Ins & Outs of Call Center Outsourcing

Posted: 09/1998

Ins & Outs of Call Center Outsourcing

By Ken Branson

As the competitive seas
are overrun, long distance companies are crowding on canvas and lightening ship. Anything
that isn’t a "core competency" or "strategic" or can be done more
efficiently by someone else may be dropped over the corporate gunwale. This includes call
center functions which, historically, long distance companies have kept in-house.

The trend applies to inbound as well as outbound call center functions. Inbound call
centers handle calls coming from customers–people with questions about bills, requests
for service, or complaints. Outbound call centers contact the customer–often just after
service has been turned up, to find out how the customer likes it, to sell more service or
to find out why a bill hasn’t been paid. Even operator services functions such as
directory assistance, once at the very core of any telephone company’s relations with its
customers, are being outsourced, according to industry observers.

"The main ones (call center functions) I get called about are customer care and
billing, particularly as they (long distance companies) get into the Internet," says
Colleen Amuso, senior research analyst for The Gartner Group. "…The Internet, for
them, poses another service mechanism. So you can dial into the Internet and look up your
service, your bill or maybe even pay your bill. The other issue is that some
telecom providers are looking to become Internet service providers (ISPs), because they
have the network. They also need to handle the volume of calls that come in. All that is
adding a burden to their traditional customer service, which has been, basically, you
didn’t pay your bill and we need to set up a payment schedule. Short sentence: The
paradigm is changing."

How is a long distance company to know a paradigm is shifting under it? Vendors and
analysts suggest some deep corporate soul-searching is in order. The first question a
company should ask itself, they say, is ‘why?’

Why Outsource?

"Why are you outsourcing?" Amuso says she asks her clients. "Is it for
price? The price (for the customer) may not be much different. Is it for higher levels of
service? Is it a temporary issue?"

Some outsource vendors will help a long distance company answer those questions. MCI
Communications Corp., for example, is a call center consulting company.

"We really try to examine the situation and find out if there are ways they (the
long distance carrier) can improve the call center and make it a core
competency," says Bill Price, vice president and general manager of call center
services. "Can they make it a mission? Is it that important? We do a series of
diagnostics in existing call centers…Some of our customers go through that and then
reach another fork in the road: Okay, it looks like we could do this, but do we want to?
Some of our customers, for whom we have done considerable consulting, have gone through
that entire phase, and they’ve then said, ‘We want to invest in and improve our call
centers, so we don’t need to outsource.’ As a one-stop shop, we’re very pleased with that.
Then we can help them develop the processes, hire, staff and so on."

MCI, of course, has a grip on all three legs of the call center outsourcing stool: The
company consults on call center matters, outsources some of its own call center functions
(some operator services, some telemarketing), and runs 30 call centers–26 for its own
purposes and four as a revenue-producing business unit.

If this analysis leads a company through ‘why’ and ‘what,’ the next questions are ‘to
whom?’ and ‘how much?’

Whom to Trust?

There appears to be no shortage of to-whoms. For example, Terry Inch, director of
vendor sales and consumer services at Sprint Communications Co., says he gets inquiries
from potential outsourcers eight times a day, "just to make sure they’re on my
list." (For a few potentials, see our list on page 46.)

Rich Hebert, president of Sky Alland Marketing, urges those in search of an outsource
to fit the outsourcer to the task.

"You have to have some understanding of the volume, and then you have to talk to
the people who have the capacity to handle that volume," Hebert says. Hebert’s
company, which specializes in outbound call center outsourcing, numbers communications
companies among its clients.

All the experts interviewed emphasized the importance of the staff–the people who
actually do the work. Amuso says labor costs amount to 80 percent of call center expenses.

"How are they incented?" Amuso asks. "How are they trained?"

Amuso’s vision of call centers is not entirely theoretical. She once worked as a
telemarketing (outbound) call center agent. "I’ve worked in call centers where I had
to be cattle-prodded to work," she recalls.

She urges long distance companies to ask potential vendors about turnover rates, and
how much time the average agent spends on the phone each day.

"If they spend seven hours and 59 minutes of an eight-hour day on the phone,
you’re going to have some turnover," Amuso says.

Dave Evanoff, president of Excell Agent Services LLC, a Phoenix-based outsourcer which
specializes in directory-assistance call centers, says it isn’t easy to find people who
will stay with a company for a long time. Excell, he says, handles 75 percent of AT&T
Corp.’s directory assistance and all of Frontier Corp.’s. It also handles local directory
assistance for Cable & Wirless PLC in Britain and 999–the British equivalent of 911.

"We compete in the marketplace (for recruits), and this is a pretty tough time to
recruit in America," Evanoff says. "For directory assistance, fortunately, the
training cycle is not very long. It’s four days, and you’re productive. I’ve done some
customer care for phone companies, and that cycle is eight weeks. If you invest that in
someone and they leave after two weeks, that’s not good. In the [United Kingdom] and
Canada, where the unemployment rates are higher, people hardly ever leave."

Hebert says Sky Alland puts its call centers in places where it will be able to find
qualified agents who are likely to stay with the company awhile. "We situate our call
centers in fairly well-heeled suburban locales," he says. "That’s because we
concentrate on customer care. Most of our customers’ customers are relatively well-to-do
people, and the people on the phone have to be smart and relatively articulate."

A typical assignment for Sky Alland might involve doing "outbound, proactive
customer care" for a "dial-around" company. His agents call new customers,
thank them for signing up and explaining again how to dial-around. "Then, a few
months into it, we’ll call again, and the script will vary, depending on their level of
utilization, and we’ll entice them to use more. We also do complaint discovery on these
calls."

Amuso says long distance companies should visit potential call center vendors and watch
what goes on–then compare what they see to what they’ve been told.

