CALL CENTER - Do's and Don'Ts of Contact Center BPO - How To

Dos and Donts of Contact Center BPO:
How To Make It Work
Gartner Outsourcing Summit 2005
Matthew Goldman
46 April 2005
Westin Century Plaza Hotel & Spa
Los Angeles, California
These materials can be reproduced only with Gartner's written approval. Such approvals must be requested via email quote.requests@gartner.com.
Dos and Donts of Contact Center BPO: How To Make It Work
Understand the Impact of Your

Outsourcing Decision
Warning: Outsourcing can dramatically

improve your efficiency
but at what cost to your customers?
The appeal of improved efficiency meaning improved cost structures lures organizations to consider
outsourcing options for different business processes. In most cases, this desired goal is achievable. What
organizations tend to overlook in their efforts are the upstream and downstream effects of the outsourced
processes. Especially with regard to customer-facing processes, or processes that drive or are driven by customer
interaction , it is essential to develop not only an understanding of what the organization desires and can achieve,
in terms of cost structure and operating performance, but how these decisions will affect customers.
By applying a customer-centric view during the planning and execution of outsourcing decisions, organizations
will retain a better understanding of how to drive operational results while adding to, or at a minimum,
maintaining the value perceived by customers.
Action Item: Evaluate your outsourcing decisions from both an operational perspective and a performance
perspective, regardless of your desired goal.
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Matthew Goldman
C9, STD8, 4/05, AE
Page 1

Client Issues
1. How can an organization determine whether to outsource its contact center operations?
2. How do organizations focus on core competencies while ensuring a customer-centric view?
What are the costs, benefits and lessons learned by organizations that already have
outsourced customer service?
Three key issues often surface when an organization considers outsourcing customer-facing processes.
1. How can an organization determine whether to outsource its contact center operations?
The starting point for many organizations often asked as How do we know if this is right for us? is a
critical question because the answer will influence subsequent decisions regarding the evaluation, selection and
transition processes. To help answer the question, develop a baseline understanding of the market and the core
elements and decision factors often involved in the evaluation. It is helpful to be aware of why other
organizations have chosen to outsource contact center processes because it might influence whether you decide
to outsource.
2. How do organizations focus on core competencies while ensuring a customer-centric view?
The next step is to determine how you maintain awareness and preservation of your customer-centric business
model. Its important to understand what you consider to be your core competency and your customers
perceived value of that interaction.
3. What are the costs, benefits and lessons learned by organizations that already have outsourced
customer service?
The third component to consider is the cost, benefits and lessons learned by other organizations, including ways
to navigate the myriad of decision inputs and options, and effective planning for risk mitigation.
Matthew Goldman
C9, STD8, 4/05, AE
Page 2

Client Issue: How can an organization determine whether to outsource its customer service
operations?
Worldwide Market Size and Growth Estimates for

Customer Service and CRM BPO
$20
$18.2
$18
$16.4
$14.8
$16
$14
$12
U.S.$ in
Billions
$10
$12.2
$13.3
$10.9
$6.8
$6.2
$5.7
$5.0
$4.5
$3.8
$8
$6
$4
(five-year
CAGR:
10.7%)
$7.1
$7.7
$8.3
$9.1
2003
2004
2005
2006
$10.2
$11.4
$2
$0
Customer Service BPO
2007
2008
Sales & Marketing BPO
Gartner Dataquest estimates that the worldwide market for customer service business process outsourcing (BPO)
in 2004 was $7.7 billion, growing to $11.4 billion by 2008. If sales and marketing BPO are included, the 2004
CRM (or demand management) outsourcing market is an estimated $11 billion market, growing to a $18.2
billion market by 2008.
Note that this is just CRM BPO. It does not include other business processes fulfilled in a contact center (for
example, finance, human resources or IT help desk). It also does not include managed services for infrastructure,
application and network services where there is no BPO component.
Despite all the hype about offshore outsourcing, the U.S. governments attempts to restrict offshore contracts and
some of the bad press in the United Kingdom, we believe that about 2 percent of BPO is conducted offshore and,
through 2008, less than 5 percent of all customer service agents will be offshore.
Action Item: The market for customer service and support (CSS) BPO is growing, but the offshore component is
still small. Consider starting by outsourcing onshore and plan over time for portions of some processes to be
conduced off-shore; however, be wary of outsourcing entire end-to-end customer service processes offshore.
Matthew Goldman
C9, STD8, 4/05, AE
Page 3

