Five myths about outsourcing customer service
Written by Ivan Ivanov, COO of 60k
A decade ago outsourcing was a new concept; now it is in many industries the norm. Indeed it is a significant part of the global economy: in August 2013 Gartner predicted that the global outsourcing market will grow by 5.4 percent a year for the next four years, reaching a total value of $288 billion.
Yet, despite this, many corporate executives remain sceptical of the benefits of outsourcing. In fact, it is hard to think of an industry that has grown so large so rapidly whilst at the same time attracting such widespread opprobrium. Here we debunk the five myths that hold back far too many businesses from realising the benefits of outsourcing.
1) Language will be a hurdle
Perhaps the most common complaint about outsourcing to an overseas firm is that they will not have the language skills required. We have all suffered through conversations with unfortunate young Indians who are bravely trying to comprehend unfamiliar words, make themselves understood through thick accents, and compete with a crackly line. It is little wonder that many senior executives are reluctant to entrust their customer service to an outsourcer which might present similar problems.
Yet, in new outsourcing locations like Bulgaria, language skills are a selling-point rather than an embarrassing problem. An outsourcing company in Bulgaria can speak more than 30 languages. And companies such as US research company Service 800, are specifically outsourcing to Bulgaria because of its multilingual capabilities, which, in nine months has built a team of 37 people speaking 22 languages to consumers in Europe, the Near East and Africa on behalf of Service 800.
What is more, the standard of those languages is very high. It is not enough for someone to speak the language well, or even be merely technically fluent – they must be a native speaker. For example, to speak to Brazilian consumers Portuguese is not enough; it must be Brazilian Portuguese.
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2) It might save us money but it will compromise quality
There are few aspects more critical to the success of a business than the relationship it has with its customers, and so it is unsurprising that so many companies are reluctant to entrust these relationships to a third party.
Because much of the early enthusiasm for outsourcing was driven by the opportunity to cut costs, and because there are still significant savings to be had – at one outsourcing company in Bulgaria for example, has fees which are around half those of a comparable agent in the UK - the entire outsourcing industry has in many minds become synonymous with cost savings.
Yet recent research from business advisory firm KPMG among 490 outsourcing contracts worth a total of £10 billion found that for many companies the primary driver for outsourcing is no longer cost reduction – it is in fact enhanced quality of customer service.
KPMG stated that 48 percent of respondents based decisions to outsource on a desire to improve service levels. That was up from 28 percent in 2009. 56 percent cite ‘the need to access skills’ as an influential factor behind their decision to outsource.
3) We will need to spend all our time training the outsourcer’s agents
An outsourcing firm may hold generic skills and knowledge, but it will lack specific knowledge about a company, its products, services and customers. For this reason many executives fear that entering an outsourcing arrangement will result in them running endless training sessions for the outsourcer’s agents.
Yet, in most cases it is only the initial training that needs to be delivered by the client company. For example, when Seatwave first began speaking to its outsourcing company back in 2010 the ticket reseller needed to be certain this company would answer at least 80% of queries in real-time, answer e-mails within 48 hours, and maintain the reputation for high quality customer service that it had built.
It brought the first batch of outsourced agents to its London head office and ran a detailed training programme for them. However, since then, the managers at the outsourced company and trainers have been able to give new Seatwave agents all the training they need. Three years later it now answers 97% of queries in real-time, respond to e-mails within 24 hours, and achieve all targets for quality of customer interactions.
4) I will have no control over an outsourcer
It is easy to feel confident about the quality of customer service you are delivering when you can wander over to your customer service department, walk among the agents and listen to the conversations they are having. How do you know what an outsourcer is doing?
When travel company Thomas Cook first began using an outsourced company for its customer service webchats it was nervous about it. Thomas Cook had always used a contact centre in Scotland, and so to outsource to distant Bulgaria was a risk.
Yet, the team at Thomas Cook was able to monitor webchats in real-time. It could look at a dashboard showing response and resolution rates, and it could see from the low escalation and complaint rates that the campaign was running as it should.
In fact, many clients of outsourced companies will say they have a clearer view of what these companies are doing for them than they gained from their in-house departments. At first, Thomas Cook monitored everything very closely but over time it relaxed, confident in the service this outsourced company was providing to its customers. In the coming months it will also entrust the company with its telephone-based customer service.
5) We will have to pay six-figure set-up fees
For organisations that have spent years building an in-house customer service function it has always been a major step to outsource it, not only for all the concerns above, but also because outsourcers have traditionally charged significant set-up fees.
An understandable reluctance to pay six-figure set-up fees has deterred many executives from outsourcing, yet the rise of cloud technology solutions, and a more flexible workforce in many countries, is enabling a growing number of outsourcers to do away with this set-up fees.
