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There’s No Place Like Home:  It’s Time to Reassess the Logic Behind Offshoring

August 27, 2020 By Blaine Slater Group Executive, New Business
hyperlocalisation Operations work from home
Article
By Blaine Slater Group Executive, New Business
hyperlocalisation Operations work from home

With the COVID-19 pandemic and restrictions impacting everything, all most businesses are trying to do is keep going as best they can.

It won’t be long though until we start thinking about the longer term, and reassessing not only the plans we’ve made during lockdown but also the assumptions behind the decisions we took long before we’d ever heard of Wuhan.

One of the most important things organisations will reassess is the logic behind their outsourcing choices, particularly offshoring, which were driven mainly by the need to cut costs and create efficiencies in the post-Global Financial Crisis world.

 

A new paradigm

The lure of offshore has always been that, as long as quality doesn’t suffer too greatly, the cost benefits of operating in a lower wage economy vastly outweigh the potential loss of a couple of CSAT points.

That thinking was based on two assumptions, both of which are being questioned now. The first is that customers don’t really mind that much (it’s not that they can’t tell, they can always tell). However, with unemployment rising dramatically at home as a result of the pandemic and lockdown, how will consumers feel about organisations keeping jobs offshore that could just as easily be done by Australian homeworkers?

The second assumption is that lower wages are the biggest factor in the overall cost of running an operation, which means Australian-based contact centres can just never compete on price.

This dynamic is also changing. Firstly, the contact centre industry has just adopted homeworking en masse, which is as great a cultural shift as I’ve seen in my working life. Eliminating costly offices from the equation makes a huge difference. Secondly, automation technology such as AI, robotics (RPA), and machine learning can now handle the most simple, repetitive requests – this ‘simplex’ work is what has most commonly been offshored – or enable customers to self-service. This leaves agents with only the most complex and challenging problems to solve, and for that you need highly trained and empowered agents, which isn’t traditionally the strength of offshore centres.

Together, these cultural and technological pressures are forcing companies to rethink their outsourcing and offshoring strategies. So let’s take a deeper dive into them.

 

Welcome home

It’s ironic that, at a time when most Australians can’t physically have people visit their houses, tens of thousands of contact centre workers around the country are welcoming hundreds of strangers a day into their homes, at least virtually.

Australia is geographically well set up for homeworking, with the hub and spoke structure of its major cities and regions. This also delivers the same kind of economic arbitrage that normally you need to go offshore to access. If you’re employing homeworkers they can be anywhere in the country, so you don’t need to pay them those capital city premium wages.

At the same time, you don’t need to pay capital city office rents either. At the very worst you’re going to need a much smaller space than before.

Australia has a reliable and robust telecoms infrastructure for remote working, certainly versus popular offshore destinations which also, don’t forget, have needed to switch to homeworking models during the pandemic.

As homeworking becomes more accepted by consumers, and more appropriate given the circumstances the world finds itself in, it will rapidly become comparable in cost terms with offshoring.

 

Hyperlocalised

I am not suggesting that every contact centre should switch to a homeworking model of course. As always, it’s a combination of different models that will likely give the best coverage and redundancy. Depending on the type of company, a combination of homeworkers in regional Australia, office-based agents in city contact centres, automated services where appropriate, all backed up by outsourced and offshore centres would generally prove to be a robust model.

The ability to include homeworkers in the mix does open up new avenues for boosting the customer experience and making stronger connections with customers. When recruiting, your available talent pool now covers the whole country, not just people within an hour’s commute of your contact centre. With a little imagination and a decent routing system it becomes possible to route callers to agents in their own local area, creating a stronger bond with your brand.

We have long believed that Australian-based contact centres are the right option for delivering the best customer experience, the best quality, and the best results – as well as being the best option for the Australian economy. Customers have become comfortable with e-commerce and dealing with brands remotely – COVID has only accelerated this trend. A combination of technology and homeworking mean companies can now build a hyperlocal e-commerce model, the best of both worlds.

When it comes to redundancy and disaster recovery a more distributed operation, which is not reliant on just one central location, is far more robust. Businesses with just the one option were hit hardest when COVID-19 forced them to close down their offices.

 

Automation brings parity

A combination of automation technology, highly trained and empowered agents capable of making decisions independently, and a CX partner that invests time and mental energy in your business can hit all your efficiency, quality, and commercial KPIs.

Simple processes should be entirely automated to get those costs as close to parity with offshoring as possible. Agent assistance and self-help automation technologies should be deployed as appropriate to reduce handle time and effort on the part of both agents and customers.

It’s all about getting the mix of human and automated assistance right, and I don’t think many companies have done that so far. Allowing agents to focus on only the more complex cases, which are high effort for customers and high value for the business, not only delivers better customer satisfaction it also increases agent satisfaction as their work is more interesting. This, in turn, can lower attrition rates, which can be a huge cost saving.

When it comes to those more complex live interactions, agents need to be multi-skilled in a variety of disciplines. The human experience, for most brands, is a combination of physical interaction (at least it will be post-COVID) and digital enablement via voice, messaging and video channels. Customer-facing staff need to be comfortable with these physical and digital channels. Enabling them is just as important a part of the digital transformation of CX as is automation.

If all this use of digital and automation technology, as well homeworkers, sounds costly to set up then this is where a reliable and experienced CX Services Partner comes into its own. A traditional BPO model, where the client contracts out a piece of work, and the partner does it as cheaply as they can to pass on the cost-saving just doesn’t cut it today.

At TSA we’re happy when helping a client to reshore an operation to build a flexible commercial model that meets their needs. This could mean we upfront many of the setup and build costs and share the benefits and savings. When your partner is experienced, reliable, modern, and proven to be able to deliver innovation and value, as well as hit KPIs, it won’t shy away from such a gainshare model.

 

Quality wins through

COVID-19 is a maelstrom, creating cultural and economic turbulence that is going to be transformative in the same way the Global Financial Crisis was over a decade ago. That led businesses to reduce their cost bases by using technology more smartly and also by outsourcing, often to offshore destinations like the Philippines.

Today’s digital CX and automation technology is much more powerful, and also far more precise a tool, than what was available a decade ago. Customer relationships – more global, more immediate, more digital, more mobile, and more competitive – are also a lot more complex, which means the job of managing them and creating personalised value for customers is more difficult. Success doesn’t rely solely, or even mainly, on cost-cutting or boosting efficiency. That is still one part of the equation, but it has to be accompanied by a ceaseless quest to create value and improve margins. For large companies, this has to be done at scale.

A traditional BPO, even one with both onshore and offshore capability simply does not have the resources or expertise to keep pace with the demands of today’s customers, or the current rate of transformation. What large businesses need today is a CX Services Partner that won’t sacrifice on customer experience, commercial results, or quality to reduce costs; that relies instead on a mix of automation technologies, bespoke processes optimised for your business, and highly trained, empowered agents to deliver efficiencies, productivity gains and results. Because you can’t cut your way to growth, but you can work both sides of the cost/quality equation to make your customers, agents, colleagues, and even your board happy.

 

TSA are Australia’s leading specialists in CX consultancy and services. We are passionate about revolutionising the way brands connect with Australians. How? By combining our local expertise with the most sophisticated customer experience technology on earth, and delivering with a team of people who know exactly how to help brands do amazing things for their customers

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