I am writing a dissertation about outsourcing an IT help desk and am looking for examples of insourcing where outsourcing has been unsuccessful. I am attempting to argue the point that outsourcing is not always the best solution to reducing costs and having a more effective call centre. If anyone can provide information, data, statistics etc. I would be very grateful....please.

I'm in the middle of a consulting assignment for a company that is looking to establish an offshore outsource call center. I've come accross a ton of places I could point you. Email me and I'll see what I can give you.

Brad, Tim,

Firstly, let me welcome you both to CallCentreVoice; it's always great to "see" new faces on the site.

Brad, can I ask you to post any information you have here on the forum? It may be useful for other members, and we can incorporate any links into our forthcoming resources pages.

Lastly, Tim, you mention insourcing and its use when outsourcing fails. This raises a good point, namely "when should we look to import resources as opposed to exporting business functions". There is of course a fine line between the two, and in my experience it goes hand-in-hand with the skills and experience available within the organisation, and the costs involved in bringing to light an internal solution (e.g. training, buyingequipment, etc.) versus outsourcing to an external solution (e.g. costs per call, say)

A tricky one this, and one whose outcome is a tough call without knowing more about what the organisation wants to achieve. Good question.

In my experience, help desk operations can be more effective with the contextual knowledge of the organisation which to my mind would point toward insourcing. However, your mileage may vary :-)

John

Hi Tim

Interesting question. I was just talking about some of these issues with a potential client yesterday.

Once upon a time I was involved with an organisation who outsourced its customer service function (call them Co A) as it grew because it believed it would be a temporary thing. At that time (!) they were concerned about service quality and had in place a positive programme to improve. However, the company they outsourced to (call them Co B) had a ‘sweatshop’ mentality. Wringing as much as they could out of people and then discarding them.

Co A were rather trusting and in a spirit of partnership put in place a package that penalised Co B for bad performance and rewarded Co B for good performance. The principal metrics involved were PCA (Percentage Calls Answered within X seconds) and average call length.

In the enlightened days of CCV, we all now know that these have NOTHING whatsoever to do with quality, but that was how it was then.

Co B, being the lying scoundrels they were, tasked certain ‘trusted’ individuals with simply answering calls and immediately putting the phone down without saying anything. This registered on the ACD as a call taken and also radically dropped average call times. This ‘cheating’ paid handsomely for over two years, but in those two years Co A’s complaints went through the roof and their reputation through the floor.

In another organisation, I experienced the very real problems of people having two bosses (their employer and the client). On one hand their employer had a particular value set – cut corners, make the immediate sale, etc (all designed to drive up today’s revenues) and on the other their client was much longer term. They wanted customers to feel they could trust them not to oversell or hard sell. The co realised this would detract from their long term revenue potential and referral business.

Hope this helps.

David

Hi Brad

Thanks for your info - please forward your email address to tim.s.widdowson@britishairways.com I would appreciate as much info as you can let me have - can't hace too much of a good thing. Appreciate yr help.
Regards

Tim

Hi David

Thank you for your prompt response and interesting information. Have you in any way got any information which I could quote as part of my dissertation. As I'm sure you know everything referred to has to be referenced in some detail. In the meantime I am really grateful and if you permit I would be interested to learn more about your company.

Regards

Tim

Alternative email tim.s.widdowson@britishairways.com

Hi Tim,

Welcome to CCV. It is some time since I posted here though I was visiting the site regularly.

Look at the problem in totality. The company which wants to outsource its call centre activities obviously wants to cut costs.The company has to first define its objectives clearly. Is cost reduction by outsourcing the only alternative?If a company has to implement relationship management programs for its customers first the organization should think of customers first not the costs."How do we deliver better service to our customers?" should be the question everyone in the company should ponder over in any customer-centric initiative.Any good investment made on customers will be fruitful if the spending is properly monitored and better services are delivered.

The company to which you outsource may not be in Sync with your company values and culture.For them your company is a healthy cow which can be milked for better profits and not long term relationship. The technology based measurement of customer satisfaction is the biggest joke played on the customers. The very idea of call answering time, avg queue time etc. do not reflect the true experience the customer had. Instead they reflect the true mindset of the management- equating customers to inanimate faceless objects.

