Executives often perceive outsourcing as an easy, fast and/or cheap alternative to tackling performance, capacity, technology, facility or budget issues. But it’s not the simple solution many hope for. Take this message back to management: You need a considered approach to figure out if outsourcing makes sense for your center, and if so, to what degree. If you’re going to do it, you will need to apply best practices carefully with appropriate service level agreements, key performance indicators and account management to put you on a path to success.
Easy, Fast and Cheap—Really?
We routinely see clients considering outsourcing as they face budget pressure, or begin to see that their cost per call or per contact (CPC) is too high. Some more specifically look at their labor or facility costs in locations with high cost of living and know they could do better. In other cases, they simply say, “We’re not contact center experts. Our core competency is (fill in the blank), and we would rather focus on that.” Other drivers to outsource include the need for agility in staff levels: fast growth, erratic or peaked volumes, uncertainty in size as their web or mobile self-service grows. And let’s not forget business continuity and disaster recovery (BC/DR), which can keep leaders of single-site centers up at night. Beyond the people, process and budget side of the equation, some are lured to outsourcing because of technology inadequacies or fears. “We don’t want to invest in technology and/or don’t have the knowledge or resources to build it out properly.” The toughest scenarios we see are driven by speed: the need to do something FAST to solve some problem that has become too painful, or has just surfaced (e.g., unexpected growth, speed to market product or service, acquisition, etc.).
In any of these situations, a moment of reflection may help companies see that there is more to outsourcing than meets the eye. It is NOT EASY. There is a lot to getting it right. The transition to outsourcing is NOT (usually) FAST. You’ll need time to select the right partner, put the right agreements in place, and implement effectively. It is NOT CHEAP. Outsourcers and their employees have to make a buck, too. (Beware if the price looks too good to be true!) It will not necessarily lead to better performance. It can work, but… it takes proper planning, the right in-house resources, strong processes, and yes, even some technology tools and smarts. And I should emphasize that outsourcing is rarely a short-term solution. Anyone pursuing outsourcing should plan to do it for the long term and recognize that you are unlikely to switch or bring it back in-house anytime soon. (That’s not easy, fast or cheap either!)
Does the Shoe Fit?
So, the first step on the road to outsourcing success is to decide if it is right for your center. Why would you outsource? All the reasons I noted earlier are valid, but they need to be weighed against alternatives, and with strategic context. That means having a clear vision of the business strategy, operational strategy and technology strategy for the short term and long term.
Why wouldn’t you outsource? Analysis could reveal it may not be cheaper, maybe you can’t do it as fast as you thought, or you have to upgrade your technology and build out BC/DR plans for other parts of the business anyway. You may look at competitive differentiation in contact handling, including brand representation, specific product or service knowledge, or the sales and revenue opportunities and realize you don’t want to put your business in the hands of a third party.
Regardless, you must consider how your goals align or compete with the outsourcer’s goals, as shown in Figure 1. You want good performance, and the outsourcer wants to extend their relationship with you by handling more contacts (for more revenue). You will need to build the right agreements (and manage to them) to make that common ground the pillar of your success.
If you’ve decided outsourcing is indeed a fit, the second step is to contemplate what form it will take. You have some big decisions to make, such as whether you will outsource all or a subset of your contact types (service, sales, etc.) and media (phone, email, chat, etc.). If the answer is all contacts, that’s a big deal, and you better have strong vendor management skills. You’ll need to decide if you want one or multiple sites, and one or multiple vendors. If multiple, you’ll tackle more decisions, such as who does what, and do they compete for work? You have options to use dedicated or shared agents, and whether to flex staffing levels in your center or the outsourced center(s). There are tradeoffs either way. As if that’s not enough, the biggie is the pricing model. Options include per agent hour (with variations tied to clocked in, production, or scheduled hours), per minute, and per call or contact.
There is no right answer to these questions. You will have to look at the situation and what makes sense for you and the vendor partners. Factors that you’ll consider should include:
- Your business strategy and directions
- Size and volume expectations
- The nature of your contacts and processes (and how well defined, repeatable, etc.)
- The nature of your customers and competition
- Technology used (leverage yours or theirs)
- The resources you already have, or will have (contact center front line, support resources, and outsourcer vendor management; technology and facilities)
The Partner Pursuit
To find the vendor partner that is the right fit, start at the strategic level. Define the goal, contact types, the problem you are trying to solve, as well as the expectations of the outsourcer. Define some key qualifying criteria to help you narrow the huge field of players (see the sidebar, “What to Look for in an Outsourcer”). Even if you’re a big company, don’t just consider the big players that land on a Gartner Magic Quadrant for Business Process Optimization (BPO). Don’t limit your options to someone who knocked on your door or one that another company you know uses. Conduct vendor research based on the defined criteria to find those that fit. We like to do a multi-step screening process since there are so many options. Cast a wide net—first based on some key criteria, then narrow the list with some brief phone interviews and/or a short questionnaire that is quick and easy for all involved.
