Call Center Outsourcing - How'd we get here?

Welcome to the Home Agent Consulting, LLC BLOG.  My name is Rick Owens and I have been fortunate to work in the customer care industry since 2002, during a time of massive change in the industry.  This BLOG will get into the intricacies of the Home Agent concept, but as an introduction I'd like to share a little about my background, then a brief yet broad discussion on the recent/ongoing evolution of customer care. 

First things first, a little information about my background - I’m a technical person at the core. An Operating Systems engineer that spent many years in the travel industry technology arena, I learned all about, and had a hand in developing, automation for quicker reservations and faster response times. In developing the Apollo Computer Reservation System, we earned revenue on each reservation transaction.  The more we booked air, car, hotels, cruises or tours, the more money we made.  We brought every travel provider (competitors) to the electronic market called the "Global Distribution System", initially giving "travel agents" access to everything vendors had to offer.  Then with the advent of the internet, the industry gave access of all this capability to the end consumer. I’m also aware of the complexity such access immediately dumps onto the end customers, who only desire to make a purchase, and not be duped into buying something they could have gotten cheaper through another venue. Don't you hate sitting next to someone on a plane and find out they bought their seat at 30% less than you did?  I understand the urge to talk with a human, an expert, to make the buyer more comfortable. That customer desire is in every industry, not just travel. With the growth of customer populations and the complexity of products and services, comes questions, complaints, the need to pay bills, etc. Some form of customer service, and thus the call center, is necessary in nearly all industries. 

My first job in the call center industry was leading the technology organization for a very large BPO (Business Process Outsourcer = fancy name for a call center company). The concept of a call center has been around for a long time. At first, business units created small support teams locally/internally, out of necessity for their specific need. Advanced technology, logistics and communications enabled products and services to reach ever growing customer populations. Large companies would find they had small pockets of these call support operations all over their organization.

The first call center consolidations were internal as companies themselves, pulled together all the fragmented customer service groups into a consolidated operational business unit. Consolidated staff could be trained on multiple products having varied call arrival patterns to keep the workforce optimized (paid for work time, and idle time, waiting for calls that might not arrive). Automation arrived with the ability to route callers based on their specific reason for calling like billing, complaints or sales (called Call Segmentation). Advanced technology helped improve customer service by delivering agent prompts (screen pops) based on call segmentation, account number or even the number callers dialed from.  Some technology actually allowed callers to serve themselves like acquiring account balances or paying bills without talking to a human. Interactive Voice Response (IVR) became a normal front end to calls to identify call type and in some cases, handle the entire transaction and avoid using a very expensive human being at all.  “Call Killing” is a term for automatically handling a customer matter without human intervention.  (Most callers just want to kill the IVR! :-)

But having all this call center investment and capability became very expensive. It's understandable when you think of all the required infrastructure, redundant data centers, networks, call processors, voice recorders, let alone the tremendous real-estate and the general customer service expertise required. The need for and value of customer care is tremendous, and all industries need it done efficiently to contain costs.  This situation spawned a whole new industry: the call center outsourcer.  

Outsourcers focus on this massive complexity, and then partner with each client to build a unique customer interaction environment.  They offer the call center real-estate, employees, training, and massive technology infrastructure and integration.  They optimize all that investment by leveraging it across multiple industries that need calls handled throughout the day, not just the hours of one industry.  Its truly a matter of scale and focus that they offer at a lower cost than a company can do for themselves. 

So that’s my background, and a brief history on how the concept of call center outsourcing started.  Next time we’ll talk about how the continual pursuit of cost containment lead to introducing "near-shore" or lower costs through lower wages, then "far-shore" which achieves massively lower costs by leveraging global economies.  And finally and most recently, we'll get to the attraction and creation of the concept called Home Agent or "home-shore" operations. 

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. 

