Posted tagged ‘offshore’

Southwest’s “Unsource” definition only tells part of the story

December 17, 2012

Blog ideas can come from anywhere, but this is the first entry I’ve written inspired by an inflight magazine.  When TSIA’s VP of Marketing, Trisha Bright, headed down to our San Diego office last week, she ran across something interesting in Southwest’s Spirit magazine and forwarded it to me. Here is “entry 627 in the Spirit lexicon:”

unsource \ ‘ən-sôrs \ verb [trans]

1. To shift customer support responsibility back onto the consumer in an effort to cut costs. USAGE: No longer satisfied with the budget benefits of outsourcing their customer service to overseas call centers, corporations are savings up to 50 percent on such costs by embracing the cut-rate option of hosting enhanced discussion boards on their websites, where frustrated consumers turn to each other for answers to common questions.

After reading this, I went thru a wide range of emotions, from violent agreement to anger and frustration. Here’s my attempt at capturing those reactions.

Obviously, I get it from a consumer standpoint. I’ve blogged before about how difficult it is to find the solution to consumer technical FAQs. But for a company who is constantly introducing new fees to make higher profits from customers, one wonders if Southwest should be finger pointing on customer service. But let’s look at the two issues in this faux definition and see how they can be a blessing….or a curse.

First up is outsourcing. Let’s be clear: sending support interactions to a service provider, onshore or off, does not automatically mean poorer service to customers. If there is one thing I’ve learned in my 25 years in customer service, it is that not every company has it in their DNA to do customer service well.  Are there terrible examples of bad outsourcing deals? Yes, and I’ve experienced them. And I’ve written about how frustrating it is to deal with a support technician with few English skills. But I’ve seen many examples of companies that improve customer satisfaction scores by going offshore. Especially in the B2B world, outsourcing is common, and CSAT and loyalty scores are high and growing higher.

I just said to a member last week that outsourcing is like implementing CRM:  You have to get it wrong once to know how to do it right. We all remember the rush to offshore in the financial crisis following 9/11, and companies learned a key fact about outsourcing:  You get what you pay for. When a company asks me to recommend an outsourcer with the lowest cost-per-call, I know they are headed for disaster. Yes, you can save costs by outsourcing, but high quality providers (such as Convergys and Sykes), balance cost and quality. If they can’t do a good job for the price you want to pay, they won’t bid on the business. They have no interest in providing mediocre support–it isn’t good for your brand or theirs.

But while I can at least understand Southwest’s sentiment regarding outsourcing, I completely disagree that providing customer discussion forums is bad for customers. In my snarky opinion, whoever wrote that is clearly over 50, and in the demographic that still thinks that phone calls are the only channel customers really want. As I am constantly saying, channel choice is largely demographic, and the younger the customer, the more likely they prefer forums over phone. In fact, the 18-34 demographic which most product companies target rate phone as one of their least likely support channels, preferring self-service and peer-service (forums) over assisted service. Even “Google search” rates higher as a support channel than phone calls with younger customers.

Would companies prefer that customers use lower cost unassisted and peer-assisted options to cut costs? Absolutely. But what consumers may not realize is that phone call, email and chat volumes are NOT going down. Support volume increases year-over-year dramatically, and companies are trying to find ways to resolve more issues without live agents because they can’t possibly hire enough agents to address 100% of support volume. While assisted support volumes may go up 10-20% a year, TOTAL support volume, meaning all customer questions including those answered via self-service and online communities, goes up 50% or more a year. The more complex the technology, the more questions customers have. Providing options other than phone to get these questions answered is not “unsourcing” support, it is providing the channels that customers demand.

Now, about that $50 fee you charged me for being 3 pounds over the baggage weight limit even though I purchased an expensive ‘business select’ fare? That’s more frustrating to customers than offering a community discussion forum. I look forward to seeing that pop up in the Spirit Lexicon. How about “gouging” as next month’s term?

A Conversation with Sath Sathyanarayan: Seven things everyone engaged in offshore outsourcing must know

September 4, 2012

We all receive a lot of emails advertising white papers, and I wanted to call attention to a report from outsourcing guru Sath Sathyanarayan, whose firm Offshoring Success LLC helps companies create more effective and profitable relationships with service providers. The report, “Seven things everyone engaged in offshore outsourcing must know to address budget overruns and frustrations,” is clear, succinct, and full of great advice—not the usual marketing speak and vague recommendations. I reached out to Sath and he was willing to answer a few questions about the paper. Here’s a peek at the interview:

John Ragsdale: Outsourcing is one topic we don’t have internal expertise on at TSIA, so I’m always happy to talk to industry experts willing to share their expertise. Let me ask you a few questions about your latest white paper. Your opening point is that “low bidders” almost always become a high-cost solution. I’ve seen this over and over—companies making their first outsourcing decision always seem to focus on cost per call and go with the lowest bid, not considering quality. It rarely ends well—but is a good lesson for future partner relationships. Why do so many companies make a decision to cut costs at the expense of the customer experience? Is this one of those mistakes everyone has to make in order to learn?