Strategic Planning Assumption: By 2007, the worldwide market for BPO of CSS processes will
have grown from $8.4 billion to $12.2 billion (0.7 probability).
Customer Service Outsourcing Market:

Drivers and Inhibitors
Drivers
Increasing competition, forcing
reduction of costs in noncore
processes
Budget pressure (perception that
outsourcers can do it for less
because of scale)
Desire to access best-in-class
processes and skills
Challenge of integration of CSS
technologies and processes
Contact center consolidation
Global deployment needs
Hype of offshore outsourcing
IT verticalization
Inhibitors
Perception that customer service

must be a core business process
Fear loss of control
Immaturity of the market
Bad internal measurement of

service costs
Lack of vendor industry process

expertise
Risk of high-profile offshore

failures
We define BPO as the delegation of one or more IT-intensive business processes to an external provider that
owns, administers and manages the processes based on defined and measurable performance metrics. This
excludes the outsourcing of specific CSS technologies or the underlying infrastructure.
Drivers: Increasing competition means companies have to focus on core competencies to drive competitive
advantage. For industries where service is not a core process, significant capital can be freed up and distractions
offloaded to concentrate and invest in what differentiates the business. Outsourcing CSS can accelerate
integration of processes and technologies.
Inhibitors: A traditional belief is that processes that touch client relationships must be core and, therefore,
shouldnt be outsourced. Also, some executives are uncomfortable with the concept of outsourcing as it may add
a layer of separation between the company and the customer. Due to the relative immaturity of the CSS
outsourcing market, there is significant consolidation, and many organizations are struggling to stay afloat, given
the do not call legislation.
Action Item: When evaluating whether to outsource CSS ask yourself the following questions: If I were to build
my business from scratch would I build this process or buy it? (Is this core?) Am I so good at executing this
process that other people might hire me to do it? (Is it a key competency?)
Matthew Goldman
C9, STD8, 4/05, AE
Page 4

Strategic Imperative: Organizations that have no experience with outsourcing should start by
outsourcing small processes instead of large, multi-process engagements.
Why Outsource Contact Center or Customer

Service Processes?
Explore decision inputs and evaluate available options.

Issues
Strategy
Costs
Operations &
Security
Staffing
Risk
Options
Outcomes
Re-engineer/
Automate
Business
Performance
Partial/Full
Outsourcing
Operational
Efficiency
Do
Nothing
Unintended
Consequence
Hobsons
Choice
Desired outcomes are possible, and errors are

avoidable, through effective planning.
Many of the drivers for the CSS outsourcing market are key pain points in CSS, including cost pressures,
keeping up with advanced technologies and integrating with legacy systems and processes. Outsourcing is only
one option to satisfy these challenges. Organizations can also re-engineer processes and invest in new
technologies themselves, use an external consulting firm or simply eliminate the process or technology.
In some cases, an organization may not have a choice when it comes to making the decision to outsource.
Business issues, changes in the market and mission-critical events can force action without options. This type of
decision making, sometimes called a Hobsons Choice, doesnt afford an organization the luxury of time or
flexibility in considering outsourcing options. To address these types of critical events, organizations can be left
without much of a choice. The upside to this situation is that there is a way to combat market forces perhaps
not in the way you prefer, but effective nonetheless.
Action Item: When considering outsourcing certain customer service processes, look beyond pure cost
considerations to issues such as the strategy, purpose of operations, security, staffing and risk. This in an effort
to make an informed decision that will achieve desired levels of performance or operational efficiency and
minimize unintended consequences.
Matthew Goldman
C9, STD8, 4/05, AE
Page 5

Strategic Planning Assumption: By 2007, vertical process knowledge and the ability to
effectively cross-sell and upsell from a customer service environment will be two of the top
three objectives of contact center outsourcing initiatives (0.7 probability).
Top Five Reasons for Outsourcing

Contact Centers
6.3
Improve Service Quality

1
6.17
Improve Customer Care
5.67
Reduce Cost of Service
5.32
Acquire Capacity on Demand
4.87
Leverage Process Expertise of

