Is the call center finally coming onshore?

Is the call center finally coming onshore?

Summary: Protectionist sentiment is swelling. The Buy America provisions in the stimulus bill are symbolic of the increasing resentment towards jobs and work going overseas. I have already seen this provision included in some sourcing RFPs from healthcare organizations and other companies benefiting from bailout money, or with significant public sector influence. President Obama should examine simple, effective ways to provide productive and sustainable employment in depressed areas where industry is in a terminable decline.

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We had a great discussion a few weeks' ago regarding the USA's potential to take on more sourcing work, with increasing unemployment and downward wage pressures.  I've made this point a few times now, but BPO is clearly the bigger onshore opportunity than mainstream application services for the US to muscle in on sourcing work.  And where better to start than the call center?

Bottom-line, President Obama should take a leaf out of Margaret Thatcher's book and examine simple effective ways to provide productive and sustainable employment in depressed areas where industry is in a terminable decline.  I never voted for old Maggie, but she did do one very smart thing during her tenure as British PM - she closed down unprofitable coalmines during the 80's recession, and encouraged businesses to set up call centers in depressed British cities.  Now there are over 650,000 call center employees across the UK.  Wages in the UK are competitive for qualified staff - and they don't command ridiculous healthcare premiums.  (I just saw one main healthcare insure just increased its premium by 20% this year).  While there are some good investment ideas inthe stimulus package, I would have liked to have seen some focus on business service support areas - as we discussed here.

Protectionist sentiment is swelling. The Buy America provisions in the stimulus bill are symbolic of the increasing resentment towards jobs and work going overseas. I have already seen this provision included in some sourcing RFPs from healthcare organizations and other companies benefiting from bailout money, or with significant public sector influence.

With over two-thirds of Americans filing first-time unemployment claims for the week ending February 21 to bring the total to over 5.1 million, this tide will surely rise. Over the past decade there had been considerable leakage of domestic customer service agent seats to offshore locations. Customer service is returning back to the country, literally. Inspired by the Canadian model and technological advances, customer care is increasingly being delivered from rural America.

The customer service rep is the organization’s ambassador to the caller. The human voice provides the company’s human face. Much of the time when the customer calls it is because something has gone wrong. If the caller cannot understand the agent due to accent issues and/or communicative styles, the problems are compounded. The caller can become agitated and the company may wind up losing a customer. In the present economic environment, just hearing a foreign accent could trip the trigger. Losing dollars chasing dimes is not wise.

Earlier in this decade, there was a mad dash for the low-wages on offer in India - and more recently the Philippines and low-cost Latin American countries such as Peru and Nicaragua. Everything was thrown over the wall once telecommunications technology and the associated costs became less of an issue. A Mercedes Benz owner was furious when connected with an offshore agent, “How can somebody help me with problems related to my car when they have probably never even driven one?”

Like Britain in thn 1980's, Canada has also explored ways to grow its economy, concludingthat the stability of the nation and its people were major assets. It was determined that the call center industry to serve the American market presented an excellent opportunity. Beginning in the late eighties, strategic initiatives were put in place involving tremendously unified efforts by all levels of government and higher education. These efforts were initially intended to address economic woes of unemployment in traditional industries and leverage the value of the Canadian dollar.

The programs proved to be successful, particularly in more rural areas. The Canadian turnover rate was consistently a third of US. As there was less competition in rural areas from other industries for workers, there was far greater retention and a seasoned experienced workforce developed.

American providers have noted the formula along with being able to take advantage of the lower cost of living in many rural areas. Additionally, wages are lower with a reduced turnover rate adding to the value proposition. Human resources consultant FurstPerson reports in its 2008 Call Center Recruiting and Compensation Survey that the average cost of attrition per agent is $5,466.32. Consequently, call center providers are increasingly leveraging opportunities in areas with smaller cities, particularly in the Midwest.

One such provider is West Direct headquartered in Omaha, Nebraska (the oft-dubber "call-center capital" of the US). The business model is based on having 39 contact centers around the country, mostly in cities with populations ranging from 50,000 to 150,000. West Direct also employs home-based agents.

By offering telecommute positions; a much wider net can be cast to attract agents in outlying areas. The employee saves time on commuting and the cost of fuel. The employer is able reduce the costs of a seat in a brick and mortar center while frequently attracting high quality employees at a lower wage. It is common for the churn rate to be in single digits for home-based agents.

Technology, high-speed connections, and Web based applications has enabled companies to tap into rural America with its strong work ethic. Customer care can be domestically delivered at an attractive price point with callers being greeted by a fellow American.  I'll wager $100 we have new call center development in Michigan before 2009 is over.