There’s no place like home! …but getting there isn’t always easy

Up to now, we’ve reviewed history on the evolution of the US call center outsourcing market. Initial BLOGs described how focus on cost reduction, using technology advances and global economies influenced the move from domestic operations to near-shore and off-shore geographies. Recently there has been increasing momentum for call center employers and employees to consider the Home Agent operation model. Drivers on the employer side:

• Continuously advancing technology, especially in the security and communications area
• International political unrest
• Domestic Disaster Recovery capabilities (driven from the point above)
• Increased US legislation on data privacy and security-complicating off-shore operations
• License requirements for specialty services (triage nurses, accountant support, insurance services, etc)
• Pressure to improve CSAT, which seems to benefit from accent & cultural affinity
• Schedule Flexibility – WAH split shifts and part-time/seasonal workforce
• Desire for very local support, like government services only wanting to hire from their own constituents

Employees seek work at home (WAH) for the following:

• Eliminate commute time and related expense
• Reduce costs for meals on the go and eating out
• Reduce wardrobe requirements
• Minimize concern over appearance (i.e. Make-up, shaving, etc)
• Enjoy comfort of working from your own home =  control your workplace environment

Despite the allure of the WAH model, employers shouldn’t underestimate the commitment required to be successful.  The operation is very different from Brick & Mortar (B&M) and we’ll get deep into that detail through this BLOG series. But to expose the magnitude of the situation, let’s start by choosing one area as an example. Let’s consider the employee applicant pool. Hiring for a B&M operation is generally confined to the radius people are reasonably willing to commute to work. This fact limits the applicant pool an employer can expect to attract when choosing a B&M location.

However, consider if an employer virtualizes their operation processes entirely, such that they can hire from anywhere - the applicant pool explodes. This model is typically referred to as the “Remote Agent” model or “RA”.  Agents provide their own PC, ISP connection and perhaps a landline telephone and headset. In this model, hiring unique skills such as languages and professional certifications become easy. Professional associations, LinkedIn groups and organizations such as heritage and language clubs become massive recruiting pools.

As a partial step, the hiring radius can be increased if workers know they will work primarily from their homes and need only visit the B&M center for training purposes, acquiring equipment and perhaps a meeting now and then. This is typically referred to at a “Telecommute” agent model or “TCA” where the employee is “tethered” to a facility. In this model, some WAH advantage is achieved like schedule flexibility and some disaster recovery benefit as well, and the hiring population can expand to some degree. Using B&M as a base, employers can deploy and support equipment, have face to face meetings and train staff locally, practices they are familiar with.

In my experience with multiple WAH companies, immediately following an occurrence of national exposure to a WAH employment opportunity, at times we experienced 1000+ applications per day. You can imagine how that challenges application and communication processes!  How does a company interact with 1000+ new applicants daily, and ongoing? How long before the application ages out?  How does a company build that DB of applicants into a longer term asset? How do you avoid being labeled a scam, because you don’t even respond to 95% or more of your applicants?  How do you automate the qualification process, so applicants self select out if it’s not the best fit?  It’s nothing like a traditional B&M application process.

Many companies fail implementing the Home Agent call center operation because they don’t recognize the level of process change involved and the required investment to make the model work. And it’s actually a bigger challenge for companies with a history of successful B&M operation. “Conventional wisdom proves that historically successful organizations resist change, due to paradigm “blindness” – at worst, they crush innovation before it interferes with the status quo.”  (CIO Magazine - June 22, 2008)

WAH should be approached like launching an entirely new, off-shore operation. The changes are extensive.  Let’s consider additional areas of note:

• The technology platform and related tech support processes and tools
• As touched upon above, applicant sourcing, recruiting and hiring
• Employee communications in general
• E-mail, voicemail, texting, bulletin boards, team performance tracking
• Outages!  How to communicate status to the troops, when systems are down
• Reference material distribution
• Human Resources documentation processes
• Operations management and monitoring practices
• Consider: Chat rooms, instant messaging, screen sharing, employee status monitoring, escalations, documentation, team huddles, simple agent note taking practices … how about raising a hand or pom-pom?
• Quality Assurance and Coaching
• Scheduling – Shift Bids, trading, flexibility with last minute changes
• Time keeping systems and practices – no turnstiles involved, but legally they must be paid from login initiation.
• Training is a huge area of change, and needs to be incorporated into the hiring practice to improve profiling, building knowledge in the workforce as they come through the process

Despite the challenges to implement the model, significant benefits are achievable. Successful WAH operations report advantages in the following areas:

• Customer Satisfaction with cultural affinity is on the rise
• Employee attrition improves if hiring, training and communications work properly
• Significant real estate costs avoided: mortgage/rent, real estate taxes and insurance, office capital and maintenance, furniture, utilities, LAN/WAN, PC’s and telephones, etc.
• Schedule efficiency improves across all the call center operation through WAH staff flexibility, to the benefit of both the employer and the employee population.
• Schedule consistency, less B&M Voluntary Go Home (VGH) required = happier B&M workers
• WAH “jump on” opportunities = increase WAH earnings 
• Highly qualified applicant pool; especially noteworthy is the emergence of three unique and valuable sources:

1. Stay-at-home moms
2. Highly qualified/experienced retirees
3. Physically challenged workers

Over the next few BLOGs we’ll break down WAH idiosyncrasies and the investments required in the following areas: Technology, Recruiting, Training, Operations Mgmt, Legal/Security & Audit, Human Resources, and finally Communications.