Outsourcer
Average Scores
Gartner Survey (n=76): 1 is not important and 7

is extremely important
In a Gartner survey, we asked respondents to rate the importance of certain objectives in their contact center
outsourcing initiative. The number of respondents was 76. Improvement of service quality was the objective
with the highest score. In order of importance, the next most important objectives were improve customer care,
reduce cost of services, acquire capacity on demand and leverage process expertise of outsourcer.
In the past six to eight months, we have seen increased interest from our clients in the outsourcers ability to
leverage customer-oriented analytical capability, such as real-time profitability analytics or event-based analytics
to drive scripting for upsell and cross-sell. Many organizations are finding this extremely challenging to do
themselves. We, therefore, believe that this objective will become more important in the coming years when
evaluating customer service outsourcing decisions and suppliers.
Action Item: Recognize that decisions surrounding outsourcing customer service are shifting from a pure focus
on operational efficiency to value generation as organizations begin to apply more customer-centric
considerations to their outsourcing decisions.
Matthew Goldman
C9, STD8, 4/05, AE
Page 6

Strategic Planning Assumption: Through 2007, 80 percent of organizations that outsource
contact centers for CSS with the primary goal of reducing costs will fail (0.7 probability).
The Myths About Customer

Service Outsourcing
We will absolutely save money if we outsource

the contact center.
Customer satisfaction rates will erode if I

outsource.
Contact center outsourcers are better at agent

retention than I am.
Outsourcers have better contact center

technology then we do.
In-house contact center agents provide more

innovative, effective customer service.
With the interest in contact center outsourcing increasingly blended into broader discussions about BPO or going
offshore, questions about the potential benefits of outsourcing for CRM activities are common. Some companies
see it as a great way to offload their problems. Others approach it as a way to improve quality. More see it as an
opportunity to reduce costs. Conversely, other organizations are staunchly against outsourcing their perceived
crown jewel the customer asset. In reality, many of these drivers and inhibitors are based on fallacies,
myths perpetuated by outsourcers looking to sell solutions and managements uneasiness about losing control or
their jobs.
One of the most-common myths is that contact center outsourcers have better agent retention rates because
hiring, training and retaining agents must be a core competency. This is not true. The average attrition rate of inhouse contact centers is 19 percent to 25 percent per year, according to Gartner benchmarks. In outsourced
contact centers, attrition is typically 35 percent to 70 percent per year, and we have seen cases of it being more
than 100 percent a year in outsourced operations. When asking outsourcers about employee churn rates,
understand when measurement of churn starts.
Action Item: Specify that the measurement period starts from the time the agent signs the contract to work as the
outsourcer, and pick those with lower churn rates.
Matthew Goldman
C9, STD8, 4/05, AE
Page 7

Client Issue: How do organizations focus on core competencies while ensuring a customercentric view?
What to Outsource: Value vs. Process

High
Insourcing Instance
Sourcing Dilemma
Pursue process automation

Leverage/grow internal skills
Apply industry best practices
Explore cost-benefit of outsourcing

Monitor customer perception
Determine internal/external scalability
Value
Process Problem
Outsourcing Opportunity
Identify changes in preference

Evaluate internal skills
Improve customer perception
Explore Outsourcing Alternatives

Evaluate impact on service levels
Seek operational improvements
Low
Core
Process
Noncore
This value/process framework serves as a high-level decision tool to categorize your situation and suggest
actions for consideration. The y axis represents the value continuum and the x axis represents the process
continuum. The four sectors on this framework illustrate distinct categories of process types.
Beginning with the top-left sector, core processes that are perceived to be high in value by your customers have
rarely surfaced in outsourcing discussions. To improve in efficiency or service level, consider automation, where
appropriate, leveraging/developing internal skills or applying best practices
In the bottom-left sector are core processes that are perceived to be low in value by your customers. Outsourcing
isn't immediately going to fix the problem. This situation begs examination of what is affecting customer
perception (for example, changes in wants/needs and alternatives in the market).
In the bottom-right sector, noncore processes that are perceived to be low in value by your customer represent an
outsourcing opportunity. It is still important to assess the impact on your customer base (What changes will they
be asked to accept? Are these trade-offs acceptable?).
In the top-right sector are noncore processes that are high in value, according to the customer. Processes that fall
into this category force a more thorough review of your own capabilities to support and grow this capability as
compared to an outsourcers capabilities.
Matthew Goldman
C9, STD8, 4/05, AE
Page 8

