Offshoring, outsourcing, BPO — whatever you call it, strategically sending sections of business operations overseas is one of the fastest growing trends in our globalising world. And for very good reasons — particularly in the ever more crucial area of customer service. Client expectations are rising exponentially, just as cost and time constraints tighten. The retail cycle is 24/-7, your closest competitor is just one click away, and a complaint by a disgruntled digital native can go viral before an understaffed company has even had time to open the inquiry that triggered it.
And ironically, sometimes it’s just when your product or service starts to take off that your customer service is most likely to fall short, as call volumes overwhelm capabilities.
Something’s gotta give
For small or newly launched companies, the expense of setting up the superstar customer service team they need to level up is prohibitive — up to $10,000 per staff member when you tally up rent, equipment, training, maintenance, insurance... That’s a lot of up-front, irretrievable, investment sunk before you even get to salaries — and well before you start to see profits from the conversions flipped by your shiny new team. Could outsourcing customer service be your way forward?
Why outsource customer service?
Customer service positions are often the first roles managers consider when looking into offshoring. Customer service call centers are one of the most familiar areas of outsourcing to the general public, and have proven success as a cost effective, low risk tool for improving sales and satisfaction, so it’s not as much of a mental stretch for clients or existing staff. And fortunately, swift technological advances are also making it easier and easier to successfully manage teams of staff members overseas.
The pros and cons of outsourcing customer service
Low cost, quick, around-the-clock responses, happier customers, better sales... what’s not to like? But it pays to be thoroughly prepared before you make a decision to set up an outsourced customer service team. Offshoring may not suit every business, and there are pitfalls for the unwary in any new venture, so it’s vital to thoroughly research your options — and evaluate your needs — before you decide to take the plunge. The field is more varied and complex than many people realise, with different outsourcing models and providers, and an increasingly broad choice of locations offering outsourcing hubs. And every choice has its own advantages and risks.
Customer service outsourcing — the benefits
Let’s start with the upsides, which widely discussed but not necessarily well understood. As you’ll see, the advantages of relocating your customer support offshore start with cost, with cascading benefits following from there.
Cost — three employees for the price of one
Cost — and the striking quality-price ratio — is the main trigger, and the wow factor of customer service outsourcing that prompts most companies to make the leap. With an average of 70 per cent savings for staff — and well educated, experienced staff at that — the cost advantages of customer service outsourcing are all many people need to hear. Not only are costs greatly reduced, they are also variable, rather than fixed costs — as well as being flexible over the long term, so much gentler on your budget.
Speed — faster response times for happy customers
Hand in hand with the cost savings of outsourcing call centres and customer support goes time savings — and that makes for a profitable loop, since, as the old adage says, ‘Time is Money’.
Better staffing means improved response times, faster transactions and expert customer care, so conversion rates are sure to rise — not to mention your brand profile, which in turn leads to more word of mouth and even more sales. Once you eliminate the daunting obstacle of up-front costs in your home city, the benefits of boosting customer service are clear and your business momentum accelerates.
Core Business — time to focus on key projects
Outsourcing customer service buys you time on another level as well — precious time you can use to work on projects to advance your core business, because you’re not over-stretched juggling minutiae better delegated to subordinates.
Especially for smaller or newer concerns, clawing back some time to concentrate on core business can be the difference between burning out and branching out. The relentless administrative demands of running a new company, generally including many tasks that don’t fall in the skill set or interests of founding members, can drain energy and direction. Meanwhile, overstretched executives covering too many jobs with too little training can lead to substandard results. Customer service is not a department any business can risk compromising on.
In contrast, a team of experienced and enthusiastic customer service offshore professionals can be integrated into your organisation and completely focussed on your clients’ needs in a matter of weeks.
Expanded hours— stay operational around the clock
The global marketplace never closes, and demand for immediate satisfaction will only continue to increase as instant communications become everyone’s default mode. Even if your company has yet to expand your markets overseas, large countries and territories like Australia, the United States and the European Union have multiple time zones just by themselves.
Data from a recent Australia Post study shows that the peak time for online shopping lies well outside ‘normal’ business hours — with over 32 percent of sales falling between 7 and 10 pm, and another 11 percent after 5pm. That makes local customer service an even more expensive proposition. When you think that Perth, for example, is three hours behind Sydney - that would be pushing your penalty rates up to whatever people at 1am cost, or missing out on prime client interaction time.