Sath Sathyanarayan: It is hard to generalize why so many companies make the same mistake. In my working with a range of companies, I have found raising awareness is the key. Once my clients understand the full impact of their decision they are very willing to choose the “right” vendor on their first try rather than try, fail and choose again.

John: Another point you make in the report is “How excessive employee turnover creates cost overruns for you.” I just checked the data in our benchmark, and “owned” employee turnover is less than 15%, but turnover for outsourced offshore workers averages 22%, with some members reporting turnover rates as high as 60% per year. Could you talk about why turnover is so high with offshore workers? Is it just that the opportunities are so good they tend to jump ship for a better offer, or are companies not doing enough to make workers feel like a part of a team, creating unsatisfied workers?

Sath: “Own” operations have salary structures that are in general much higher compared to the salaries offered by vendors. Combined with this, it is easier to operate are “one organization”, because it is! Less issue of us vs them. When you outsource to a vendor often the attitude of HQ management is that turnover is “their” problem. However, companies who have been successful in keeping turnover lower take a different approach. While vendors have to implement, they work in partnership to understand reasons for turnover and do things within their purview to mitigate turnover.

John: Your report also talks about how to deal with low offshore productivity, and you give several approaches, including regular audits. One of our members who knows a lot about outsourcing, Tarik Mahmoud at Cisco, told me that having a frequent in-person presence at offshore centers is absolutely a requirement. Of course, that means he’s on the road most of the time, but he keeps everyone on their toes. It seems that many companies write a check to the outsourcer and feel their responsibility ends there. How often should companies visit offshore centers, and what level of company employee should make visits? Executives? Product experts? Support all stars? All of the above?

Sath: Writing a check and sitting back is a recipe for almost certain failure! Successful companies get involved. They treat the offshore service provider as a partner and they actively manage the relationship at all levels. From the executive sponsor to the hands on project manager.

  • Visits: All of the above. Executive level: Once a year. Hands on managers — Once a quarter. Needs to be adjusted depending on the stage of the relationship (launch vs ongoing)
  • Regular Audits: I am referring to a comprehensive look at the relationship in its entirety. Major issues to understand: Does the strategy and reasons still make sense? Do we need to change the business mission in light of current and future direction of the company? What operational issues are we experiencing — quality, deadlines, turnover etc? Do we have the right staff of managers offshore? Do both sides have or continue to have understanding of each others cultural issues and their impact? Do we have the right metrics in place? Do we have the right organization in place? Do we have the right management processes for visibility and control?
  • People and organizations continue to change. I recommend once a year audit to make sure that the offshore operation continues to stay on track.

John: The last section of the report discussion moving to a “outcome based” metrics approach with service providers. In my experience, tech companies struggle with how to define these metrics, how to approach the negotiation, etc. Could you talk a bit about outcome based metrics? For companies considering this approach, is this something you can help them with?

Sath: Traditional outsourcing models focus on input; for example man hours, person months, emails answered or number of calls processed. On the other hand outcome-based focuses on output i.e. reaching a business goal such as customer satisfaction, customer loyalty, support cost as a percentage of revenues etc. Outcome based approach can dramatically improve benefits from offshore outsourcing. But it is not for everyone. Moving to an outcome-based model requires that you establish a win-win model both for you and the vendor replete with both business and operational considerations. This is the reason many companies struggle with implementing this approach. Yes, we can definitely help companies to evaluate and implement outcome based approach in their operations. Your readers can also download a white paper I wrote “Outcome-based Offshore Outsourcing.”

John: Thanks so much for taking the time to speak with me. Great information!

Sath: Thanks for having me.

Best Practices for Talent Managment in India: Report Live 5/5

April 21, 2008

I’m thrilled to report that the long-awaited whitepaper, “Talent Managment in Emerging Markets: Best Practices for Attracting, Developing and Retaining Talent in India,” is now complete, and a press release dropped today announcing it.

A committee of SSPA members, many based in India, have been working on this project for nearly a year, including participants from Symantec, Cisco, Avaya, Microsoft, Oracle, MeritTrack, EMC, Sun and other companies.  The report will be released at the SSPA Spring Best Practices Conference on May 5th, and a presentation on the findings and recommendations will be given by Dheeraj Prasad, Director, Developer Support, Microsoft Global Technical Support Center, at 10:45am on the 5th.

Here are some findings of the study. (more…)

The New Low Cost Outsourcing Location: USA?

March 26, 2008

When I had 4 people in 2 weeks confirm that companies have been shifting calls from Canadian outsourcers back to the US because the US dollar’s slide was making the costs of “near shore” outsourcing too expensive, I suspected something was brewing.  And yesterday, when over 400 people registered for our SSPA Webcast entitled “Onshore vs. Offshore Support: Why Domestic Providers are Winning,” I knew we had hit on a hot topic.

Our SSPA benchmark data shows that no matter how you slice it, satisfaction is higher with onshore service than with offshore service:

Onshore vs. Offshore