Strategic Imperative: Organizations that have no experience with outsourcing should start by
outsourcing small processes instead of large, multi-process engagements.
What to Outsource: Full or Partial Options to

CRM BPO
For operational or performance benefit, organizations may

choose to outsource all customer-facing processes
Customer Data Analytics
Cross-sell/Up-sell
Inquiry Handling
Problem Resolution
Field Service Support
Telesales
Telemarketing
Lead/Opportunity Management
Market Segmentation
Data Analysis
Campaign Design
Customer
Extension
Customer
Retention
Contact
Center
Customer
Customer
Acquisition
Customer
Selection
Partial outsourcing is often used to address noncore processes
As you identify what processes may be candidates for outsourcing, keep in mind that you need not outsource all
related processes or subprocesses to achieve specific benefits. Partial outsourcing may be a viable option as you
consider the need to scale certain components.
Additionally, consider the distance between the process and the customer. Some demand management processes
that are candidates for outsourcing do not immediately require interaction with the customer. Some processes,
such as customer selection and customer extension, can be outsourced in a way that doesnt put any distance
between your organization and customer. In the case of customer selection, organizations such as Harte-Hanks,
D&B and Acxiom provide services to support marketing functions, but generally dont interact with your
prospects or customers.
Improvements in technology, services, resources and many lessons learned contribute to a market of suppliers
offering flexible solutions that appeal to a wide range of outsourcing services from the risk-averse to the more
aggressive to meet your specific needs. The onus, however, is on you to determine the course of action, which
includes review of key decision inputs and stated desired outcomes, and incorporates customer-centric thinking
into your end-state goal.
Matthew Goldman
C9, STD8, 4/05, AE
Page 9
If You Dont Know What You Want to Do,

You Are Not Alone ...
Eighty percent of large organization respondents have

no plans to outsource
N=109 (Organizations with 1,000 or more employees)
Decision requires thorough analysis, clearly stated

objectives and appropriate metrics for evaluation
If you still have not decided what your organization should do, you are not alone. A recent Gartner survey asked
respondents from large organizations (those with 1,000 or more employees) about their current and future plans
for outsourcing. With regard to demand management, roughly 80 percent of respondents have no plans to
outsource.
Is this surprising? Perhaps not. Amid all the hype around outsourcing and the seemingly endless supply of press
clippings announcing new, 10-year contracts wins (and cancellations), there remains a significant number of
firms that remain undecided on the value proposition of outsourcing their customer-facing processes.
Outsourcing is a nontrivial decision for any process. There can be significant upstream or downstream
consequences for poorly planned, poorly executed or simply wrong sourcing decisions.
Matthew Goldman
C9, STD8, 4/05, AE
Page 10

Client Issue: What are the costs, benefits and lessons learned by organizations that already
have outsourced customer service?
Top Mistakes in Customer

Service Outsourcing
Expecting cost savings before measuring your current performance
Going ahead without executive buy-in
Locking yourself into a long-term contract without an exit strategy
High outsourced agent churn rates
Inadequate processes for knowledge management
Not managing the customer experience appropriately
Inappropriate or unmeasurable SLAs
Failure to map customer-facing processes (from the

customer perspective), and no management of the
intersection between the outsourced and retained
processes
Underestimating management cost and time required,

especially to make the transition and manage an offshore
relationship
There are many challenges and pitfalls to be aware of in CSS outsourcing. The most significant include:
Mort organizations struggle to understand the total cost to service customers internally.
The decision to undertake CSS BPO requires executive buy-in, because it will have a significant impact on the
business. Also needed is buy-in from all the managers down the executive chain.
Outsourced agents can lead to process knowledge dilution and loss of control over the process, because much
of the knowledge required to resolve customer issues is held tacitly in the minds of the agents.
Companies often develop service outsourcing contracts focused on operational metrics (for example, number
of calls handled or average handle time) and priced on a per-seat basis. This creates a direct conflict between
the companys objectives and the outsourcers goals. The outsourcer maximizes profit by increasing the agenthandled calls.
Action Item: When crafting outsourcing contracts, dont just pass on your traditional operational metrics and
measurements, but rather ensure that the metrics you select to measure and pay your outsourcer encourage the
outsourcer to improve and innovate the process.
Matthew Goldman
C9, STD8, 4/05, AE
Page 11