A basic team of three outsourced customer service professionals can man your customer service platforms over a 24 hours roster — again, for the price of one local hire working the relatively quiet day time hours.
More people — access a larger pool of talent
Without casting aspersions on the potential employees in your immediate area, it is a fact that setting up an outsourced customer service team through a reputable outsourcing company somewhere like the Philippines — where education levels and English language proficiency are both very high — offers you a vastly larger pool of talent. Larger populations and lower expectations mean good jobs are in demand, and an established outsourcing industry means many locals are highly skilled professionals already. Not only would an established outsourcing company have lists of experienced, well vetted candidates already to hand, and the skills to help you evaluate prospects, the nature of the culture means candidates are more likely to be enthusiastic and long term...
Excellent candidates — enthusiastic, high quality workers
Customer service and call centre jobs are often regarded as undesirable, short term stop-gaps in the Western world, and therefore they’re often filled by unsuitable people who would prefer to be elsewhere. In the most successful outsourcing countries, however, these jobs are respected and prized.
There are both economic and cultural reasons for this. A reliable, full time job working for a relatively wealthy, well-run foreign company in clean well-equipped offices is understandably a highly regarded outcome for smart graduates in cities like Manila or New Delhi. In addition, the Philippines in particular is a country with a strong tradition of hospitality, with its attendant qualities of politeness, warmth and helpfulness. Filipinos are renowned for their friendliness — but also for their efficiency and diligence —- a winning combination for high-level customer service interactions… and often hard to find in the West.
Well treated outsourced customer care professionals in the Philippines can be counted on to do their best and stick with you for the long term, in a job they’re proud to hold.
Scalability — grow your team as you grow your business
Using outsourced customer care also allows you the option to scale up the team as your business grows, which would be a much more expensive and cumbersome process at home. Whether an outsourced team helped you to optimise your customer service in your very early days of building a new business, or gave you the momentum to take an established concern into new markets with less risk, the flexibility and agility of an outsourced customer service team can adjust to suit your future needs. After all, it’s only logical that demand will increase after you cut response times and increase satisfaction.
Keep on top of multi-platform communications
The rise and rise of SAAS and cloud computing means it’s easier than ever to access sophisticated platforms to manage all forms of incoming customer inquiries — but keeping on top of those advances, and the ongoing training for existing staff to use them, is easier said than done. The current trend in customer service is moving away from platform specialists — ie, call centre rather than email responders — and towards multi-skilled, multi platform staff, assisted by cutting edge ‘universal inbox’ platforms like Liveagent that alert your staff to incoming customer requests (almost) before they’ve finished typing them.
Top of the range facilities
When you’re not paying metro Sydney (or Melbourne, or San Francisco) rents for your call center staff, and you’re not obliged to pay for hardware that will be obsolete before your next birthday, you can afford to splash out on the best licenses. The right managed outsourcing partner will be able to offer you offices in modern, well equipped urban hubs — safe, healthy and welcoming to your new team, and insulated from the vagaries of tropical weather or infrastructure deficiencies with failsafe wifi and reliable backup power systems that you are not responsible for maintaining.
So what are the drawbacks of customer service outsourcing?
Now for a look at the dark side — just what are the cons of outsourcing customer service? And, more importantly, can they be addressed?
The negatives of customer service outsourcing are more complex than the positives, for several reasons. Some perceived drawbacks result from a lack of understanding — whether of the outsourcing sector itself or the direction the world is going in — and some are based on outdated metrics. But that doesn’t mean there aren’t real risks as well. As long as you’ve taken the time to educate yourself, you’ll be best placed to decide whether customer service outsourcing is a good fit for your business.
Although some companies may genuinely not be in the right place for such a big change, knowledge, preparation and — importantly — choosing the model of outsourcing best suited to your needs can go far to address some of the ‘cons’.
Customer service outsourcing — the downsides
Loss of control
Many companies, particularly if their leaders are used to having close oversight over every aspect of the business, fear that outsourcing can lead to a lack of direct control of processes, and reduced understanding of what’s going on. With modern tracking and feedback tools, the latter isn’t really a concern any longer, whether your team is downstairs or halfway around the world. But it is true that certain forms of outsourcing, such as small scale, project-based contracts carried out by freelancers, can mean that processes and decision making is taken out of your hands.
The best way to address this — assuming that’s not your objective — is to choose a managed offshoring partner to help set up a team that will simply be an extension of your existing staff at home. In this model, you retain full responsibility for training and managing your new workers, although they will be operating out of premises and using materials that are part of the offshoring package.
