Penalties Loom for US Firms that Outsource Call Centers Offshore

Bipartisan legislation introduced in the U.S. Congress seeks to bar corporations that send U.S. call center jobs overseas from receiving federal grants and loans. The Cloud — hosted call centers — may offer a solution for balancing demand for jobs at home and the cost of doing business.

U.S. Congressman Tim Bishop (D, NY-1) in December 2011 introduced bipartisan legislation to bar corporations that send U.S. call center jobs overseas from receiving federal grants and loans.

Bishop's "U.S. Call Center and Consumer Protection Act," which is co-sponsored by Reps. Dave McKinley (R, WVA-1), Mike Michaud (D, ME-1), and Gene Green (D, TX-29) also requires overseas call center employees to disclose their location to US consumers and gives customers the right to be transferred to a US-based call center upon request. The bill also has the full support of the 700,000-member Communications Workers of America (CWA).

The legislation would require the U.S. Department of Labor to track firms that move call center jobs overseas; the firms would then be ineligible for any direct or indirect federal loans or loan guarantees for five years.

According to CWA, total customer service/call center employment has dropped from 5.2 million in 2006 to 4.7 million in 2010, a loss of approximately 500,000 jobs in 4 years. The union says companies have taken millions in incentives from local taxpayers to open call centers in the U.S., only to offshore their operations a short time later and leave local communities devastated and still paying the bill.

U.S. lawmakers have made several unsuccessful attempts in the past to penalize corporations that send their call center operations off shore. To date, such proposed penalties have not made it into law. In 2010, Senator Charles Schumer (D, NY) said he would introduce legislation that would impose a $0.25-per-call excise tax on any customer service call placed in the U.S. that was transferred to a foreign call center and would require firms to inform U.S. customers when their call was being directed to foreign centers. Schumer never introduced the legislation.

However, Bishop has gained some traction in his efforts to ensure that taxpayer dollars do not benefit companies that choose to relocate jobs overseas despite slow job growth in the United States. In 2010, he supported an effort that successfully forced the United States Agency for International Development (USAID) to drop a program that would have used approximately $10 million in taxpayer funds to help train workers in Sri Lanka for jobs in the outsourcing industry.

The Challenge of Repatriating Call Centers

Savings in cost per call and cost per minute have lured many a U.S. firm to offshore its contact center operations. Recent arguments against the practice have focused on customer-centric metrics such as first-call resolution and related backlash in customer satisfaction ratings.

Earlier this year, citing a lack of quality service and actual cost savings from offshore outsourcing efforts, Delta Airlines Inc. said it would stop sending U.S. customer calls to its offshore call center, and US Airways LLC announced plans to close its Manila call center.

For most organizations, however, cost remains the greatest challenge in bringing call centers back onshore is cost. How will the company deliver a quality customer experience with home-shore call centers at a comparable price to offshoring?

Technology to Meet the Home-shoring Challenge

The call center is charged with meeting dynamic customer demands, oftentimes in always-on mode, at the lowest possible cost.

One trend that is helping organizations do this with home-shore agents is remote agent technologies, and government efforts to expand the U.S.-based broadband infrastructure are increasing the pool of available call center agent candidates.

Further aiding the availability and quality of remote resources is cloud-based, or hosted, call center solutions.

Cloud-based solutions offer call centers an option for cost management in allowing them to hire agents in areas where the labor costs are less than the current area, according to a white paper released by ICMI in December. Using normal attrition, the call center can replace agents that leave with agents in a lower-cost labor market. For a 100-seat call center with a 30% attrition rate over a period of two years, agent salary costs could be reduced by as much as $3 per hour.