Hope this will help.
Vedula

Hi Tim

I have no problem with you asking me on a one-to-one basis whatever you like. Lets face it, the worst I can do is say, “No”.

I’m afraid there are no circumstances I could envisage where it would be possible to give you any detailon the parties involved. Integrity is probably my strongest personal value. If however you wish to quote what I have written, and me (CECL) as the source ref , I have no problem whatsoever.

Despite all said thus far, outsourcing can and does work. However, it's not as simple as calling a company and simply letting go.

Going back to basics, it is in everyone’s best interest if a company maximises its profitability. However, there is a single critical caveat to that statement which is,“Provided it is not to the detriment of any stakeholder”.

For outsourcing to be successful for all, the following must be considered and actively managed:

1 - Reasons behind initial outsourcing
1.1 Must be done principally to enhance (even if ultimately) the Customer Experience

2 - Values prevalent in outsourcing supplier
2.1 If these are ‘at odds’ with the outsourcing company, then the customer facing staff will never be able to develop crucial relationships with customers as they’ll be being pulled in opposing directions

3 - Customer metrics that reflect outsourcing company values and customer needs
3.1 Ensure metrics are NOT simply those which are easy to do (PCA, Ave call times etc) but those that truly reflect what is important to customers. The easy stuff does have value but NOT in isolation.
3.2 As the outsourcing company, choose independent measurers. Their experience may help both parties.
3.3 Consider paying for metrics independently of contract. This reduces potential for internal conflict in supplier
3.4 Review results with supplier in a ‘no blame’ manner but insist on positive action. Include in reviewing body all strata from supplier to gain best feedback
3.5 Ensure metrics immediately reward good performance and penalise poor performance
3.6 Review team churn and staff survey results with supplier at least 6 monthly

4 - Ensure you appoint an internal relationship manager or team to oversee relationship
4.1 Insist on ‘instant access’ by your relationship manager or team to ensure openness
4.2 Work with outsource supplier HR to draw up profile for recruits to your team as you know (hopefully) the types of people your customers respond best to

Hope that helps

David

Everyone,
I've enjoyed reading about this topic and each of your varied (and thoughtful) opinions. If this string isn't too old yet, I'll pitch in as well.

The original post asked for statistics. Here are a few interesting points:
1. In the US, over 85% of all major companies outsource at least one major function within their organization. Not always a call center, but... outsourcing does allow a company to focus on it's core competencies and allow call center professionals to handlecustomer interface.

2. Costs of outsourcing are actually more expensive in the short-term than insourcing, by nearly 20%. It is infinitely more efficient to manage your own insourced center (quality control, cost control, culture control) - however, the costs of starting a call center from scratch are startling, and the outflow of capital often causes companies to instead outsource, particularly if volumes are in question. It takes most companies nearly three years of insourcing to begin realizing a return on their initial investment.

3. The propensity to outsource (at least in the US) is rising dramatically. Many companies (including a number of my clients) insource first, then outsource overflow to help control staffing costs. In 1994, the average percentage of total call center activity outsourced within a company was 5.5% - today that number has risen to 16.5%.

4. The call center outsource market in the US was worth $6.2 billion in 1997, with a CAGR of 21.4%. This makes the outsource market worth well over $20 billion by 2003.

I read with interest (and a chuckle or two), David, your account of Company A outsourcing to Company B, and Company B's reaction to attaining service statistics. I have also read with much interest many of your previous posts regarding the customer experience. What Company B did is what many under-educated (and not-so-ethical) outsourcing companies will do: hit a number for the sake of hitting a number. Unacceptable, to be sure.