Topics: CXO, Enterprise Software, Software

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23 comments
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  • Excellent article

    I hate talking to people overseas when I have a
    problem or need a loan. I would pay extra to
    talk to an American. We definitely need to stop
    all our jobs from going overseas. Buy American
    people - put someone back to work (except cars
    of course - American car companies are run by
    crooks and make crappy cars).
    FireThorn
    • CEO's GREED

      If you pay more, you have contributed more to the milions that greedy CEO's make. I blame all this offshoring on corrupt politicians and greety, unpatriotic CEOs. Why send jobs abroad when we need them the most?
      Nsaf
      • Right On

        Right on target Nsaf,

        I have worked in electronic hardware development for 20 years and in the big picture I don't think offshoring production really helped anyone in the long term, except greedy CEO's as you said.

        Up until 2000, getting quality HW built in the US was a no-brainer. Since 2000, it's a constant struggle to get consistent quality out of offshore manufacturing. I spend much of my time babysitting the offshore manufacturers where I should be developing new products.

        These inefficiencies, coupled with massive domestic job losses in the domestic manufacturing sector and extensive piracy by overseas manufacturers makes offshoring a net loss to the US IMO. I know the argument is lower cost consumer goods but the price is way too high.

        The problem is that most US CEO's are bean counters and are hell bent on offshoring. They have no interest in any common good.

        alexh1@...
      • Excessive business taxes force offshoring

        I discussed this issue at length with a friend of mine, who is an IT VP for a global company. According to him, most companies headquartered in the US WANT to keep jobs here... but can't due to excessive business taxes.

        The US has the 2nd highest business taxes in the world (behind Japan). As a result, companies are practically forced to offshore low-priority jobs in order to remain competitive.

        But of course, with the current administration (supported by most of the posters on this board), I don't expect any of that to happen.
        dominigan
        • Business taxes or greed?

          Your friend is either very low in the pecking order or somewhat disingenuous. Taxes are a result of PROFIT and THAT is the deciding factor.

          Why do I believe that? Because of the position I enjoyed for many years that provided the opportunity to visit on a very personal basis with the people who have the final say.

          True, the Lt. Fuzz (Beatle Baily) of the business world come up with all sorts of rationale hoping to be noticed .. not the decision makers ... just income minus expense.
          781lc
          • Yes, But

            I agree that taxes accrue to profits. But there are costs that accrue regardless of profit. There is FICA (now we are calling it Social Security and Medicare), Workmans Comp and in many cases Health Insurance. But I expect you will find in replies to follow, customer service fails if the customer is not satisfied. Even if the outsourcing is within the USA it may not meet customer expectations. If the customer is not adequately served, what is the true cost?
            Sagax-
      • Greedy CEOs?? How about greedy unions?

        ... and the goddamn democrooks behind all these taxes that drive the business away? You want the business back, you cut the union, minimum wage .and all that crap to restore it back to good ol' "no free lunch" America.

        Well if you don't like it, start your own business and be a CEO, and then you'd understand why the jobs are out-sourced.
        LBiege
  • RE: Is the call center finally coming onshore?

    JOBS FOR AMERICAN WORKERS--ONLY?

    Most Americans and legal residents are kept in the dark by the national media about the illegal alien occupation. About the true number estimated to be 40 million foreign nationals squatting here, according to the Heritage foundation; not 11 million? About the betrayal of many politicians who hide away their true intentions of offering AMNESTY. A traitorous move of Sen.Harry Reid (D-NV, Speaker Pelosi D-CA, Sen. Feinstein (D-CA) who secretly squashed E-Verify in the Stimulus.

    Sen. Gutierrez (D-ILL), Rep. Flake (R-AZ) pushing the president hard for the Immigration reform, that would mean overwhelming competition for American jobs. With 7.5 million of the legal population unemployed, who in their right mind would slam for AMNESTY. California has its own traitors including Pro-illegal alien mayors like Antonio Villaraigosa in Los Angeles, Galvin Newsom of San Francisco have brought upon this state a 47 billion dollar budget crash, which now they expect the taxpayers to bail them out.

    For THE PEOPLE, who are patriots first and want to know the grade score of politicians at NUMBERSUSA who have ignored their oath of office and in collusion with corporate hierarchy and appeasing corrupt foreign governments. You need to read the immigration grade scores for our elected officials. For instance Rep. flake has a grand (F)! Those who have been complicit in eroding E-Verify, like Sen. Reid, who must be a puppet of the the US Chamber of Commerce. They are heavily involved in destroying any regulation or legislation to ruin jobs for AMERICAN WORKERS in Washington. They are behind bring in millions of cheap labor on a grand scale annually, under a corrupted system of visas. Even the Ford foundation gives grants to subversive organizations like La Raza, Mecha.