Once you’ve qualified a set of vendors, conduct a selection process like you would for contact center technology or any other important services. Write requirements and seek proposals with defined pricing models. Bring vendors in for presentations with an agenda targeted on your requirements and concerns. Conduct site visits to the outsourcer—preferably to the sites that will handle your calls—and meet with a variety of leadership and frontline staff. And don’t forget reference checks with a well-defined list of questions that address your hot buttons for implementation and ongoing operations, including account management and performance.
Keys to Success
The starting point for success—for you and the outsourcer—is a pricing model that fits. Technology configuration, your role in defining the number of staff needed, the flexibility you desire (e.g., shared vs. dedicated, where volume variations are absorbed, etc.) all influence the best pricing approach. Generally, per-minute or per-contact is better suited to shared agents and situations where the outsourcer has more control over agent scheduling. Per-hour is better suited to dedicated agents with you dictating staffing levels.
Both parties will bear some risk, which can be mitigated and managed through the agreements and associated performance criteria that align with the pricing approach. With hourly fees, you bear the risk of efficiency and productivity. You address that risk through good forecasts and schedules and consideration of where staff levels can flex. With per-minute or contact, the vendor bears the risk of efficiency and productivity, so may require a minimum monthly cost, or volume or occupancy guarantees. You risk that they drive up costs through higher AHT with per-minute, or compromise quality or customer experience as they try to shorten handle time or transfer back to an in-house SME with per-contact. Selecting the right partner and negotiating and managing to the right set of goals will address these risks.
Avoid getting stuck in contracts that have high fixed fees or specific number of FTEs, if you are dealing with uncertainty or change. Find a partner that is willing to adjust based on business needs. If possible, build in reviews or triggers to adjust pricing (model and/or rates), especially if you are in the situation of starting up quickly to address an urgent need. And remember, in most cases, you will be signing a multiyear agreement and building a long-term relationship that is not easy to change.
A proper statement of work (SOW) for implementation, master services agreement with well defined service level agreements (SLAs), and good account management are the most critical keys to success.
SOW: The SOW should address many elements, including project management, timeline, transition plan, integration, training (new-hire and ongoing), testing, pilot and rollout, if you will take a phased approach. The SOW differs if the facility and staff are already in place, or if a build-out or hiring is required. (Sometimes outsourcers start a new facility for a given client.) Similarly, the technology plans impact the SOW. Finally, the SOW should make clear the resources to make it all work (IT, trainers, supervisors and other leadership, HR, etc.) on each side and the required amount of time, including onsite time.
SLAs: The SLAs vary depending on the model, but key performance indicators (KPIs) should always include quality and adherence. You will likely want to monitor handle times and transfer rates, and measure customer satisfaction, if possible. If the outsourcer is doing some quality scoring, establish routine calibration. If you use shared queues on your system, you will be responsible for service level and other “big picture” performance metrics. If you are sending volume to their system, they will manage meeting these important KPIs. Regardless, you’ll want to ensure real-time and historical visibility to all appropriate systems for center leadership at both the outsourcer and your office. Always include routine (e.g., monthly) account review with status and actions. Include SLAs for response time and resolution time when issues arise and time to ramp up or down, or address new needs as your business changes. And finally, SLAs on attrition may be important, especially regarding who foots the bill for training new-hires to replace those who leave.
Account Management: Good account management is a two-way street. Assigned managers on each side must work together. You hold the vendor accountable based on the SOW and SLAs. Routine reports and reviews, along with monitoring of quality and other KPIs, provide the basis to communicate, assess and optimize. The managers define and execute action plans to address issues and prepare for changes (new products, processes, technology, etc.). Your account manager should expect to conduct routine and unexpected site visits. During these visits, the manager observes contact handling, meets with leadership, support teams and frontline staff. Other tasks could include visiting training classes, assessing new-hires, and observing brand and culture representation. And of course, all of these tasks are even more demanding in an offshore or global scenario.
If You’re Going to Do It, Do It Right
While outsourcing might help your center achieve its goals, it’s not an easy answer for everyone. Take the time to figure out if it fits and, if so, where and when. Then do it right, starting with good agreements and a methodical implementation approach. Allocate the proper resources to manage your relationship effectively. You’ll ensure success for you, the outsourcer and your customers.
Lori Bocklund is Founder and President of Strategic Contact.