Please share some feedback with me at Rick@HomeAgentConsulting.com or via this BLOG comment area.  Welcome Home! 

Home Agent Technology – The agent desktop

It is the evolution of technology that has enabled the HA call center operation model. This BLOG will focus on securing the agent desktop. Employees must have a desktop that prohibits printing, moving or saving data outside a controlled environment. Additionally, we must eliminate the chance of nefarious desktop viruses or key logging trojans which can compromise data security. Significant process adjustments are required in every facet of a home agent operation as well. You’ll see that technology and process are intermingled throughout any serious HA discussion.

There are multiple ways to secure the desktop. VMWare is a very popular product in home agent solutions. It is installed, often downloaded to the agent PC. After booting the PC to the resident environment, the VMWare application is started, which serves to lock out the rest of the applications and provides a secure, centrally controlled desktop environment. Bringing up the VMWare environment can take several minutes, which is very costly in a call center operation.

Every HA desktop must incorporate solid Virtual Private Network (VPN) technology to encrypt the connection, and some VPN vendors also lock the desktop as well. Those approaches rely on the Operating System (OS), typically Microsoft Windows, already resident on the PC. Unfortunately, over the years, my innovative staff have routinely been able to build viruses that penetrate the OS and log key strokes under most solutions for desktop locking. Introducing a process to conduct a thorough virus scan before each log in, can compensate for most virus intrusions. Such a process will also add significant time to the log in process, again, very costly to the HA operation.

I prefer using bootable environments for the agent desktop. This is typically a CD or DVD disc or a USB device that the agent connects/loads to the computer, then the machine boots off that device, eliminating the installed Operating System (OS) and any viruses, entirely. This approach is also done pretty quickly. The best success I’ve seen, uses a Linux kernel via a USB thumb drive, delivering strong software cost reduction as well. This approach, however, also has its challenges such as running the softphone call control applications. These are required for agents to interact with a central telephone switch and are typically built only for Microsoft desktop OS’s. Other applications used in a daily call center operation evolve as well, routinely built for the Microsoft OS environment. These changes will keep the IT group testing future application enhancements as a matter of course, to minimize issues to the home agent operation.

Every solution, has challenges with the continuous evolution of hardware and software. Consider the ultimate desktop challenge: PC’s are simply going away! Tablets are outselling PC’s today in the US and that will eventually have an impact on anyone expecting to use a “standard” personal computing environment. The ultimate solution is creating a very low cost, disposable yet secure desktop apparatus you can ship to the agents. Several companies are working toward that solution, but I don’t know anyone that has achieved it yet. Recovering deployed equipment is very costly, time consuming and often futile.

It’s hard to consider desktop security without addressing connection security at the same time. We only touched on it above when we mentioned VPN. The agent connection must be securely encrypted and all transactions carefully logged for potential forensic analysis. Network capacity via the typical ISP now far surpass application needs, enabling in many cases the use of full Voice over IP (VoIP) delivery through the PC to the agent. Let me explain. VoIP technology allows delivering the calls through a headset connected to the PC, not through a standard telephone. That provides some serious cost avoidance. VoIP is still rare as the end point delivery of voice for home agents because as any ISP throughput issues can impact voice quality. Again, strict processes and heavy monitoring can minimize the problem. Most operations still use a land based telephone line, connected to the desktop PC through the ISP, running a softphone call control software application. And this brings us to another challenge: Home’s with land-lines are disappearing! Most people do all their voice communication on smart phones. Cell phone’s have not proven stable enough for heavy call center use.

Next BLOG we’ll get into agent ID verification, as part of the security challenge - from a technology perspective as well as begin discussing the processes for sourcing, recruiting and hiring agents. Thank you for all the e-mail. I appreciate hearing from others involved with this unique operation model for customer care. Contact me Rick@HomeAgentConsulting.com - Welcome Home!