    Overwhealm the capital switchboard--demanding mandated E-verify at 202) 224-3121 Call the presidents hotline at 202) 224-3121. Leave comments at 202-456-1111 Save American workers jobs. Read the immigration news reports at JUDICIALWATCH, CAPSWEB, AMERICANPATROL!
    Brittanicus
  • Dell's customer service from offshore....

    is so pitiful that my boss has decided we will no longer even consider Dell as a possible solution. I am personally glad Dell is totally out of the picture in my world.
    bjbrock
    • Dell AND Microsoft "offshore"

      Great post .. wish everyone who has switched, or would like to, would follow your example..

      We went to Apple Mac just for the N. American service. We hang up if not and try again.
      781lc
  • RE: Is the call center finally coming onshore?

    "The Buy America provisions in the stimulus bill are symbolic of the increasing resentment towards jobs and work going overseas."

    Yeah - although it has frankly been going on (and [b]IGNORED[/b]) for years.

    Now, finally, when the economy starts tanking, they begin to notice.

    Was being a little bit "protectionist" really such a bad, horrible, evil thing?

    "A Mercedes Benz owner was furious when connected with an offshore agent, 'How can somebody help me with problems related to my car when they have probably never even driven one?'"

    I'd say he had the right to be furious, and he makes a good point - rarely are these people actually any sort of expert. They're just given a list that has half of the steps being totally useless.

    Either that, or they're instructed to tell the user to reset or reformat the system and lose all of their data.

    As a developer and expert, I often [b]truly am[/b] on my last leg when I'm calling support. I've likely already gone through the stupid list of items they immediately start reading out on the phone, several times. A sweet sounding Chinese who can't understand basic English grammar and can't pronounce half the words on her list that she repeats until the user gives up isn't going to help anybody, and certainly isn't going to help me.
    CobraA1
  • Of course they move jobs overseas

    ... when you screw them w/ unions, minimum wage, welfare support and god knows how many more are coming out of Obama porkulus plan. At some time, these business owners have enough. "This is it. I move my business where there's no socialists leeching off me. You guys can shove all those rubbish programs right up your own butt."
    LBiege
  • Politicans don't get it

    Everytime I hear the President talking about how we need more "education" to compete in the global economy I cringe. To compete in the "global" econonmy all we need the ability to work for 3rd world wages. It has NOTHING to do with education.

    Republicans tout that if we cut taxes, businesses will create more jobs. They will, just not here. That is the sad truth and the difference between now and when Reagan was president. It's so easy now with technology to send jobs overseas. Until we tie tax breaks with hiring "here", and get rid of unions the middle class doesn't stand a chance.
    ddmattison
    • Not quite...

      Remember, the name of the game is COMPETITION.

      If companies only want to compete on price (not necessarily the same as profits), you're right... they'll outsource no matter what.

      But remember, competition isn't only about price. Many times, quality is more important than price. If you don't believe me, talk with anyone who has had to talk to someone in India to get Dell support.

      If there is enough breathing room with taxes, regulations, etc... many companies will opt to go with higher quality offerings (i.e. rural US call centers) in order to carve out a better business niche and realize more loyal customers, and ultimately more stable profits.
      dominigan
  • Are Dell and Symantec Listening?

    I doubt you will find many not agreeing with your opinions on this. Anyone who has had to deal with offshore support knows how awful is usually is. Offshore support is a failure from a customer service perspective, and the sooner companies bring support back to the U.S., the better. Maybe we should start demanding it. Is your support staff based in the U.S.? No? Then I don't want your product.
    jpr75_z
  • RE: Is the call center finally coming onshore?

    A Mercedes Benz owner was furious when connected with an offshore agent, ?How can somebody help me with problems related to my car when they have probably never even driven one??

    Of course people working in call centers for Mercedes should also own one. Do similar standards apply to Lamborghini call center employees and mechanics?

    Other than that, great article :)
    Alniyat
  • Here's why I can't stand offshore call centers and HP is one of the worst

    Please read this conversation logged some time ago, CAREFULLY and see how many times I ask the SAME question without getting a reply. They do NOT listen and are SOLELY focused on being polite to get you to feel happier. Note that I was already irritated by previous attempts to call HP's support and I tried to minimize the conversation by telling her no need to spend time on apologizing but just answer the question.

