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Introduction to Customer Services Outsourcing
Customer service is an important business process that firms carry out to ensure satisfaction and retention of their customers. Though it is a non-core activity of an organization, it helps in creating goodwill of the company since the company caters to the wants and needs of its customers.
Customer service is a key parameter that differentiates a company from its competitors. Earlier, companies used to carry out customer service in-house, but due to benefits such as focus on core competency, cost savings, quality and flexibility, which are applicable for business process outsourcing as a whole, many companies are outsourcing customer services now. Today, a call made to a British credit card company is answered by an Indian on one day and by a Malaysian on another day.
Customer service outsourcing, also known as call center outsourcing or contact center outsourcing, is a part of <a href="business/outsourcing/bpo/report.php">Business Process Outsourcing (BPO)</a>. It is an established industry with a market size of USD 8.4 billion in 2004, according to research firm Gartner.
Gartner expects the market size for customer service outsourcing to grow at a Cumulative Annual Growth Rate (CAGR) of 13.2 percent and reach USD 12.2 billion in 2007. Research firm, Datamonitor, has also predicted robust growth in customer service outsourcing. The research firm expects the onshore customer service outsourcing market to grow faster than the offshore market.
Types of Customer Services
Customers need different types of information or support services from a company. Customer interaction is also required for sales and marketing. Hence, a contact center can be used for a variety of business process. Robinson and Kalakota have analyzed different types of customer service functions in their book ‘Offshore Outsourcing: Business Models, ROI and Best Practice’. These functions include:
1.Support: Support services include resolution of billing queries, order taking, activation of accounts, registration of new customers and recording complaints.
2.Marketing: Marketing tasks carried out through a contact center include sending outbound emails, telemarketing, surveys and poling, responding to inbound emails and management of marketing campaigns.
3.Sales: Sales tasks include inbound sales, outbound sales, web chat, web call-back and co-browsing.
4.Technical Support: Customers require different technical support services such as data verification, application support, address updates and problem resolution through the technical help desk.
5.Customer Analytics: Customer analytics includes profitability analytics, quality auditing, reporting and complaint analysis.
Building Blocks of a Customer Service Center
What makes a call center successful?
The essential building blocks of a customer service center are strategy, processes, technology, human resources and facilities. Vendors providing customer services need to invest time and resources in building a center that guarantees not just low cost but also quality services through efficient technologies, people and processes.
According to the American Financial Network, Inc., a call center should gain expertise in the following areas:
•Transformation: The client’s customer services are thoroughly studied by the vendor, which then suggests solutions that will provide various benefits. The vendor shares the management that will carry out the transformation and executes the operations as an outsourcing partner. Transformational outsourcing enables the vendor to work on predefined process outcomes and gain benefits that are greater than the low margins provided by traditional outsourcing.
•Benchmarking: The operations of the outsourced center need to be properly monitored and benchmarked to ensure quality delivery of results. At the same time, a client may want to monitor some sample calls. Also, providing regular feedback to agents on their calls ensures the center’s operations according to the benchmark. Some benchmarking parameters are given in the section Performance Measurement in a Call Center.
•Innovation: Outsourcing vendors can improve the efficiency of their services by using the latest technology and bringing innovations in their processes regularly.
•Human resources: Human resources is the most important asset of a call center. The employees who interact with the customers in a contact center are known as agents. These agents should know the different aspects of their service and should try to solve the customers’ queries to satisfaction without any ‘do-away with the call’ attitude. To build these human resources, companies should develop a rigorous training program and should ensure that their employees are updated with the changes or modifications in the services through regular training sessions. Vendors should also motivate the agents to increase their satisfaction and optimize their productivity and retention.
Technologies for Customer Service Outsourcing
Technology has played a vital role in customer service outsourcing. Rapid advancements in information and communication technology have led to a boom in call centers across the world. Call centers use a variety of technologies to support contact with a customer.
Prosci research, a firm that researches call centers, conducted a survey of 120 contact centers and found that email is the most commonly used medium for customer contact. The survey findings have been tabulated in Table 1 (numbers do not add up to 100 as the survey participants were not limited to one option).
Table 1: Technology Usage Level in Call Centers Source: Prosci Research
TechnologyPercent of respondents
Email62
Voice response systems61
Quality monitoring systems53
Computer telephone integration51
Call logging systems49
Contact Management tools46
Workforce management tools43
Wallboards / reader boards42
Advanced network services38
Knowledge-base tools35
Predictive dialers
18
Web-enabled call center18
Multimedia queues13
VoIP9
Speech recognition7
Various technology options are available to an outsourced customer service center and the selection of technology that will be used by the center needs to be done intelligently. The technology used should give the call center a competitive edge over other vendors. According to Intel, the technology used in an outsourced customer service center should provide the following six essential requirements:
1.Availability: The applications and services should be available during the specified time of operations. The system should also be available to the customers without making them wait for a long duration.
