When the going gets tough, like in today's uncertain, angst-ridden economy, it may pay to have a service bureau buddy who can help you get through it.

By offloading some of your work to service bureaus you avoid keeping costly people, buildings and technology idle. You conserve scarce capital by not expanding your own call centers and services. Outsourcing may also allow you to shrink, close or reconfigure your call centers.

While your own call centers can provide customer service and sales for the same (if not lower) costs than service bureaus can, outsourcing the most expensive functions enables you to redirect your best agents and centers to more productive tasks (e.g., handling top customers and upper-level technical support).

"What quality service bureaus offer are economies of scale," says Geri Gantman, senior partner with Oetting and Company (New York, NY). "They can have a substantial number of people and high-capacity technology in place, or at their fingertips to ramp programs up and down much more quickly and easily than most companies can in-house."

PRICE FLEXIBILITY

In turn, by outsourcing you become a buddy to service bureaus. The slowing economy hurt many of them. Many had removed seats and closed or consolidated call centers (see January's site selection article).

To boost business and stay afloat, some bureaus are cutting prices for short-term (one year or less) contracts to fill seats, reports Paul Kowal, president of Kowal Associates (Boston, MA). "This is most definitely a buyer's market," he says. "You can get pretty good deals at probably less than your own cost if you need to run a short-term (30-60 day) outbound or inbound direct-response program."

Oetting's Gantman has seen more bureaus willing to negotiate pay-per-performance contracts (PPP; where a client pays part or all of the service based on per-call received, sales, customer satisfaction, or other agreed-on service measurements) compared with standard by-minute or hourly rates.

"I haven't seen the prices charged by service bureaus drop to any appreciable degree, but the total packages they're offering are more competitive than they were last spring, cutting overall costs to the clients," she says.

Outsourcer Convergys (Cincinnati, OH) is seeing more clients ask for PPP, including for inbound work.

"More of our clients want us as partners to share the risk and reward because it more closely aligns our success with their specific business objectives," explains Renee Kuwahara, Convergys' senior vice president of operations.

But price isn't everything. Kowal is seeing more clients shop around for quality than he has in previous years.

"Companies are becoming much more sophisticated in their teleservices purchases," he explains. "They're beginning to realize, especially in inbound, to retain customers and their business, that quality matters."

EFFICIENT, BETTER SERVICE

Service bureaus have taken other steps to cut costs, gain efficiencies and improve service. ClientLogic (Nashville, TN) began in August 2001 a modified dedicated inbound agent program with two unnamed clients. The bureau's clients elect to have the outsourcer's employees handle other non-related functions such as data processing when they are idle.

Clients must approve the outsourcer's functions and other client(s) to avoid having "their" agents handle work for a competitor.

Because inbound calls arrive randomly, managers have difficulty using dedicated agents, says Amit Shankardass, ClientLogic solution planning officer. Consequently, these agents remain unproductive when no calls or contacts arrive for them.

The new program intends to maintain the exclusivity of dedicated agent programs, where the outsourcer agrees to designate and train employees to handle calls and contacts for only that client, but control costs.

The program has been working. ClientLogic reduced response costs for the two clients by about 10% to 15%.

"Because the functions are not related to their call center work and do not require much of their attention, the dedicated agents remain focused on their primary job, which is to serve [call center] clients' customers," Shankardass points out.

Outsourcers have also improved their agent training. Last fall Tele-Servicing-Innovations (TSI; Denver, CO) deployed SmartForce's Web-based e-learning program to supplement in-person training at its four call centers. Agents access the program on-site and at home.

The training program will help the bureau deliver better, more consistent service, explains Steve McCutcheon, TSI's vice president of sales and marketing. The program ties into the firm's site selection strategy of locating in small towns that have pools of potentially friendly, loyal agents who can deliver better customer service at lower costs and with less turnover than large cities.

"Our training challenges are even greater than average because we have centers in small towns scattered across Idaho," McCutcheon notes. "While we have a trainer at each facility, it made more sense for these trainers to concentrate on campaign-specific skills or on improving individual skills for individual agents, rather than giving group training on the basics."

Outsourcers have also partnered with consultants to deliver more effective marketing campaigns.

Interactive Marketing Group (IMG; Allendale, NJ), which specializes in high-end marketing and call center services, partnered with consulting company Constellation (Atlanta, GA) to provide market research and customer management services.

IMG selects mediums and methods during the marketing development phase. The company also monitors response rates and other indicators. Constellation analyzes and reports on the data in a statistical format that is accessible to the client.

OUTSOURCERS EXIT BUSINESSES

Outsourcers have always run lean shops. But the economic downturn, aggravated by consumer and business security fears since Sept. 11, also led them to exit unprofitable businesses and concentrate on those where the demand is.

For example, Sykes (Tampa, FL) closed its US fulfillment and distribution and worldwide product localization businesses. The moves helped Sykes to focus on its global customer support outsourcing and consulting businesses.

Gantman notes that many outsourcers are exiting the outbound business, converting their centers for more profitable inbound operations. Illustrating her point, GrowthExperts, a mostly outbound Canadian company, shuttered its Nanaimo, New Westminster and Victoria, BC, call centers in December 2001, according to a story in the Victoria Times-Colonist.

The paper reported on December 7, 2001, that GrowthExperts, which paid its agents $8-$10/hour CDN ($5.10-$6.35 US), had sold cellphones and other goods for American firms. The outsourcer's Web site, eerily functioning even as its toll-free number did not as of December 21, boasted clients including AT&T Wireless, Cingular, E*trade and VoiceStream.