Strategic Planning Assumption: Through 2008, 60 percent of organizations that are outsourcing
parts of the customer-facing process will encounter customer defections and hidden support
costs that will cost more than any savings they derive from outsourcing (0.8 probability).
Understand the Total Customer-Facing

Process (Outsourced and Retained)
Prospect to Cash Process (Customer Acquisition)
1. Log Activity
2. Log Opportunity
3. Check for Contract
4. Check Inventory
CRM
EAI
13. Ship
ERP
12. Send ASN
5. Check ATP/CTP
6. Determine Price
7. Quote Customer
14. Invoice
EAI
11. Plan and

Produce
SCM
8. Create Quote
10. Check Credit

9. Generate Order
Most organizations elect to outsource some customer-facing processes, but not all of them. For example,
telecommunications companies might choose to outsource debt collection on late bills, but not the billing
process. There is nothing wrong with this approach in principle; however, when doing this, most organizations
neglect to map the entire customer process and, particularly, the intersection between the parts of the process
that are outsourced and the parts that are retained, often resulting in horrible customer experiences and,
sometimes, customer defections. Therefore, the cost savings of outsourcing were not as promising as originally
thought.
Careful planning, integration and management of outsourced channels, functions or processes, where they
remain a portion of the companywide strategy for customer service, are the recommended path. A huge base of
this knowledge of how to execute the process from end to end resides with the clients themselves, rather than a
documented manual.
Action Item: To build successful solutions, clients and outsourcers must understand the entire process, clearly
articulate where they enter and where they exit, determine how they will integrate their solution and ensure that
nothing falls through the cracks.
Matthew Goldman
C9, STD8, 4/05, AE
Page 12

Strategic Planning Assumption: Through 2008, 70 percent of businesses will entertain the
notion of business value-based contracts (such as revenue sharing) for outsourcing of
customer service processes, but 50 percent will be unable to negotiate these contracts because
they lack the measurements needed to determine success (0.8 probability).
CSS Outsourcing Contract Types:

Measuring Risk and Value
Contract
Type
Vendor
Risk
User
Risk
Payment
Types
User
Reward
User
Preference
Performance
High
Medium/High
Fixed fee &

component
Medium
Fixed Price
High
Low
Fixed rate
Low
Transaction
Low
High
Fixed fee
per
transaction
Low
Business
Benefit
High
High
% of profit or
revenue
High
Seat
Low
High
Per agent
per hour
Low
Contracting and pricing flexibility is increasingly important to users when structuring a CSS outsourcing deal.
The most-common pricing models remain fixed fee and per-transaction fee, with variations. A number of pricing
models exist, whereby the outsourcer is paid in proportion to the business value generated by the service
provided. These deals initially sound attractive to many clients, because the outsourcer has more skin in the
game; however, if the gains are significantly higher than expected, users may feel that they are giving away too
much, and that the vendor is earning more than the fair value of its actual contribution.
Despite claims, neither vendors nor end users venture much out of the traditional pricing methodologies. In a
recent survey of BPO deals (including CSS; n=22), the newer equity payments and business benefit types of
engagements only constituted 10 percent of deals. The transaction- and seat-based deals are increasingly less
popular with users; whereas, contracts in which full payment or parts of the payment are based on performance
of SLAs are more popular. SLAs have to be considered properly. If only efficiency SLAs are used in contracts
(call abandon rate or first-call closure), then customer satisfaction and customer profitability may suffer.
Action Item: Add metrics such as customer retention or profitability to the traditional SLAs used to measure
outsourcers and provide them with incentives.
Matthew Goldman
C9, STD8, 4/05, AE
Page 13
Example: National Low-Cost Airline
Business issue
Startup low-cost airline needed new customer interaction
capabilities
Required time-definite availability from zero to go in 120 days
Customer interaction center for reservations, ticketing and
customer service
Phone and Web access
Solution
Engage eLoyalty, CRM service provider
Leverage VoIP solution to prioritize, route and
queue calls according to type of interaction
Outsource lower-value, noncore processes to offshore providers in the Philippines and India
Retain high-value, core processes in Virginia
contact center
To illustrate some of the topics discussed, consider the example of a national low-cost airline. This carrier was
facing increased costs as part of its relationship with larger airlines. The organization decided to fly on its own
and required a rapid, time-definite delivery of a Web and phone-based customer interaction solution (hardware
and software) that could manage reservations, ticketing and customer service issues including agents and it
had to be ready in 120 days.
To develop a solution, the airline engaged eLoyalty, a CRM service provider that specializes in these matters.
Together, they forged a plan that would enable the accelerated development of the system and quickly scale the
capacity to handle the anticipated call volume.
The plan called for ticketing and reservation processes to be outsourced, using offshore providers in the
Philippines and India. The more-complex interactions, such as ticket exchanges, service issues, complaints and
lost baggage, would be addressed inhouse by a smaller interaction center maintained by the airline in Virginia.
To facilitate this approach from a technical standpoint, the airline looked to eLoyalty to design and implement a
VoIP solution to prioritize, route and queue calls according to interaction type.
Matthew Goldman
C9, STD8, 4/05, AE
Page 14
Partial Outsourcing Model Returns