However, I don't believe we can discount service level statistics as irrelevent. In a study conducted by AT&T in the late 1980s, an attempt was made to 'quantify' customer satisfaction (big ol' can of worms, I know). Their study showed that the correlation coeffient between customer satisfaction and various call center metrics was as follows:
Average Speed of Answer: 1.1%
Abandoned Rate: 10.1%
CSL (% calls answered in 20 seconds or less): 85.5%

The 'trick' is that there are number of complementary measurements that must be accounted for as well. Handling time must be measured as a component of the staffing equation, lest you understaff. And while a good customer experience is what we wish for, it must begin with the prompt answering of the phone call. Quality issues must be addressed (quality monitors, work audits, follow-up customer satisfaction surveys).... all of these, along with cost, must be rolled into a single service level agreement that (as David mentions) serves the customer, the shareholder and the employees of the company, none at the expense of the other.

Plenty to talk about on this one - I'd appreciate hearing more opinions.

Brent Preece

Hi Brent. Welcome to CCV. It’s great to see yet another quality view aiding everyone.

Firstly, I quite agree with you that service level statistics are not irrelevant. However, if PCA (Percentage Calls Answered) and the number of rings a caller gets are the only metrics then they are irrelevant insofar as the Customer Experience encompasses things a million times more important that should be measured first – e.g. at the very least, whether the CSA gives the caller an answer that is factually 100% etc etc

This is going to sound odd, to say the least, but my belief is that the single problem with existing measures is that fact that they are measurable! What I mean by that is, they are measured simply because people can…

In terms of your AT&T ref, again, what AT&T did was measure (probably more closely) what everyone was already measuring. So, surprise surprise they got similar answers. Their fundamental mistake was not to approach the whole thing with an open mind and a view to discovering just what it is that constitutes Customer Satisfaction. What I will say is that the elements that are measured do contribute to the Customer Experience. However, their level of influence on the overall interaction is way down the list.

You may have read elsewhere Brent of something I use as part of my message to Centre Management. It is the simple fact that Centres measure their performance. They use internal standards and measure against them. Typically, centres average 85% against those stds. When however, you ask any Centre staff if that score of 85% means they are just 15% short of PERFECT in their customers’ eyes, they answer a resounding, ”No way.” The conversation always progresses like this. “Ok. If you’renot 15% short, how far away do you think you are?” Their response ALWAYS ranges from 45-60%. So, they score 85% but really feel they should be scoring between 45 & 60%. What that means is that their scoring system is inadequate in its task of reflecting the whole Customer Experience.

What centres do is measure process and procedure alone. What they cannot currently do is measure their impact on customers feelings – how customers FEEL. That’s where we come in!!

The two key factors most important to people when asking for some form of help are 'real understanding' and 'accuracy'. Way down the list, as a ‘nice but by no means essential’ is answering the phone quickly.

What the overwhelming majority of companies fail to realise is that people will forgive you if you don’t answer the phone promptly BUT deliver on the two crucial issues. Taking forever to answer to phone and then getting the crucial issues wrong too is the point at which they start to complain about the length of time it takes to get through. The reason this comes out is because as human beings we feel we have to have something ‘tangible’ to complain about rather than ‘you weren’t interested in me enough to fully understand where I was coming from’. It's exactly the same as when people leave. 95% of the time people leave because they feel undervalued. However, they cannot say that because it seems 'naff/soft/daft'. So, what they say is, "the pay is crap" – it's tangible and people overtly recognise it.

Sorry to go on a bit but whilst its actually very simple, it’s description is not.

David

David, thanks for your excellent response. Back when I first began in the industry in 1991, I remember having lengthy discussions with operations folks and customer service folks and marketing folks regarding the empirical definition of customer servicein our organization.

The conversations went much as you might expect: operations based their views on CSL, abandoned rate, ASA, etc; customer service pooh-poohed those metrics with questions like "but how happy was the customer" and "how did the customer feel"; of course, marketing assumes that people are happy if they are buying things. The result was, as you may expect, a many-headed monster called a "committee" to discuss the topic and decide the best course of action...which accomplished little.

Meanwhile, operations continued 'business as usual', as the current system supported their views. Customer service built surveys to send to customers, inquiring about their experience (numeric scale, of course). But the questions and scale were built to support positive scores, ie, Excellent, Very Good, Above Average, Average, or Needs Improvement (good grief!). And the marketing folks did actual focus groups, but instead of listening to them, spent most of their time trying to convince the particpants that they were 'misreading the company's efforts'.