When the going gets tough, like in today's uncertain, angst-ridden economy, it may pay to have a service bureau buddy who can help you get through it.

By offloading some of your work to service bureaus you avoid keeping costly people, buildings and technology idle. You conserve scarce capital by not expanding your own call centers and services. Outsourcing may also allow you to shrink, close or reconfigure your call centers.

While your own call centers can provide customer service and sales for the same (if not lower) costs than service bureaus can, outsourcing the most expensive functions enables you to redirect your best agents and centers to more productive tasks (e.g., handling top customers and upper-level technical support).

"What quality service bureaus offer are economies of scale," says Geri Gantman, senior partner with Oetting and Company (New York, NY). "They can have a substantial number of people and high-capacity technology in place, or at their fingertips to ramp programs up and down much more quickly and easily than most companies can in-house."

PRICE FLEXIBILITY

In turn, by outsourcing you become a buddy to service bureaus. The slowing economy hurt many of them. Many had removed seats and closed or consolidated call centers (see January's site selection article).

To boost business and stay afloat, some bureaus are cutting prices for short-term (one year or less) contracts to fill seats, reports Paul Kowal, president of Kowal Associates (Boston, MA). "This is most definitely a buyer's market," he says. "You can get pretty good deals at probably less than your own cost if you need to run a short-term (30-60 day) outbound or inbound direct-response program."

Oetting's Gantman has seen more bureaus willing to negotiate pay-per-performance contracts (PPP; where a client pays part or all of the service based on per-call received, sales, customer satisfaction, or other agreed-on service measurements) compared with standard by-minute or hourly rates.

"I haven't seen the prices charged by service bureaus drop to any appreciable degree, but the total packages they're offering are more competitive than they were last spring, cutting overall costs to the clients," she says.

Outsourcer Convergys (Cincinnati, OH) is seeing more clients ask for PPP, including for inbound work.

"More of our clients want us as partners to share the risk and reward because it more closely aligns our success with their specific business objectives," explains Renee Kuwahara, Convergys' senior vice president of operations.

But price isn't everything. Kowal is seeing more clients shop around for quality than he has in previous years.

"Companies are becoming much more sophisticated in their teleservices purchases," he explains. "They're beginning to realize, especially in inbound, to retain customers and their business, that quality matters."

EFFICIENT, BETTER SERVICE

Service bureaus have taken other steps to cut costs, gain efficiencies and improve service. ClientLogic (Nashville, TN) began in August 2001 a modified dedicated inbound agent program with two unnamed clients. The bureau's clients elect to have the outsourcer's employees handle other non-related functions such as data processing when they are idle.

Clients must approve the outsourcer's functions and other client(s) to avoid having "their" agents handle work for a competitor.

Because inbound calls arrive randomly, managers have difficulty using dedicated agents, says Amit Shankardass, ClientLogic solution planning officer. Consequently, these agents remain unproductive when no calls or contacts arrive for them.

The new program intends to maintain the exclusivity of dedicated agent programs, where the outsourcer agrees to designate and train employees to handle calls and contacts for only that client, but control costs.

The program has been working. ClientLogic reduced response costs for the two clients by about 10% to 15%.

"Because the functions are not related to their call center work and do not require much of their attention, the dedicated agents remain focused on their primary job, which is to serve call center clients' customers," Shankardass points out.

Outsourcers have also improved their agent training. Last fall Tele-Servicing-Innovations (TSI; Denver, CO) deployed SmartForce's Web-based e-learning program to supplement in-person training at its four call centers. Agents access the program on-site and at home.

The training program will help the bureau deliver better, more consistent service, explains Steve McCutcheon, TSI's vice president of sales and marketing. The program ties into the firm's site selection strategy of locating in small towns that have pools of potentially friendly, loyal agents who can deliver better customer service at lower costs and with less turnover than large cities.

"Our training challenges are even greater than average because we have centers in small towns scattered across Idaho," McCutcheon notes. "While we have a trainer at each facility, it made more sense for these trainers to concentrate on campaign-specific skills or on improving individual skills for individual agents, rather than giving group training on the basics."

Outsourcers have also partnered with consultants to deliver more effective marketing campaigns.

Interactive Marketing Group (IMG; Allendale, NJ), which specializes in high-end marketing and call center services, partnered with consulting company Constellation (Atlanta, GA) to provide market research and customer management services.

IMG selects mediums and methods during the marketing development phase. The company also monitors response rates and other indicators. Constellation analyzes and reports on the data in a statistical format that is accessible to the client.

OUTSOURCERS EXIT BUSINESSES

Outsourcers have always run lean shops. But the economic downturn, aggravated by consumer and business security fears since Sept. 11, also led them to exit unprofitable businesses and concentrate on those where the demand is.

For example, Sykes (Tampa, FL) closed its US fulfillment and distribution and worldwide product localization businesses. The moves helped Sykes to focus on its global customer support outsourcing and consulting businesses.

Gantman notes that many outsourcers are exiting the outbound business, converting their centers for more profitable inbound operations. Illustrating her point, GrowthExperts, a mostly outbound Canadian company, shuttered its Nanaimo, New Westminster and Victoria, BC, call centers in December 2001, according to a story in the Victoria Times-Colonist.

The paper reported on December 7, 2001, that GrowthExperts, which paid its agents $8-$10/hour CDN ($5.10-$6.35 US), had sold cellphones and other goods for American firms. The outsourcer's Web site, eerily functioning even as its toll-free number did not as of December 21, boasted clients including AT&T Wireless, Cingular, E*trade and VoiceStream.