2.Manageability: The system should be easily reconfigurable and should enable the center to quickly customize the applications for any new services and scripts requested by the client.
3.Quality of Service: The voice and data services should be reliable and should have a pre-specified quality level.
4.Redundancy: There should be adequate protection against system failures and data loss. Adequate back-up plans in case of any system failures should be made so that the operations are not hampered.
5.Scalability: Modular increments in the system capacity should be feasible.
6.Security: Ttechnologies used by the center should ensure prevention of loss and theft of client data.
Call Center Infrastructure
The most critical asset of a call center after human resources is its infrastructure.
The infrastructure should allow an outsourcing vendor to maintain multiple applications and systems for multiple clients and should enable rapid deployment and integration. Hence it becomes necessary for an outsourcing vendor to select the right infrastructure and architecture.
Infrastructure requirements of a typical customer service center include the following:
1.Telecommunication network
2.Hardware
3.Software
Telecommunication Network
The telecommunication network connects a caller with the agent. The basic elements of a telecommunication network include public switched telephone network (PSTN), router, long distance carrier (LDC), Ethernet switch, modem and contact center server. When the outsourced call center is located in another country, the LDCs in the two regions are connected through the International Private Leased Circuit (IPLC), which is an agreement that provides connectivity through cable or satellite on lease. Companies have recently started using the Voice over Internet Protocol (VoIP) technology, which is used to transmit voice, fax and data to another location through Internet Protocol (IP) network.
Hardware
A customer service center should have state of the art hardware components such as local area network (LAN), desktops for agents, automatic call distributor (ACD), predictive dialer, computer technology integration (CTI), Web integration, interactive voice response, fax on demand, and voice logging and messaging. Integration of these different components becomes easy if they have a single platform.
Software
Software is as important as the telecommunication network and hardware in a call center. Various Customer Relationship Management (CRM) software are available that enable an agent to gather information about a customer (who is on line). CRM software also allows segregation of the customers into different types and determining the value of each type. Vendors can use end-to-end CRM software as well as packages catering to specific functions such as telemarketing and technical support, etc.
The telecommunication network and hardware at a typical call center that uses IPLC is given in Figure 1. The client and the customers are generally located in a developed country such as the US and outsourced vendor is located in an offshore destination such as India (Read the report on outsourcing to India for details on India’s value proposition as an offshore destination). The customer connects to a PSTN at the client site. The call is then routed over to LDC in the US. This call is further connected to India through the IPLC between India and the US. The Indian LDC and a local loop transfer the call to the call center server through a router, while the data is transferred to the call center LAN. The ADC distributes the calls to the agents. Other hardware components are used to either obtain information about the customer from the database or to manage the calls efficiently.
Fig 1: "Telecommunication network and hardware in a call center"
Performance Measurement in a Call Center
The productivity of a call center greatly depends on its performance measurement system.
The performance management system or the quality assurance (QA) program analyses the calls attended by the center and thus suggests areas of development for the agents, managers and the center as a whole. Many clients demand the implementation of these QA programs to regularly evaluate the service quality provided by the outsourcing vendor.
Clients and vendors should also use clearly defined parameters that do no involve complicated measurements and thus reduce the possibility of disputes over service quality. Using parameters that enable performance measurement on an objective basis is the key to avoid complicated measurements.
Some commonly used service evaluation parameters include the following:
•Average talk time: The average time a customer is connected with the agent is obtained from the ACD. Lower talk time ensures customer satisfaction and guarantees efficient call handling.
•Average speed of answer: When customers make calls to the customer service center, the ACD picks up the calls and distributes them to different agents. The average time required by the ACD to carry out this process is the average speed of answer of a call. A lower speed of answer ensures lower customer dissatisfaction.
•Hold time: The average time an agent keeps the customer on hold to obtain data from the database is obtained from the ACD. This includes initial hold time (before the call is answered) and the time the customer is kept on hold by the agent while accessing data. Contact centers try to reduce the hold time as longer hold time leads to customer dissatisfaction.
•Calls per hour: The average number of calls attended by an agent in an hour is obtained from the ACD. Higher calls per hour ensure higher agent efficiency.
•Average time in queue: Average time in queue is the total time required to reach an agent divided by the number of calls attended by the center. The average time in queue should be lowered to increase customer satisfaction.
•Occupancy: The average time an agent spends on his/her seat and is ready to answer calls is also obtained from the ACD. Clients who pay the outsourcing vendor for the number of agents employed demand a specified occupancy rate. This ensures that the vendor has not overcharged the client.
•Percentage of calls answered: Many clients demand the vendor to answer at least a fixed percentage of incoming calls. By decreasing the rate of abandoned calls, clients strive for greater customer satisfaction.
Clients and vendors also use additional parameters such as number of blocked calls (call handling errors), number of dropped calls (calls that were dropped due to system failure), number of misdirected calls (calls directed to a different division) and database access (slow access of database leads to customers disconnecting the calls).
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