With outsourcers charging no set-up fees, offering ongoing costs around half those of a comparable UK contact centre, and providing a pool of talented, enthusiastic young workers with enviable language and technical skills, it is no wonder that a growing number of companies like Thomas Cook, Sky, and Seatwave are looking again at outsourcing.
Based in Sofia, Bulgaria, 60K is a 600-seat contact centre which since 2008 has provided multichannel and multilingual support to the customer service functions at companies such as Thomas Cook, Sky, Seatwave, and Service800.
Six issues at the top of tax and finance leaders’ agenda
New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation, from undergoing digital transformations to rethinking their supply chains or investing in green initiatives.
According to Phil Mills, Deloitte Global Tax & Legal Leader, to “truly deliver value to the business, the tax function needs to rethink its resourcing model and transform its technology infrastructure to create capacity and control costs”.
And the good news, according to Mills, is that tax and business leaders have more options at their disposal to achieve this.
Reflecting the insights of global tax and finance executives at global companies, Deloitte’s Tax Operations in Focus study reveals the six issues at the top of tax and finance leaders’ agenda.
Trend 1: Businesses seek more strategic counsel from tax
Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation and this is taking them into uncharted tax territory. Tax leaders say their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%) and sustainability (48%) over the next two years. This means redrawing the boundaries of what tax professionals focus on, and accelerating adoption of advanced technologies and lower-cost resourcing models to meet compliance requirements and free up time.
According to Joanne Walker, Group Tax Director, BT Group PLC, "There’s still a heavy compliance load today, but the vision for the future would be that much of that falls away, and tax people become subject matter experts who help program the machine, ensure quality control, and redirect their time to advisory activity.”
Trend 2: Tipping point for resourcing models
Business partnering demands in the tax department are on the rise, but 93% of tax leaders say their department’s budget is remaining flat or falling. To ensure that the tax function can redefine itself as a strategic function at the pace that is required, leaders are choosing to move increasing amounts of compliance and reporting to a combination of shared service centers, finance departments, and outsourcing providers that have invested in best-in-class technology.
Trend 3: Digital tax administration is moving faster than expected
in addition to the rising focus of the corporate tax department partnering with their business counterparts, transformative changes to the way companies share tax information with revenue authorities is also creating an imperative to modernize operations at a faster pace. Nine in 10 (92%) respondents say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years—and several heads of tax said the trend is moving faster than expected.
"It’s really stepped up in the last couple of years," says Anna Elphick, VP Tax, Unilever. "Tax authorities don't just want a faster turnaround for compliance but access into a company’s systems. It's not unreasonable to think that in a much shorter time than we expect, compliance will be about companies reviewing a return that's been drafted by the tax authorities."
Trend 4: Data simplification and lower-cost resourcing are top priorities
Tax leaders said that simplifying data management (53%) and moving to lower-cost resourcing models (51%) must be prioritized if tax is to become more proactive at delivering strategic insights to the business. Many tax teams are ensuring that they have a seat at the table as ERP systems are overhauled, which is paying dividends: 56% of those that have introduced NextGen ERP systems are now highly effective at supporting the business with scenario-modeling insights. Only 35% of those with moderate to low use of NextGen ERP systems said the same.
At Stryker, “we automated the source P&L process for transfer pricing which took a huge burden off of the divisions," says David Furgason, Vice President Tax. "Then we created a transfer price database to deposit and retrieve data so we have limited impact on the divisions. We are moving to a single ERP platform which will help us make take the next step with robotics.”
Trend 5: Skillsets are shifting
Embedding a new data infrastructure and redesigning processes are critical for the future tax vision. Tax leaders are aligned — data skills (45%) and technology process experience (43%) are ‘must have’ skills in a tax department of the future, but more traditional tax specialist knowledge also remains key (40%). The trick to success will be in tax leaders facilitating the way these professionals, with their different backgrounds, can work together collectively to unlock lasting value.
Take Infineon Technologies, which formed a VAT technology and governance group "that has the right knowledge about how to change the system to ensure it generates the right reports", according to Matthias Schubert, Global Head of Tax. "Involving them early was key as we took a greenfield approach, so we could think about what the optimal processes would look like and how more intelligent systems could make an impact
Trend 6: 2020 brought productivity improvements
Improved productivity (50%) and accelerating shifts to remote working (48%) were cited as the biggest operational benefits to emerge from COVID-19-driven disruption. But, as 78% of leaders now plan to embed either hybrid or fully remote models in the tax function long term, 34% say maintaining productivity benefits is a top concern. And, as leaders think about building their talent pipeline and strengthening advisory skill sets, 47% say they must prioritize new approaches to talent recognition and career development over the next two years, while 36% say new processes for involving tax in business strategy decisions must be established.