Call Center Geographic Migration

Much like the improvement found in assembly line processes of the early automobile industry, the consolidated call center started pursuing and realizing amazing gains in operational efficiency. Bringing similar work together allowed specialization or process familiarity resulting in lower interaction handle times (=cost reduction) and even improved customer satisfaction (CSAT).

Outsourcers get paid by some unit of measure, whether that is agent worked hour, agent call handle time or perhaps payment per call. Additionally, but not primarily, there might be some measure or penalty based on CSAT levels. In general however, outsourcing clients seek cost reduction. Outsourcer profits are made by servicing more calls in shorter periods of time, perhaps keeping customer satisfaction to some level; but outsourcers cannot tolerate having staff get paid when not servicing calls. US staff wages became the largest single cost in the equation. Unlike the "fixed costs" from real-estate or technology infrastructure, wages are “variable cost” in that they can be turned up or down by scheduling more staff, or sending them home early. Focus on staffing efficiency is paramount in the call center outsource world.  

Operations engineering practices, similar to manufacturing time & motion studies could maximize call handling efficiency. Strictly measuring call status, call routing, call handling practices and resulting agent efficiency became the continual focus. Call arrival patterns were studied with the strictest science practices and complicated scheduling algorithms could achieve the highest staffing efficiency  Operators sought precise balance between Average Handle Times (AHT) and the Avg Wait Times (AWT) customers would accept before impacting CSAT. The call center became a laboratory of efficiency to minimize cost, maximize volumes and thus increase revenue and profitability.  However, in the rush to savings, CSAT was routinely left in the dust. Also, it became standard to treat the call center worker as almost disposable. As the rigor of meeting ever increasing performance demands proved tremendously stressful, employee attrition skyrocketed, thus training efficiency became the focus. It was cheaper to hire and train low cost workers, than emphasize improved working conditions to stem the attrition.

Call Centers, particularly those in the US, had “life spans”, meaning a call center would deplete an entire population by hiring and separating-from volumes of employees from the region. That location would be closed and another opened in a new area to start the cycle all over again.  

Enter the influence of advancing communication technology and world economics. 

During the 90’s and early 2000's, the US dollar (USD) was strong and many companies began moving work to nearby Canada, taking advantage of the USD valuation vs the Canadian dollar (CAD).  Paying someone 8 CAD equated to roughly 6 USD.  By shifting calls across just the border to a very strong labor pool in Canada operators could realize a quick 30-50% wage cost improvement.  Call center construction in Canada exploded; I implemented many. The language barrier was low, as Canadian accents were different, but acceptable. The evolution of voice technology permitted calls to be shifted across border quickly. Operators endured telecom vendors’ long distance charges and Governments international voice tariffs, to achieve the wage savings. But the technology resources hotly pursued communication technology advancement, a primordial soup of acronyms like ATM, TDM, POTS, and VoIP.  Quickly technology helped obfuscate those matters by turning voice into data and continue downward pressure on infrastructure costs while improving speed and quality of communications. A political issue began to develop as thousands of jobs shifted from the US population to Canada, but the US economy was thriving so initially it made little noise.  

This Canadian near-shore savings rapidly evolved to include the USA southern border country, Mexico, achieving an even greater wage savings due to the very low Peso valuation. Outsourcers began training many people in Mexico to speak English and even created things like Accent Neutralization Training (ANT), which provided some CSAT improvement, but in general entering Mexico for English support services introduced the first major accent issues with US customer service, call center operations.

Fiber optics greatly increased data speeds and transmission quality, and converting voice communication into data packets also advanced. These two technologies enabled call center operators to begin leveraging far-shore economies, from third world countries. GE had already entered India, moving manufacturing and software development to that very populated and economically attractive country. Wages as low as 2 USD per hour provided jobs that country craved. And as a one-time province of the United Kingdom (UK), a great percentage of the population spoke English - with a very heavy accent of course. Off-shore operations in India provided massive wage savings. An operation could afford calls to last 2 or 3 times as long as calls handled on or near-shore, and still achieve savings. Other countries followed behind India and the ongoing chase for international outsourcing savings for customer care became status-quo.  On shore and near shore operations would be closed and those jobs shifted to off-shore locations. The downward spiral of costs (and CSAT) was in full force, but with the burgeoning US economy, the consumer-king loved the low prices. More and more products became disposable.  Who keeps a mobile phone more than 2 years?

But as we all know, things change. Accent challenges became everyday experiences to American consumers and call center humor became the source of movies and TV shows (i.e. “Outsourced”).  Also, economies seem to cycle, and without getting political, pressure to reduce rampant fraud brought US legislation like the Sarbanes-Oxley Audit standards (SOX compliance) and the Payment Card Industry Data Security Standards (PCI-DSS compliance).  Identity protection and healthcare laws emerged like Health Insurance Portability & Accountability Act (HIPAA).  All these audit requirements and increasing competition on CSAT opened the door to re-consider using a domestic call center agent… but technology evolution had introduced a new twist.

See my next BLOG where we’ll finally arrive at the rise of the home based agent operation.