The Contact Centre Industry --

Outsourcing Internationally

World Summit on the Information Society: Women

and ICT

Tunis, November 2005

Objectives of PresentationObjectives of Presentation

1. How a developing nation can make use of the information technology and educated workforce to develop an outsourcing and offshoring call centre industry

2. Examples from India, Malaysia and the Philippines

Who is COPC Inc.?Who is COPC Inc.?

Customer Operations Performance Center Inc.

Founded in 1995

Grown to a worldwide staff of 60 associates in nine countries

More than 750 onsite operational audits in 30 countries / average 10 audits per month

200,000 contact center seats

Operations of all sizesFrom 10 to 5,000 customer contact seats

Co-developers of the Industry Standards for contact centers worldwide

Global FootprintGlobal Footprint

Argentina – Australia – Brazil – Canada – India – Japan Singapore – United Kingdom – United States

Offices in nine countries around the worldOffices in nine countries around the worldOffices in nine countries around the worldOffices in nine countries around the world

Global StandardGlobal Standard

Canada IrelandUnited States EnglandDominican RepublicFranceArgentina NorwayBrazil NetherlandsCosta Rica Germany

South AfricaJapanSingaporeMalaysiaPhilippinesHong KongAustraliaIndiaPakistan

200 Companies – 300 Locations 35 Countries – 6 Continents

Global Internal / External Operational EnvironmentsGlobal Internal / External Operational EnvironmentsGlobal Internal / External Operational EnvironmentsGlobal Internal / External Operational Environments

Evolution of economyEvolution of economy

Early 1900s, the economy was predominantly driven by agriculture. The nations which had a strong agricultural production had a competitive advantage. Mid 1900s, industrial revolution became a dominant force in driving the economy. Manufactured goods and products delivered competitive advantage to nations.Late 1900s, the manufacturing economy gave way to the information economy where knowledge and information services play a key role in providing competitive advantage to a nation/company.

Key Terms and RelationshipsKey Terms and Relationships

OnShore: The Client’s domestic locations (e.g. Canada, US and Europe)NearShore: Typically countries near the OnShore locations (e.g., Mexico and the Caribbean)Offshore: Locations significantly distant from the Onshore geography (e.g., India, the Philippines, and South Africa)Global Sourcing: The use of CSPs in multiple locations to service the Client’s customer transactions

Development of economy in Development of economy in emerging countriesemerging countries

Singapore during her formative years of the 1960’s and 1970’s

strong, effective and stable government

investment in education and infrastructure

attract large amounts of foreign direct investment

India, over the past 5 years have developed a strong offshore industry with better educated people and low-cost workfoce

Why Companies Offshore?Why Companies Offshore?

Top corporations are focusing more on core activities and outsource labor intensive service functions.

Lower operating costs often dominate today´s company site selection criteria.

Labor shortages/wage pressures are driving Contact Centers out of the their home countries to low cost international locations.

International telecommunication costs are dropping in many geographical areas.

Moving Offshore: Key Challenges for Moving Offshore: Key Challenges for European and U.S. CompaniesEuropean and U.S. Companies

Companies which want to move their operations face two types of risks in deciding where to migrate transactions offshore:

Location risks: Where should I go?

Company risks: Who should I use?

Additional risks include deciding which customer transactions to move offshore.

Moving Offshore: Key ChallengesMoving Offshore: Key Challenges

Location – DistancePhysicalCultural

Political, economic, and social stabilityBuyer staff safety Tax policy – IncentivesCustoms regulationsEase of implementationTransportation (air services, courier services)

Location-specific factorsLocation-specific factors

Moving Offshore: Key Moving Offshore: Key ChallengesChallenges

Labor pool Size, skills, cost, labor lawsUnemployment, income levelsWork ethic, flexibilityAttrition, absenteeismWork expectations (e.g., company provided transportation, food, housing)

Telecommunications infrastructure (carriers, fiber, cost) Reliability – redundancy

Electric Power (Back-Up)Availability of replacement equipment

Location-specific factorsLocation-specific factors

Moving Offshore: Key Moving Offshore: Key ChallengesChallenges

Range of Services Offered Cost of Services (Quoted and Actual)Ability to meet commitments & hit targetsImplementation capability (time to volume – the ramp)Technology Platform (compatibility)Workforce

Skills – both coming in and required time to trainVoice/culture neutralizationAttrition/Absenteeism

ExperienceManagement team (capabilities, depth, and tenure)With the offshore markets under considerations (“we can set up a site for you there”)With the specific products/services being moved offshore