Vicki Pearson, senior vice president of call center operations at Teltrust Inc. in Salt
Lake City invites potential customers to visit Teltrust’s four call centers–all of them
located within a 50-mile radius of the Utah capital. Though she won’t say whether she is
one of the people calling Terry Inch eight times a day–Teltrust doesn’t name its
customers–she says the selection process at a major long distance carrier is very
detailed and may last months. She adds that what happens after a contract is won is every
bit as intense.

"When we do an implementation with a carrier, we spend a lot of time putting
together an implementation team and an implementation plan," Pearson says. "So
our customer operations people, once the sale is made, will step in and go through every
aspect of the service with the customer, develop methods and procedures, escalation
procedures, procedures for the ramp-up for traffic turn up, and so on. It really is a
partnership."

Inch and his Sprint colleagues are picky about their "partners." Every six to
nine months, Inch says, he sends out a request for information to the vendors who have
called him. The returns are ground into a "vendor assessment matrix," which
enables Inch to look at them from several different angles. Out of the matrix, Inch and
his colleagues pick companies they think look promising, call them up, and subject them to
a telephonic grilling lasting three to five hours.

"Then, probably once a month, we’ll go out and visit somebody," Inch says.

Once Sprint has decided to outsource some work to a vendor, the company signs the
vendor to a contract running 18 months to two years. It may be a partnership, but it’s no
sinecure.

"Nobody’s got a lifetime contract," he says. "There are no
guarantees."

How Much?

As to ‘how much,’ well, that answer may depend in part on the original question, ‘why?’

Inch, for example, thinks benchmarking is a good reason–though perhaps not the main
reason–for a long distance company to outsource its call center functions. Sprint
outsources "a little bit of everything" and keeps a little bit of everything
in-house. He thinks this keeps Sprint and its vendors on their toes, since they have to
compare their results to each other.

"When people rely on just their own internal call centers, there is a reluctance
to change," he says. "You may compare yourself now to yourself a year ago, and
be 10 percent better. But there may be an opportunity to be 20 percent better, and you
wouldn’t know it if you’re just off in your own private Idaho."

Pearson says that operator services, particularly directory assistance, are among the
fastest growing businesses in call center outsourcing. Her company, Teltrust, does
national directory assistance for several large long distance companies, whom she declines
to name. It offers directory assistance in 20 languages, mightily assisted by the presence
in Salt Lake City of thousands of Mormons whose two-year overseas mission assignments have
left them with language skills and cross-cultural awareness. Inch says
non-English-speaking directory assistance is one of the little bits of everything that
Sprint outsources–and one of the few things Sprint doesn’t do a little of itself.

"That’s because our national operator services center is in Lenexa, Kansas,"
he says. "And the pool of, say, Cantonese and Mandarin-speaking people there is
pretty thin."

Directory assistance is almost entirely outsourced at Frontier Corp., according to John
Tassone, vice president, commercial customer care. Frontier’s decision to outsource was
driven at first by cost/benefit analysis, Tassone says. Frontier was buying directory
assistance from incumbent local exchange carriers (ILECs), and they were charging 70 to 90
cents per minute, depending on the part of the country where the service was purchased.
The idea of recruiting, training and finding space for its own agent force was also
unattractive, he says.

Now, however, Tassone urges his counterparts to pay attention to quality of service,
not just cost.

"The service provisions of your contract are key," he says. "If you’re
doing this to lower your expenses, that’s great, but providing bad service can raise your
costs."

And Pearson agrees. "The level of service–the consistent level of service–is the
key," she says. "We do business with the RBOCs (regional Bell operating
companies), for instance, and they hold us to a very, very strict level of service."

Another key to answering the how-much question is how much money the outsourcer will
charge for the service. Outsourcers are reluctant to discuss this, because, they say, the
price varies depending on the part of the country or world they’re working in and the
level of service requested. But they point out that there are lots of choices to be made,
and each one has to be weighed against the cost and time involved in doing the job
in-house. Call center outsourcing, they stress, is not an impulse purchase.

"If you’re new to outsourcing, what you might miss is that it’s all in the
execution and delivery," Sky Alland’s Hebert says. "And the only way to get a
good feel for that is by going to the call center for a visit. The outsourcers all say
they hire great people and train them well, but it’s the execution that really matters.
The devil is in the details."

Ken Branson is East Coast Bureau Chief of PHONE+ Magazine.

Look Before You Leap
Questions to Ask Before Outsourcing Call Centers

By Ken Branson

Experts say the outsourcing of a carrier’s call center functions can save money, make
money, improve customer relations and loyalty, and further growth strategy–if it’s
done for the right reasons. Here are the questions a telecom service provider should
ask itself before taking the plunge.

Why are we doing this?

Is it just to save money? That may be a reason, but it’s not the reason.
There are plenty of outsource companies who can save you money, but some of them may lose
you customers in the process because they’re the wrong match for the task, or because they
don’t hire, train and retain the right people as agents. Consider whether it might be more
worthwhile, in the long run, to improve your own call centers.

What shall we outsource?

If you have call center tasks for which you don’t have the right people, the right
systems or the right locations, consider outsourcing those tasks. This is particularly
true if you’re facing a temporary task–say, a sales promotion campaign which will
generate more inbound calls than your own staff can handle.

How do we go about finding a good call center?

Check out the companies that other carriers are using; ask those carriers about those
outsource companies. You’ve probably already been contacted by potential outsourcers; keep
a running list. Send out requests for information periodically; don’t wait until you
absolutely have to find help right away. Be prepared to spend months on this process.

Once you’ve assembled a list of likely outsource companies, contact them and ask every
question you can think of about their operations. Be persistent, be detailed.

What are the most important questions to ask them?

Once we’ve got an outsource company,
how can we make sure we’re getting our money’s worth?