    Brooklyn: Hello Georgi,
    Brooklyn: Welcome to HP Total Care for All-in-One Products. My name is Brooklyn. How may I assist you today?
    Georgi Penev: Hi
    Georgi Penev: How many of these can I run at the same time without them interfering with each other?
    Georgi Penev: HP WIRELESS PRINTING UPGRADE KIT Q6236A
    Georgi Penev: I have three printers that I was going to use them on
    Georgi Penev: I have one now but wanted to buy a few more and run them on different channels
    Georgi Penev: WILL this work?
    Brooklyn: I understand that you want to use multiple printers on a single wireless upgrade kit simultaneously. Am I correct?
    Georgi Penev: No, on multiple wireless kits
    Brooklyn: Let me confirm that you have connected one Wireless upgrade kit in the network with three printers. Am I correct?
    Georgi Penev: It would be very nice if you paid attention to what I am asking...
    Georgi Penev: Can I get you to e mail me a transcript of this please?
    Georgi Penev: I am assuming you are NOT in the US because this is what usually happens. NO ONE actually pays attention to what I ask...am I correct?
    Brooklyn: I do understand your concern and realize the gravity of situation.
    Brooklyn: However, I will assist you in setting up the wireless upgrade kit and the printers in network.
    Georgi Penev: Apparently not. There is NO gravity and you apparently do NOT understand the question.
    Georgi Penev: Again, where are you located because this is typical of outsourced tech support. They simply respong with polite chit chat without EVER resolving the problem.
    Brooklyn: I am sorry Georgi, as I am not authorised to provide my location details online. I hope you understand my limitations.
    Georgi Penev: No I don't and I hope you understand that I will file a complain about this conversation as I got NO help and you don't even pay attention to what I am writing.
    Brooklyn: However, I would like to inform you that we can connect one printer to one Wireless upgrade kit and use the printer from more than one computer over the network.
    Georgi Penev: Yes but I want to do the OPPOSITE. I want to connect THREE PRINTERS WIRELESSLY!!!!!!
    Georgi Penev: This is the THIRD TIME I am saying this, MULTIPLE PRINTERS from ONE kit or from several kits!
    Brooklyn: I apologize for the inconvenience caused you.
    Brooklyn: However, I was just confirming to assist you in a better way.
    Brooklyn: I would like to inform you that we cannot connect more than one printer to a wireless upgrade kit.
    Brooklyn: We can connect and configure only one Printer to one Wireless upgrade kit.
    Georgi Penev: Ok, this is the fourth or FIFTH time you completely IGNORE THE ORIGINAL question where I CLEARLY stated that I want to connect SEVERAL printers to SEVERAL kits and putting them on different channels. IS THIS POSSIBLE?
    Georgi Penev: If you take the time to read the question, MAYBE you will understand what I am asking instead of spending all this time and effort on appologizing and being polite. That's great but does NOT answer my question.
    Brooklyn: Let me explain you in more specific manner.
    Georgi Penev: Ok
    Brooklyn: If you have three printers connected in different network, then you need to have three different Wireless upgrade kit. You can connect the one printer to one Wireless upgrade kit for one channel or network.
    Brooklyn: Then other printer to other wireless upgrade kit to other channel or network.
    Georgi Penev: WEll, this is what I asked you around 10 minutes ago...
    Brooklyn: I am extremely sorry for the inconvenience caused you.
    Georgi Penev: So, to be VERY CLEAR. If I buy THREE kits, use THREE different USB ports on my computer, I can connect THREE different printers putting EACH one of them on A DIFFERENT channel?
    Brooklyn: Georgi, may I know how many computers you have?
    Georgi Penev: ONE
    Brooklyn: Do you want to connect three printers to a single computer through Wireless upgrade kits?
    Georgi Penev: YES
    Georgi Penev: Just to be clear again, through THREE different kits
    Brooklyn: May I know the models of the three printers you have?
    Georgi Penev: One is B9180, one is 1018 and I was going to connect an Epson printer which should be fine as there is nothing I think that limits to HP use only
    Georgi Penev: since they are simply connected to the USB port on the printer
    Brooklyn: Fine.
    Brooklyn: Well Georgi, to connect these three printers to the computer in network, you need to purchase three wireless upgrade kits and connect them on different channels.
    Georgi Penev: Ok, THAT'S what I wanted to know.
    Georgi Penev: Please send me a transcript of this chat.
    Brooklyn: However, I would suggest you to even contact the Epson support once and check for the compatibility of it with the upgrade kit.
    Brooklyn: Sure Georgi, I will Email you the transcript of this chat session.
    Georgi Penev: Ok, thanks
    Georgi Penev: Have a nice day

    guiri
    • Does it matter where they are?

      You cannot blame such a response on whether the call center is located onshore or offshore. I've had similar or even worse response from T-mobile, American Express and US Bank support centers. Its the whole process, they are trained to respond with specific sentences rather than actually listening to the question.
      faiz553
  • I want to talk to an American !!!

    Preferably someone who knows something. I recently had a very bad experience with Western Digital. Then, a round with Microsoft, ending with my giving them the answer, finally found on some discussion boards. Of course, you might know, the problem was caused by a McAfee product.
    Hans Schmidt
  • BRING THOSE JOBS HOME!!!

    Not being an isolationist. Just stating that under the present laws outsourcing hurts our economy.
    Keeping Current