Legal issues — security and privacy concerns
Australia and the United States are continually updating their data security and privacy legislation to keep up with cyber threats in the digital age. Although legal confusion and privacy concerns may once have constituted separate drawbacks to outsourcing, they’re now pretty much inextricable. Increased risk, and increased legislation, does put the onus on companies that outsource any business operations to ensure they follow protocols for cross border information handling, and keep their clients’ personal data safe. Depending on the nature of your business, protecting intellectual property may also be a concern.
Having said that, the ongoing globalisation and digitisation that makes outsourcing possible also means that firms need to be vigilant about data protection no matter where they are. If anything, benefitting from the expertise of an experienced outsourcing management company, which should already have tested plans and procedures to handle breaches, could help your operations at home as well.
It’s not appropriate to entrust private client data to freelance piece-work contractors overseas, and you might not have enough oversight of an entirely independent outsourced team to be confident they are acting within the law. If you can’t be sure that your outsourcing arrangement won’t compromise you legally, it might be better to opt out for peace of mind. This is another situation where a managed outsourced team that functions as an extension of your staff is the safest option.
Loss of quality
This is one concern about customer service outsourcing that is quite easy to address. For one thing, it dates back to a much older, less sophisticated regime of early call centre outsourcing, where possibly quite sheltered customers were unnerved by unfamiliar accents, communications technology was in its relative infancy, and outsourcing companies had yet to refine their business models.
As described in the Pros above, it’s well established that outsourcing done correctly is more likely to improve the quality of customer service — and not only because you can afford to hire more people. Choosing a country with a well-established outsourcing sector, and a model that allows you to choose and meet your team, pretty much eliminates this risk.
Cultural and linguistic differences
It’s important that your outsourced team is a good fit with both your existing staff and your client base — current and projected! With the expansion of the outsourcing industry, the standards of English language in the countries involved have also improved. However, it is vital that you ensure your outsourced customer service staff start the job with excellent English and cultural sensitivity. Failure to understand customer requests, or jarring interactions resulting from cultural misunderstanding, can definitely do damage to your company and undo the benefits of outsourcing in the first place.
Again, using the services of a proven management company and choosing a country with demonstrated cultural sympathies with Western countries, and widespread near-native standards of English, will address this issue.
Hidden costs
The excitement of saving so much money on wages for new customer service staff can sometimes blind new entrants to the sector to hidden costs they may incur. Of course, some of these, such as taking the time to find the most trustworthy outsourcing company, and training new offshore staff, are upfront costs that dwindle into insignificance compared to the cost of setting up a similar operation at home, and are perfectly legitimate expenses.
It is important to spend enough person hours laying the groundwork so that your new venture will add maximum value without nasty surprises. Do also make sure you shop around enough to get a good idea of the differences between outsourcing management companies and what they offer, including how binding their contracts are and what exactly is included.
Negative impact on local staff
There is a risk that outsourcing significant portions of your business overseas can unnerve your employees — even if there are no reductions in local jobs and the customer service roles to be offshored don’t already exist in the organisation. Big cultural shifts can be threatening, and in the current climate of economic uncertainty and tight budgets it makes sense that people may be concerned about their jobs. Communication of your strategy is key: explain how your new offshored customer service team will free up time for home base employees to concentrate on other projects, for example, and that the new team could even improve job security for existing staff by supporting growth and boosting profits. And it’s also wise to keep up these messages, sharing successes and signs of growth with all your teams, and finding ways to integrate offshored workers into your workplace community.
Some final tips
In an increasingly globalized marketplace where everything can be had or arranged online, reputation and reliability can’t come at the expense of cost and efficiency. Offshoring customer service to experienced staff, accessible 24/7, at a fraction of the cost of setting up an equivalent team, can definitely be the making of a young company ready to expand - if it’s done right.
So how do you offshore your customer service operations without falling victim to risks? Here are some final tips to ensure a smooth ride:
- Set clear goals for your outsourced customer service.
- Research and plan before proceeding
- Choose the right outsourcing management partner
- Choose the offshoring country best suited to your company and preferred timezone
- Treat your offshore staff like members of your team
- Don’t skimp on training during the transition — at home or abroad
- Make sure you have a home team ‘champion’ of your overseas team
- Track progress and monitor feedback
- Evaluate your set up as your company evolves and scale up if necessary
For more insight into how one of our clients exceeded their customer service with the help of an offshore team, watch this video.
