OFFSHORE – "THERE"

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Having extracted out all the necessary potential productivity improvements in their call centers located in North America and Europe, GE, American Express, Sprint, Dell, AOL and Amazon resorted to go “offshore” to have their their cost-effectiveness further improved. Following the movement of a number of their call center to lower cost destinations such as India, the Philippines and Malaysia, these and many other Fortune 500 companies had their cost-effectiveness go up by up to 50% together with an improved quality and increased overall customer satisfaction.

Astounding offshore results

Given the “proof of concept” by several other players across multiple verticals and advances in technology, business groups are now gradually moving volumes of their work to outlying locations, thus, creating more and more opportunities.

The benefits of launching software-writing centers have been seen by these companies in lower cost countries. For example, in India, learned workers are competent and may be employed for about one-fourth of the cost in North America and Europe and there are also much lower infrastructure expenses.

Moreover, greater opportunities are now being opened up to transfer many parts of a company’s system. This includes front-end customer-facing functions, usually to lower cost locations having increased bandwidth capacity and as universal networking standards emerge.

These offshore call centers will persist making dramatic results as we’ve seen with IT offshoring. A few corporations have by then concluded about a reduction of fifty to sixty percent in costs, right after adjusting for higher telecommunications and management expenses. These results are because of lower labor costs, a large pool of highly talented workforce, and increasing offshore capabilities across global majors and Indian providers.

Lower labor costs: Labor comprises a big part (about 60-70%) of operating expenses in North American and European call center, compared to India and the Philippines, with a much lower rate of 10-20% of those in the U.S. As said, distribution of operating expenses are more evenly towards labor, systems and telecom, and real estate and utilities. And savings due to these cost advantages could accumulate to up to an outstanding $250 million every year.

If offshore facilities will increase so will the risk of demand exceeding supply. It will then affect the cost advantage’s sustainablity. In significant plentiful offshore locations such as Ireland and the Netherlands, it took about 10 years for the increase in wages from 50 to 75% of those in the U.S. Still, it will take about 25-30 years (in the most aggressive circumstances) for destinations which includes India, as a result of having much lower initial wages and a large highly skilled workforce that is gradually growing.

Bountiful and highly skilled workforce: Lower cost labor does not necessarily mean lower skilled, lower quality workers. Furthermore, in most offshore cases, the opposite is true.

Call centers in North America eventually hire high school graduates. And they appear to be low in commitment to the job and the company, an attrition rate of 40% or higher being clearly evident. Contrary to this, the call centers in India and Philippines hire university graduates from their large pools of skilled labor. Thus, they have more commited workers.

Increasing offshore capabilities: The functions and types of services that are being provided by offshore call centers are expanding rapidly, despite the fact that outsourcing just started with a simple, transaction-oriented, non-customer-facing work such as back-office processing. Next are e-mail and live inbound and outbound calls. These much more complex interactions were earlier just relatively simple. For instance, GE and others manage most of their volumes collected through their Indian partners. And it is considered to be a task in the U.S. that usually necessitates a higher cost skill level.

The coming of the training wheels have begun. As long as their is maintenance involving commitment and investment in people, offshore agents will be able to manage the same situations similar to their American counterparts.

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