Company-specific factorsCompany-specific factors

India as an offshore site for U.S. and India as an offshore site for U.S. and European companiesEuropean companies

Delhi

Mumbai (Bombay)

Pune

Hyderabad

Bangalore

Chennai

Market Review: IndiaMarket Review: India

Projected to grow 100%+ per year through 2005

Major players establishing “owned” centers

200-250 contact centres, some without customers

CSRs paid US$150 to US$300/month “all in”

Provide services for $13 to $18/hour voice “all in”

Connectivity improving

Aggressively marketing to US/UK companies

IndiaIndiaStrengths Weaknesses

General• Stable economy• Stable socially/politically• Physically safe?• English speaking• Government support – in

some partsLabor• Available (high

unemployment)• Educated • Low cost• Good work ethic• Average absenteeism

• Physical distance• Cultural distance/difference• Time difference – working daily

at night• Doesn’t show well• “Expediting” payments• Bureaucracy--slow implementation

• Attrition rates high – 50%+• Have to train “basic skills”

PC Customer service Typing Language/accent/culture

• Lack flexibility• Few experienced managers

IndiaIndia

Infrastructure• New

technology/equipment• New facilities• Telecom

Inexpensive Improving availability

• Power: Totally redundant

• Availability of critical equipment

• Availability, speed, and capability of repair technicians

Strengths Weaknesses

Indian ITES - BPO Industry Indian ITES - BPO Industry

A US$ 5.0 b industry and growing

stronger

Outsourcing of IT jobs to India could grow fivefold to $50 billion by 2008 if it can

overcome a US labour backlash

says a report by investment-analyst firm Brean Murray Institutional Research

Indian ITES - BPO IndustryIndian ITES - BPO Industry

Looking AheadLooking Ahead

India has the opportunity to be a world leader

One prediction is that by 2008, India will employ two million people as call centre staff

Opportunity for severe price competition

Will need to keep “eyes wide open” and aggressively compete with other countries/regions

Malaysia Malaysia as an offshore site for as an offshore site for U.S. and European companiesU.S. and European companies

General• Stable economy• Stable socially/politically• Physically safe• Ability to find English

speaking staff• Government support• Little Bureaucracy

• Physical distance from the U.S. and Europe

• However, focusing on customers in South East Asian regions of Multi-Nationals

Strengths Weaknesses

Malaysia Malaysia as an offshore site for U.S. as an offshore site for U.S. and European companiesand European companies

Labor• More experienced CCC

managers compared to 2002

• Average absenteeism• Ability to find English,

Cantonese and some Asian languages to provide service to Asian regions of U.S. companies

• No experience with (and no desire to) accent neutralization

• Unfamiliar with U.S. or European culture

Strengths Weaknesses

Malaysia Malaysia as an offshore site for U.S. as an offshore site for U.S. and European companiesand European companies

Infrastructure• Available technology,

power, telecom--things works here

• Very limited experience with centers of size >1,000

Strengths Weaknesses

Philippines as an offshore site for Philippines as an offshore site for U.S. and European companiesU.S. and European companies

General• English speaking• Culturally close to US

• Unstable economy• Uncertain political climate• Limited government support• Physical safety?• Physical distance• Bureaucracy--slow

implementation

Strengths Weaknesses

Philippines as an offshore site for Philippines as an offshore site for U.S. and European companiesU.S. and European companies

Labor• Available (high

unemployment)• Educated • Low cost• Low attrition?• Average absenteeism

Infrastructure• More experience than

India--doing emails and calls for 3-5 years

• Many issues reported

Strengths Weaknesses

Companies are looking for alternative Companies are looking for alternative to India – to India – source: ContactCentre.net 13 Nov 2005source: ContactCentre.net 13 Nov 2005

The high turnover rate of Indian call centre staff and cultural differences has prompted a British internet service provider to relocate its call centre from the subcontinent to South Africa.

An ISP with 250,000 customers, has shifted its call centre to Durban a £2 million (US$3.5 million)

the main reason - high levels of turnover among call centre agents in India.

South Africa is believed to have the second-lowest turnover rate in the world, at between 5-15 % a year, whereas, India's rate was about 35%.

“South Africa has a very good population that is culturally diverse for call centre work."

Tunisia as an offshore site for U.S. Tunisia as an offshore site for U.S. and European companiesand European companies

Should review the opportunities for the outsourcing industryReview strengths and opportunitiesEducated population Developing infrastructure Political stability Same Time Zone as Europe and the Middle EastCulturally close to EuropeFrench and Arabic language skills

France, Belgium, French Canada and the rest of the French-speaking worldMulti-national companies Arabic language needs

Thank YouThank You