and the industry hard, especially in the outbound sector upon which TeleSpectrum depended. In 2002, it had only 10 call centers. The company rebranded and vowed a comeback. But in 2003 TeleSpectrum bought back much of its stock and went private again, removing itself from public disclosure requirements. Its last Securities and Exchange Commission filing was in March 2003.


TeleSpectrum now provides a foothold in the United States for another up-and-coming teleservices provider, The Resource Group. Founded and headed by Chishti, a U.S.-born graduate of Stanford University's Graduate School of Business, the company has invested in other U.S. call center firms, including Alert Communications, South Pasadena, CA.


The Resource Group is a minority investor in Alert, said Gary Blasiar, president of Alert Communications. In partnering with The Resource Group, Alert gained access to the company's call center resources in Pakistan. Alert realized some time ago that offshore service would be essential to its future, Blasiar said.


Offshore service quality, long considered a downside to using overseas call center labor, has become comparable to domestic service, Blasiar said. If the service is equal, clients generally don't care where it comes from, and for those that do, it pays to have a domestic presence.


"I have customers who do not want offshore service, and I am an onshore company," he said. "I can deliver the service here or there."


Scott Hovanyetz covers telemarketing for DM News.com. To keep up with the latest telemarketing news subscribe to our free e-mail newsletter DM News Daily by visiting http://www.dmnews.com/cgi-bin/newslettersub.cgi
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