The Truth About Right-Shoring

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Here's a fun project: Look around your desk and see how many countries the products there represent. Chances are, you'll find "Made in Mexico," "Made in China," "Made in Germany" -- countless items of international origin. Our offices, homes and cars are filled with products, materials and components from around the world.


Is it any surprise, then, that the customer support of those products is becoming equally global?


As borders fade, commerce alliances grow and technology connectedness improves, offshore and near-shore labor sources are increasingly relevant for service work. Companies around the world are looking for the "right shore" for their business services, and they have increasingly unlimited options, combinations and migration possibilities. Just as most products now contain materials from around the world, the service strategy of the future will be equally geographically diverse.


Offshore and near-shore labor arbitrage hold tremendous promise to reduce support costs, improve service speed and enhance flexibility. But with promise comes peril, especially when dealing with foreign countries, PR backlash and international trade issues. The heated debate about offshore and near-shore outsourcing is full of myths, exaggerations and dubious projections. Before the "FUD" (fear, uncertainty and doubt) gets too pervasive, we offer this honest assessment to guide your way:


All call centers are NOT going offshore. Everyone has seen the reports and media coverage of offshore-related job losses and union protests. Despite the hysteria, everything is not going offshore. The truth is that some functions will go offshore and near-shore, but many never will. We've already seen several companies bring service back on-shore after going abroad with the wrong segments of customers or unrealistic service expectations. Datamonitor's latest research predicts that a mere 5 percent of all global call center agent positions will move offshore by 2007.


Cost is NOT the only reason for moving near-shore or offshore. Certainly, one benefit of taking service offshore is increased access to cost-effective labor. The most attractive offshore locales are educated and urban, yet exhibit such significant underemployment that their wages average 30 percent to 70 percent less than domestic wages. However, various motivations exist for right-shoring, including access to particular skill bases or multi-lingual populations.


For instance, the U.S. Hispanic population is growing at a dizzying pace and represents a tremendous current and future market opportunity for companies that serve it effectively. Near-shore outsourcing is a compelling option for providing high-quality Spanish support. Whether customers want support in Spanish, English or any other language, right-shore outsourcing can deliver a cost-effective, culturally compatible and convenient solution for serving them.


Right-shore service strategy is a delicate balancing act. Leveraging offshore and near-shore resources brings new capabilities, but it also may expose your organization to new potential hazards and issues. Support costs, margin pressure, risk exposure and corporate strategy must be weighed against customer needs/expectations, brand image and the competitive significance of service in your industry. Only you know which way the scales will tip for your company.


Offshore and near-shore support aren't right for every company or every customer. Not all types of service can be delivered effectively from overseas locations. The labor arbitrage decision should be made with careful consideration of industry, brand and customer base characteristics. International experience has shown that certain sectors of companies and customers fit well with offshore support and technology-enabled service automation (i.e., IVR and self-help) while others are best served by an on-shore, high-touch solution.


Prestige brands, BTB players and firms with an older or more traditional customer base are wise to keep their support domestic. But high-tech and telecom companies must consider near-shore and offshore support to manage their extreme margin pressures. The easiest way to segment is by contact type: Are your calls complex, non-repetitive or involving sensitive customer information? Better keep your customer care local. But if your contacts are repetitive and costly, both right-shoring and service automation may be viable options.


Look before you leap: A slow, phased transition is best, and don't forget multi-site redundancy. How does a business decide what functions should go global and which should stay domestic? Keep your company's strategic goals in mind when selecting functions to take offshore or near-shore -- what aspects of your business can be delegated abroad to deliver increased growth, profitability and speed to market? Most smart companies prefer to make a slow, calculated transition to near- and offshore support, starting with non-critical functions like batch processing and e-mail service, then gradually moving to inbound voice support.


Geographically, many companies prefer first to transition work to near-shore locations just a quick hop away (i.e., Canada, Mexico, the Caribbean) and later take the distant offshore plunge (i.e., India, the Philippines). No matter the migration plan, multi-site redundancy will help mitigate risk and ensure service consistency, regardless of contingency. Your customers are on the line -- literally and figuratively -- thus backups are essential to delivering a smooth, positive experience that earns customer loyalty.


Share the risks and rewards with a trusted partner. Hundreds of companies are realizing the value of right-shore contact centers -- and most aren't taking the plunge alone. Establishing an outsourcing partnership is the fastest, most reliable approach to serving customers offshore and near-shore.


When you choose to delegate a function as important as right-shore customer care, a circumspect evaluation of potential partners is vital. Optimally, the relationship will become a lasting partnership that will change and grow with your company. If a provider's support price sounds too good to be true, it probably is -- below certain price thresholds, you may be dealing with inexperienced or fly-by-night operations. Do your homework on your prospective partner's business pedigree and corporate governance, with emphasis on its tenure in call center operations and the local market.


The popularity of offshore and near-shore outsourcing is growing rapidly, spurring innovative relationship models with blended domestic, near-shore and offshore support. Companies that understand and embrace the investment and self-awareness required for successful global sourcing will reap great rewards while minimizing risk.


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