Sitel: Shore Thing - Joe Doyle
Social networking has opened up a new shop front in customer relationship With more markets beginning to embrace outsourcing, Sitel's Joe Doyle highlights how many multinationals are looking to consolidate vendors and geographic sites into two or three multi-lingual hubs in order to gain economies of scale, gain greater consistency and improve vendor management.
While cost-cutting is the leading priority for companies of all sizes, bosses are not happy to sacrifice the quality of their customer service. Many are therefore following a strategy of offshoring or nearshoring, which results in significantly reduced labour and property prices but also offers advantages of scalability as well as access to a work force that is commercially sophisticated and in tune with Western culture.
The range of destinations that can be called upon to offer outsourcing services is increasing rapidly. Companies looking for low-cost English-speaking agents have a choice of India, South Africa and the Philippines, among others. While India offers the advantage of an extremely large labour pool, countries such as the Philippines use English as the official language at university and for business.
Morocco and Egypt are equally practical for French-speaking customers, while Mexico, Panama, Chile, Columbia and Nicaragua have huge workforces that offer Spanish language services to customers based in Spain and the US. Moreover, the cost of living in the Scandinavian countries is prohibitively high, which has led to London and Barcelona becoming outsourcing hubs for the Nordic languages.
According to Joe Doyle, EMEA marketing director for Sitel, one of the leading outsourcing providers of customer care and back-office processes, central and Eastern European countries are coming to the fore. "We've got sites in Poland and Bulgaria, but countries such as Romania, the Czech Republic, Hungary, Slovakia, Lithuania, Latvia and Macedonia are also seeing that there's an opportunity to make money by capitalising on the outsourcing trend," he says. "They are becoming prevalent in terms of offering grants to companies to locate call centres there."
Economic growth and an increased liberalisation of trade and the financial markets are partly driving this trend, but demand from Western European countries is also on the rise. "Many West European multinational organisations are looking to take advantage of central and Eastern Europe's low overhead costs," Doyle notes. "They've got good linguistic capabilities, so within one centre you can have a good mix of languages."
Grouping many languages in one hub can significantly reduce clients' costs through a technique known as 'call blending', where one multilingual agent handles two or three languages and by offering economies of scale.
"There's also a relatively close link between Eastern and Western Europe from a cultural perspective," Doyle continues. "Around 20-30 years ago countries in central and Eastern Europe were cut off from the rest of Europe, but now they're much more in tune."
As more Eastern European nations start to join the European Union, companies can also benefit from increased transparency and uniformity in terms of laws and currency. "The deregulation of the financial services, telecommunications and utilities markets gives new players the opportunity to move into those regions and improve on areas such as customer care," Doyle adds.
There is no doubt that the swift growth of the Eastern European market is contributing to the interest in multishoring, as shown by the increasing numbers of companies. "Previously, there was a perception that you either did it all onshore or you did it all offshore, but, with new markets opening up, companies are looking to maximise efficiencies by starting to spread certain services across different locations," Doyle remarks.
The main advantage of multi-shoring is the price. Within a call centre operation; often around two-thirds of the total expenditure relates to labour, and agent-related costs are typically 20-40% lower if a company goes offshore. On top of dramatic labour-related cost savings, commercial property is significantly cheaper in offshore and nearshore destinations than in Western Europe. Moreover, emerging markets often have attractive incentives for companies looking to outsource, such as subsidies and tax breaks.
The value of skills
While the labour markets in many developed countries are almost saturated, the scalability offered in offshore destinations is impressive. "They have a large labour pool to draw on and agent attrition is often lower, meaning that recruitment and training costs are reduced," says Doyle. "It is therefore easy to ramp up for a particular seasonal campaign and find an additional 100-200 staff relatively easily at a reasonable price."
The commercial sophistication of outsourcing locations is also growing. Whether it's related to languages or handling different types of software, the gap between developed and developing nations is narrowing, particularly in EMEA destinations.
When considering a multi-shoring strategy, there are several factors companies must take into account, not least implementing a rigorous recruitment process. "Training is key," says Doyle. "But if your recruitment policy is poor, training will be much less effective and more expensive."
A thorough screening process is essential. After an initial telephone screening, comprehensive testing and evaluation should be followed by a job preview. Once a candidate has passed this stage, a formal interview and background checks need to be carried out. "That's when the training comes in," Doyle notes. "Corporations need high-quality trainers for cultural affinity and skills training, and sensible companies would then implement an 'onboarding process' for one or two months throughout which new employees have constant support from their supervisor or team leader."
Even before the recruitment process, choosing the right mixture of onshore, offshore and nearshore destinations is a significant challenge for companies, and, for Doyle, there are three boxes that must be ticked: process affinity, cultural affinity and vertical market experience.
"If they're looking to do technical support, for example, technological literacy in the destination they choose must be high," he explains, citing Bulgaria and India as good options. "Moreover, they will need agents that are familiar with the products and services delivered by their company, which will lead to high levels of empathy, as well as a labour force with experience in a vertical sector similar to theirs."
With so many factors to take into account, it is often beneficial for organisations to team up with a quality outsourcing partner. "It all comes down to core competencies," Doyle remarks. "This is what we do; we go into foreign markets and establish contact centre operations. We've been doing that for almost a quarter of a century."
Sitel has over 300 clients in locations spanning the globe and covers a wide range of vertical sectors, from financial services to retail, travel, media and entertainment. The outsourcer can therefore provide huge cost savings to companies.
"Let's say we are supporting a sales service, we can improve a company's revenue and turn a cost centre into a profit centre," Doyle comments. "We ensure that customers are getting the best possible level of customer service, which reduces customer churn and goes on to protect the margins and profitability of the organisation."
Although Doyle is well placed to comment on the future of multishoring, he remains cautious about his predictions. "On the one hand, it will continue as more new markets open up," he says. "As new countries join the EU, they can become attractive, particularly with the advantages of lower costs.
"To take another example, we were the first outsourcer to start providing services into Nicaragua, a country with a somewhat unstable history, but it's proving first-class in terms of quality of agents, cost and the level of service, so there will always be that hunger for new markets."
On the other hand, Doyle has seen a new trend emerging over the last 18 months. "Larger pan-EMEA and global organisations are starting to adopt a strategy of having only a few vendors," he begins. "They may be delivering their customer services across ten languages via eight or ten different countries with as many separate vendors, but they are starting to cut that down to two or three multilingual hubs. This will mean they need less staff to mange their vendors while attaining economies of scale."
Outsourcing, however, is still on the rise. "First-time outsourcers often dip their toe in one particular type of service or consumer group and start to see quickly that the cost benefits are there and they can begin to focus on their core competencies," Doyle explains. "They'll then start to outsource other things such as back office activities, which are closely linked with call centre operations."
While the movement towards multi-shoring has been marked in recent years, emerging markets have started to capitalise on the needs of multinational companies, leaving the future of the trend up in the air. There are clear advantages of spreading operations across several locations, but this could potentially lead to unnecessary complexity. And as many global organisations are looking to consolidate, the future may lie in offshore or nearshore hubs capable of providing flexible, multilingual agents.