And me? I have a feeling that no one is really wrong in their views, maybe just their methodology. I will say this, though, David: if someone can truly quantify (don't you hatethat word?) the customer experience and their feelings, and then provide solutions that work, then sign me up! We must all be open to learning new things and trying new approaches. Albert Einstein's definition of insanity was "...to continue doing the same thing over and over, but expecting different results each time."

Brent

Hi Brent, "to continue doing the same thing over and over, but expecting different results each time"? That's me!

Bob.

I have an analogy to this issue that might go as well:

Many auto manufacturers who are in fact sourcing out increasingly, are bringing chosen component suppliers within the same roof. These suppliers bring in their machinery, labor, materials, etc. And are co-tenants to the automaker.

In fact, by adopting this automakers hope to reduce manufacturing costs, keep synergies, reduce inventories of stocked componentes, and streamline & improve production schedulling.

Well you will call this outsourcing.

With call centers, there are certain skills that cannot be either shared or absorbed, or at least in a short term project. Companies need to keep a lid in these things.

However, while keeping employees is just asimportant, eliminating or reducing infrastructure costs ( circuits, equipment ), in the age of hosted apps might as well be one of the many solutions that service bureaus can present.

Tim. Contact me direct and we can chat.

Bob. Been there and done it. It DON’T WORK. Change for your own sanity...

Brent. Largely I agree with you. No one is actually 'wrong' in their views it's simply a question of at what point their view becomes relevant in terms of manifesting positive change.

We (CECL) look at things purely pragmatically. Take 'loyalty'. It is the Holy Grail of every business because it is the only way to maximise profitability (there is a single caveat here insofar as it's maximising profitability WITHOUT screwing stakeholders).

There are many very clever people who know far more about things than I, and serious tomes have been written about the subject. However, as business people we want simple clean and practical definitions that will allow us to be effective in business. So we came up with a simple ‘business’ definition of loyalty which is:

“When a person chooses to do business with your company over all others time after time."

Whilst that may seem simple (aren’t the best always that way ) let me explain how we arrived at it: a few observations or facts of life if you like as none of it is rocket science.

1 - Loyalty can only exist between people. Just think of the last time you recommended. I can tell you it was based on how you were made to feel by an individual NOT by the company.

2 - Companies do not do business. People from one company do business with people from another. Regardless of medium, it is a person or people that design(s) and manage(s) interactions. So, what comes through is the motivation of the individual or the collective and that’s the thing you hang your hat on.

3 - People always have a choice. At the very least, people have a choice whether to or not. More often today they have more choice than ever about who might supply them.

4 - Long term loyalty, advocacy, can only come from continually delivering complete satisfaction. Single/individual instances do not constitute loyalty as trust and confidence are essential ingredients of loyalty and these can only be built over time.

Brent we CAN and DO measure the feelings based Customer Experience. We CAN and DO measure how your customers feel about dealing with you. Outside of full blown, big 5, mortgage the offices and factories consultancy we are the only people anywhere able to do it. Moreover we do it at a price point comparable to std Customer Satisfaction measurement – ours answers questions and leaves you with focussed actions to improve rather than leaving you with bundles of work to do to interpret dry data.

If you feel so disposed give me a call +44 1937 589935 I’d be happy to chat.

David

GREETINGS TIM!

JUST TO ENQUIRE ABOUT THE STATUS OF YOUR DISSERTATION AND THE OBSERVATIONS FROM YOUR STUDY ON THE SUBJECT.

MAHIDHAR

Hi Tim,

Wasnt on the site when you first posted this, so I hope this gets to you

We provide advice on various virtual systems that allows companies to insource a lot of their systems and route it more efficiently. I have case studies if that is of interest

Didnt want to sell anything, however, thought it may be of interest to see.

Regards

Shaun

Albert Einstein's definition of insanity was "...to continue doing the same thing over and over, but expecting different results each time."

Many of us work in an environment where we effectively ask our people "...to continue doing the same thing over and over..." and yet they manage to produce a whole plethora of results. So are they mad, are we mad, or is the customer mad?

I suspect Al was more comfortable with equation than philosophy