Real Results
Customer interaction solution in place ahead of

schedule
Consolidated outsourcing providers

Initial Philippines provider had difficulty meeting
customer service expectations
Quickly implemented additional outsourcer facilities in
United States and India for improved service and
capacity
Overall solution delivers high value,

strong satisfaction and flexibility to
respond to the dynamics of business
In less than the 120 days, the airline had its own customer interaction center in Virginia and two outsourced
providers all handling interaction concurrently. The IVR solution proved critical in its ability to route to the
appropriate agents, based on skills and availability. More importantly, it delivered customers to the right place
for assistance.
The airline experienced some difficulty in that the Philippines provider was having trouble meeting service
levels. Fortunately, the decision to apply a diversified sourcing strategy proved invaluable, because operations
were more easily transitioned to the India location.
Often, organizations may not have the luxury or ability to contract with multiple providers. This example
underscores how to mitigate risk for critical noncore processes. Given that the India location was already trained
to perform the same tasks, as well as demonstrated an ability to meet service levels, consolidating was a sound
decision. This decision capitalized on the tacit knowledge accrued by the agents in India and accelerated their
ability to quickly scale and meet the increased demand.
The airline continues to receive high customer service marks from its clientele, is expanding its reach across the
country and continues to evaluate, enhance and improve its interaction with its customers.
Matthew Goldman
C9, STD8, 4/05, AE
Page 15

Strategic Planning Assumption: By year-end 2005, 70 percent of the top 15 Indian-owned BPO
startup companies with CSS services will be acquired, merge or be marginalized (0.8
probability).
2006: Massive Consolidation of Indian CSS

Outsourcing Providers
Dont be left high and dry
if your Indian CSS outsourcer sinks
Indian Outsourcer Checklist
Success in scaling service
Profile and record of venture capital investors
Founders track record
Margin growth, not just revenue growth
Stable workforce strong workforce mgmt.
CSS focus, not BPO generally
Carefully worded exit clauses
youll be forced to switch providers or re-insource.
Merger and acquisition (M&A) activity in the Indian BPO market began in 2002 and 2003, particularly for
providers with CSS services. In 2004, IBM acquired Daksh, and eTelecare acquired Phased 2 solutions.
A number of large U.S. service providers are obtaining contact center outsourcing skills from India. Owners of
these firms are keen to capitalize on the high evaluations this interest has caused. Indian BPO vendors have
grown aggressively, some even quadrupling their revenue during the last two years. This rapid growth is
straining or breaking their customer service processes, negatively affecting the companies culture and skill base.
Some of the M&A activity will be driven by venture capital owners who are putting pressure on companies to
demonstrate margin growth, and proposing mergers as one way to achieve this via scale. M&A will also be
driven by U.S. or Europe, the Middle East and Africa (EMEA)-based service providers that are shopping for
Indian offshore CSS BPO capability to ramp-up their delivery capability from India.
Action Item: Give proper consideration to exit management in case your startup Indian CSS outsourcer fails or
exits the market.
Matthew Goldman
C9, STD8, 4/05, AE
Page 16

