Skills primary reason for offshoring

Call centre operators mulling to move their operations offshore consider skills proficiency over plain cost savings when choosing a location, a recent study revealed.

A survey of 166 contact centres entitled the Global Contact Centre Benchmarking Report 2005 shows that about 50 per cent of the respondents cite “staff skills” as the primary driver for their location strategy, while only 42 perc ent cited cost savings as the deciding factor.

First published in the U.K. in 1997 by Merchants, a Dimension Data company, this year’s edition is the seventh in a series of benchmarking reports. The report balances global and industry representation from 166 contact centres located across 24 countries and five continents. It also provides managers with a set of benchmarks with which to measure their operations that include contact centre staff, salary levels, performance statistics, technology developments and training needs.

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“Offshore call centres face tough challenges as half of the businesses cite access to skills, and not necessarily lowest-cost labor pools, as the primary driver for the location of their call centre,” said Karina Majid, general manager for Customer Interactive solutions at Dimensions Data, a subsidiary of Datacraft Asia.

Staff issues were also considered as factors that influence the eventual choice of a location once a call centre decides to take the offshore route. The primary issue is the availability of staff (45 per cent of call centres), followed by staff skills (35 per cent). Interestingly, only a quarter (27 per cent) of call centres considered staff costs as an influencing factor, which again underlines the primary challenge placed on assuring quality of service.

“Staff issues, particularly around skills, remain a number one priority that companies must address and get right in order to realize the benefits of low cost locations, while maintaining excellent delivery of service,” Majid pointed out.

Businesses are also confronted with significant staff and service concerns. The top three issues in managing a contact centre in an alternate location are quality of service (56 per cent), culture of staff (51 per cent), and retaining control over remote operations (44 per cent), the study stated.

With concerns on skill and quality of service on the rise, challenges from the technical side have started to wane. Most of the businesses surveyed reveal that they have overcome many of the technical challenges of managing a contact centre overseas, the report declared. In fact, only 28 per cent cited data linkages, while only 19 per cent cited telecommunication as among their top three challenges.

On the rise Outsourcing will remain strong, according to the study. Overall, 48 per cent of contact centres ranked increase efficiency and cost reduction within their top three commercial drivers. This means that as long as cost can be significantly reduced by going offshore, organizations will continue to use this as a way of cutting operational expenses.

For companies that choose not to outsource, potential damage to brand (43 per cent of businesses), risk factors too great (32 per cent), and insufficient cost savings (22 per cent) were cited as factors influencing their decision. Unsurprisingly, two-thirds (68 per cent) of companies said they choose not to outsource because they perceive the function as being “core” to the business.

“Offshoring will, undoubtedly, continue as businesses are focused on reducing costs,” Majid said. “However it is likely that the same onshore issues concerning staff skills and processes are often replicated offshore. Indeed, sub-optimal processes or competence are likely to be exacerbated by moving the operation offshore.”

Related links:

CA’s Barrenechea explains offshore strategy

Offshore guidance

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