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Build vs. Buy: When Outsourcing Makes Sense | #ICMIchat Rundown (September 15, 2020)

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No word strikes fear into the hearts of customers and front-line agents like "outsourcing." Employees fear their jobs will be shipped to far off lands. Following prior bad experiences, customers hold contempt for companies who don't care enough to speak with them directly. While this reputation is sometimes justly earned, outsourced contact center providers can't take all of the blame.

Join us on Tuesdays at 1 p.m. Eastern, 10 a.m. Pacific to weigh in on the contact center industry's most pressing challenges. Check out next week's discussion and join the conversation on Twitter!

It takes two to tango and to talk on the phone. Businesses who outsource based on the lowest sticker price, neglect to help their partners serve customers well, and don't provide clarity in their objectives get a proportional return on their lack of investment. In reality, outsourcing comes in many shapes and functions, and outsourced contact centers can dramatically improve customer experience when they're set up for success. In this #ICMIchat, we scoured the globe, and our neighborhoods, for the best and the worst of outsourced support.

The Case For Outsourcing

Running a contact center is no easy feat; it takes dedicated managers with experience, business acumen, and the best interpersonal skills. Not all startups can afford to acquire the resources they need at the right scale for their growing business, and even some larger companies struggle to operate contact centers efficiently. In addition to high monetary costs, successful contact centers are the product of valuable focus and attention. Outsourcing functions that aren't an organization's core competency can be in customers' best interest.

Companies outsource to save money, allow companies to focus on their core mission, and leverage the knowledge the outsourcing company has gained over time and different clients.

Sometimes it just makes sense to focus on your core competencies of building your product and let an experienced team run your customer service operation. Especially when you’re a young company with limited budgets or headcount.

If it's your first contact center or customer service ops, espec in case of startups, I suggest outsource first - it's better to determine best practices there vs. making the investment and taking one step fwd and multiple steps bk. Strategically speaking, it's a better plan.

Follow the Money

Cost savings may be the most commonly expected outcome of outsourcing, especially when the service provider is offshore. However, outsourcing doesn't automatically mean lower costs. If the purpose of outsourcing is to add features, capability, or scalability, the service may come at a premium. That's okay, provided the business realizes the value of the more expensive service. It's also vital for outsourcing decision-makers to thoroughly understand the total costs and tradeoffs of insourcing and outsourcing options. Service doesn't magically become less expensive when bid out, and you may be paying for the "savings" another way.

Not always. You need solid understanding of your costs and the cost savings (or lack thereof). Folks don't always understand the full scope of cost to the Org and include that in their analysis. It can be worth paying more if the vendor can do it better and quicker.

Everyone's got a different price point, the key is what kind of ROI you're getting for that cost. More expensive can be better if you're getting more in return.

It need not be cheaper, but it needs to be of the same quality or better. It’s definitely worth paying more while outsourcing support in new languages, for example.

Shore Up Your Service

Outsourcing providers are often categorized by their proximity to their customers. Outsourced does not universally mean India or the Philippines; there are probably onshore outsourcing providers right in your back yard! Onshore providers are within the same country, nearshore providers are close by, and offshore providers account for everywhere else. Nearshore (to the U.S.) providers, such as those in North, Central, and South America, benefit from a closer time zone and cultural understanding of U.S. customers. You'll even find some nearshore providers that share your customers' first language, while also having lower operating costs.

On=North America. Near=Central/South America and maybe Europe? Off=Everything else. Big considerations for Near and Off are cost savings, follow the sun, and language proficiency. Though many will do their darndest to throw quality/CX in there.

Onshore outsourcing is typical to a US-based firm. Near-shore is debatable but might mean the Caribbean or Central America, while offshore tends to be Europe, India, and the Philippines. I don't think the location is as important as reputation and industry fit.

Onshore = Same Country. Near-Shore = Same Time Zone. Offshore = International. Depends on your company's needs and goals. What is most important? Quality? Availability? Low costs? Each one comes with benefits, but each one you will pay a price, not always monetary.

Low Cost, Low Quality

In the early days of globalization, customers were frustrated by language barriers, cultural misunderstandings, and sub-par support. Companies quickly shipped customer service jobs to the lowest cost locales with little regard for the customer or employee experience. These initiatives were often undertaken for the express purpose of reducing costs, without adequate concern for quality and customer retention. The industry has learned from this experience, on both fronts. Companies now balance service costs with customer objectives, and service providers have gotten much more adept at delivering quality efficiently. Changing customer preferences and channel mix has increased text-based service by email, live chat, and even SMS. Improved training and practice are equipping offshore providers to deliver even better support over voice channels.

The perception has gotten a lot better now but there’s still a slightly negative perception. It’s mostly due to bad blood from the past and due to stereotyping in pop culture!

Generally, yes. It's done poorly by many in the past and there has been a political aspect tied to the idea of outsourcing. E.g. "Sending good American jobs overseas". Whether you agree or not that is a narrative.

Outsourcing for Better CX

Outsourcers usually don't get much love for improving the customer experience, but there are plenty of ways to add value and delight customers. With the press of a button, your agents can help customers in hundreds of languages, thanks to outsourced interpreters. The next time marketing launches a huge campaign and forgets to tell you, your prospects will be pleased that your outsourcer was on standby to answer their calls quickly. When customers cannot sleep because of unsettled concerns, your outsourcer is burning the midnight oil to put them at ease 24x7. These are only a few examples of how outsourcing, as a whole or as a complement to your own staff, can serve customers' needs better than you can go it alone.

Outsourcing can help to reduce the response and resolution time. The outsourcing company can staff up and train quickly in a pinch.

Absolutely -- especially if you choose a partner that can help take people, process, and technology to the next level in your organizational development.

Sometimes the resources to do it well don't exist within the company. An experienced provider and strong partnership can definitely beat doing a half-assed job with internal team.

Fair Share Of Challenges

While outsourced contact centers have much to offer, integrating them with your customer service strategy isn't simple. After all, to help your customers better than they could help themselves, outsourced agents must understand your business. This is especially true when complimenting your insourced contact center. It's also vital that contractual agreements with outsourcers set them up for the service your customers expect; monitoring the wrong metrics with a contractor is no better than with your own employees.

Out-sourcing is trusting your CX and brand to someone who is not as invested in your company as you. Can affect the quality of service. It is a risk, but you can implement QC to help avoid this.

The outsourcing company not being prepared from the start of the engagement. Not understanding the customer’s needs. No processes or not the right processes. No knowledgebase. Wrong technologies. Not having the right people in place including management. Wrong KPIs.

Get On My Level

Communicating expectations with a third-party can be a chore; it's easy to make assumptions about standards you take for granted or haven't formally codified. Miscommunications and ambiguous requirements can quickly drive a wedge into your partnership. Companies usually liked each other when they signed the agreement, so ill intent can't be blamed for every lawsuit. Specific procedures and measurable objectives keep the peace as much as they hold entities accountable.

Have clear & communicated expectations of results & processes. Comms have to take priority. If you’re not giving feedback your partner will think they have it right even if they don’t. Trust & support go both ways.

Speaking of vendor managers, their focus needs to be on quality and productivity. You should expect that manager to calibrate with the outsourced team to regularly set and uphold a standard.

Join us on Tuesdays at 1 p.m. Eastern, 10 a.m. Pacific to weigh in on the contact center industry's most pressing challenges. Check out next week's discussion and join the conversation on Twitter!