Tactical Guideline: When evaluating offshore countries, organizations should look at
qualitative factors such as government support, infrastructure, data and intellectual property
security, educational system, software and hardware resources, language skills, political
stability, marketing skills, availability of skilled resources, cultural issues and cost.
New Countries Are Emerging as

Alternatives to India
Central/Eastern Europe
Ireland
Canada
Mexico
On-site/
Off-site
Spain
Barbados/
Dominican
Republic
Israel
Jamaica
Ghana
Senegal
Morocco
Tunisia
India
Sri Lanka
Thailand
Malaysia
China
Vietnam
Philippines
Singapore
Australia
Mauritius
South Africa
Fiji
New Zealand
Secondary Locations
Current Priorities
Aspiring Countries
The chart above depicts a number of the countries, as well as longer-term prospects, for providing CSS BPO
services to U.S. organizations. The interest in nearshore options is strong, particularly from Western European
clients because of language requirements, but also in the United States because of the immaturity of the BPO
market. For U.S. organizations, Canada and Mexico appear to be the most-likely nearshore options Canada
because of the weaker currency and Mexico as a platform to serve the growing Spanish-speaking population in
the United States.
When evaluating alternative countries, look at many qualitative factors: the country's government support,
infrastructure, educational system, resources, political stability, marketing skills and cultural issues. Most of the
offshore contact center CSS activity for U.S. companies has been in India and the Philippines, with nearshore
growth in Canada and Mexico (for the U.S. Hispanic population). With approximately 80 percent to 95 percent
of total BPO revenue, India dominates, and it will continue to dominate. In terms of size and number of call
center and IT professionals, no other country comes close to India in potential. The exception is China, which
has a nascent market and is better qualified for Korean and Japanese support than for English language. Other
growing offshore countries include the Czech Republic, Hungary and Poland for German-speaking customer
support, South Africa for the United Kingdom and Mauritius, and North Africa for the French-speaking market.
To date, the interest and investments in these areas by CSS outsourcing firms have been more exploratory than
demonstrating real commitment.
Matthew Goldman
C9, STD8, 4/05, AE
Page 17

Strategic Planning Assumption: Through 2008, vertical-industry process and the leverage of
analytical CRM in the contact center will become some of the new CSS outsourcer
differentiators (0.7 probability).
Contact Center Vendor Landscape

Top Global Contact Center Outsourcers by Revenue
Name
CRM Revenue 2004*
Convergys CMG
$1,600 million
SRTeleperformance $1,160 million
EDS
$1,100 million
Teletech
$1,050 million
West Corp.
$1,010 million
SITEL
$ 870 million
Sykes
$ 500 million
ClientLogic
$ 425 million
Stream
$ 400 million
ICT Group
$ 310 million
(CSRs)* Focus
40,000 Customer care, tech. support, HR
40,000 Telesales, customer care, research
18,000 Customer care, tech. support, logistics
33,000 Tech support, customer care
24,000 Telesales, customer care, risk mgmt.
19,000 Customer care, tech. support risk mgmt.
18,000 Tech support, customer care
16,500 Customer care, logistics
14,000 Customer care, tele-sales
11,600 Telemarketing, customer care
Top Offshore Contact Center Outsourcers by Revenue

Name
CRM Revenue 2004* (CSRs)*
Wipro Spectramind $ 100 million
10,000
ICICI OneSource
$ 50 million
5,000
IBM (Daksh)
$ 45 million
7,000
24/7 Customer
$ 40 million
5,000
Focus
Customer care
Customer care
Customer care
Customer care
*Gartner estimates, where public information is unavailable.
The contact center CSS outsourcing market has rapidly expanded during the past 24 months, with the
development of the offshore contact center outsourcing market and the entrance of several consulting and
systems integration firms, such as IBM and Accenture, into the market. These players enter the market via work
done in BPO and strategic business consulting. Broadly speaking, the players can be categorized into:
Those that grew up on prioritizing operational excellence in handling calls, driving efficiencies out of the
infrastructure to reduce costs and improve performance
Those that grew out of industry process expertise, and have experience in broader BPO deals than just CSS,
but that often rely on partners or subcontractors to provide scale
Pure-play offshore vendors
Although there is some level of convergence, if you already have best-in-class customer service processes in
your industry, and you are primarily looking for operational efficiency and proven ability to manage large
contact centers, then you would be better off looking at the players in the first group. If you are not sure what
best-in-class processes are for managing customers in your industry and that is what you are buying through the
outsourcing arrangement, then you would be better off looking at big consulting firms such as Accenture and
IBM. Yet, be aware that although they understand program management and best-in-class business processes in
many industries, they do not have years of experience in managing large contact center infrastructures, so they
tend to come to market via partnerships and arrangements with other players.
Matthew Goldman
C9, STD8, 4/05, AE
Page 18

Recommendations
Identify outsourcing objectives. What do your customers expect from you? Consider the process vs.
value proposition.
Map customer-facing process end to end to understand and manage the intersection with retained
processes.
Develop contracts that require innovation in delivery to reduce ongoing costs (for example, flexibility
and diversification).
Leverage global delivery capabilities, but be careful about provider evaluation. Ensure that they have
the industry or business process understanding.
Establish well-defined metrics for vendor and process performance management. TA requirement to
manage and measure the outsourced relationship.
Do not underestimate the management time that will be required to make this work at least in the
first year.
Evaluate and monitor changes in customer perception.
Matthew Goldman
C9, STD8, 4/05, AE
Page 19
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Dos and Donts of Contact Center BPO:

How To Make It Work

Gartner Outsourcing Summit 2005

Dos and Donts of Contact Center BPO: How To Make It Work

Understand the Impact of Your

Warning: Outsourcing can dramatically

but at what cost to your customers?

Dos and Donts of Contact Center BPO: How To Make It Work

Dos and Donts of Contact Center BPO: How To Make It Work

Worldwide Market Size and Growth Estimates for

Customer Service BPO

Sales & Marketing BPO

Dos and Donts of Contact Center BPO: How To Make It Work

Customer Service Outsourcing Market:

Perception that customer service

Fear loss of control

Immaturity of the market

Bad internal measurement of

Lack of vendor industry process

Risk of high-profile offshore

Dos and Donts of Contact Center BPO: How To Make It Work

Why Outsource Contact Center or Customer

Explore decision inputs and evaluate available options.

Desired outcomes are possible, and errors are

Dos and Donts of Contact Center BPO: How To Make It Work

Top Five Reasons for Outsourcing

Improve Service Quality

Improve Customer Care

Reduce Cost of Service

Acquire Capacity on Demand

Leverage Process Expertise of

Gartner Survey (n=76): 1 is not important and 7

Dos and Donts of Contact Center BPO: How To Make It Work

The Myths About Customer

We will absolutely save money if we outsource

Customer satisfaction rates will erode if I

Contact center outsourcers are better at agent

Outsourcers have better contact center

In-house contact center agents provide more

Dos and Donts of Contact Center BPO: How To Make It Work

What to Outsource: Value vs. Process

Pursue process automation

Explore cost-benefit of outsourcing

Identify changes in preference

Explore Outsourcing Alternatives

Dos and Donts of Contact Center BPO: How To Make It Work

What to Outsource: Full or Partial Options to

For operational or performance benefit, organizations may

Partial outsourcing is often used to address noncore processes

Dos and Donts of Contact Center BPO: How To Make It Work

If You Dont Know What You Want to Do,

Eighty percent of large organization respondents have

N=109 (Organizations with 1,000 or more employees)

Decision requires thorough analysis, clearly stated

Dos and Donts of Contact Center BPO: How To Make It Work

Top Mistakes in Customer

Expecting cost savings before measuring your current performance

Going ahead without executive buy-in

Locking yourself into a long-term contract without an exit strategy

High outsourced agent churn rates

Inadequate processes for knowledge management

Not managing the customer experience appropriately

Inappropriate or unmeasurable SLAs

Failure to map customer-facing processes (from the

CALL CENTER - Do's and Don'Ts of Contact Center BPO - How To

CALL CENTER - Do's and Don'Ts of Contact Center BPO - How To