Offshoring of Call Centers May Have Negative Brand Repercussions

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The question of the effect of a decision to locate call centers in other regions or even other countries is one that has attracted much attention and comment in recent years. We are all aware of the rationale that prompts a company to locate its call centers offshore. The reasons are most often related to financial savings — plain and simple, it costs less to operate help desks and customer service centers in areas where labor costs are much lower.

Many companies are today saving a great deal by locating call centers in foreign countries where wage rates are a fraction of what they are in North America and Europe, and where an educated, multilingual workforce stands ready to go to work.

And, we’ve all heard of the negative reaction from customers who have to deal with call centers that are obviously located in another country. Criticism seems to relate mainly to the fact that customers have difficulty with levels of service, with being able to access service in the first place, and with the level of product knowledge demonstrated by the person on the end of the call — all of which are, by the way, criticisms that are just as likely to exist if the call center was located in Kansas or Kilkenny or Kent.

Perceptions of customer service delivery aside, there are more specific negatives that customers tend to associate with offshore call centers. These relate to an inability to understand the accent of the call center agent and to the lack of local market knowledge. One frustrated customer recounted a story of a call center agent who indicated that it would be several days before they could get a service technician to her home because of snow conditions. The agent seemed unaware that it was June in Canada and there had been no snow for months.

In recent customer research projects, I have encountered a more subtle negative reaction to the offshoring of call center operations, one that may have more lasting negative effects on customer relationships and the company’s brand. It seems that many customers, who used to be able to pick up the phone and talk with someone in a local office, clearly resent the fact that they now have to deal with agents thousands of miles away.

Even if customers experience excellent customer service, the fact that the company has located its customer service function in another country sends a powerful message to some customers that it no longer supports the local community or even the country. It’s seen to take jobs out of the local market and is, therefore, unpatriotic. The perception is reinforced every time they have to contact the company.

The decision to locate call centers offshore has corporate social responsibility implications that go well beyond accents and local knowledge and that backfire on the brand. Customers observe “why should I support them? They don’t support us anymore.”

5 COMMENTS

  1. Jim

    Like many of your readers, I have my own offshore call centre horrer story. My own turned from mildly irritating to downrght unsatisfactory because the Indian agent didn’t understand polite English and didn’t seem to care at all. (It was a bit like the hilarious scene in Transformers when the special forces are under heavy fire, and try and phone through to the Pentagon to get help, using a credit card and a public phone). When I politely asked to speak to an English supervisor the agent became downright rude and berated me for being a racist before slamming the phone down. Not much customer care there. I no longer bank with this particular institution.

    Part of the problem you describe is that offshoring is too often driven by reducing costs and not enough by increasing value. And by value I mean the optimal level of mutual value for the company and customers. My ex-bank’s desire to cut costs led to them destroying a lot of value as customers left in droves.

    Sadly, I don’t see this short-sighted attitude to cost-cutting changing until companies look differently at how a superior customer experience drives value creation, or better-still, adopts a service-dominant logic to operating its business.

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

  2. Graham

    It’s almost impossible to find someone who has not encountered the offshore call center phenomenon and who feels good about it. So, to your point, why do companies continue to press for short-term cost savings at the expense of long-term damage to customer service levels and, ultimately, to customer loyalty? We all know the answer to that question, as it has raised itself in various guises over the years. The point is that management is often driven toward short-term exigiencies with long-term negative fallout.

    The collateral damage to the brand that I encountered is somewhat more invidious than a bad expeeience such as you describe. Meanwhile, behind the scene customers are asking themselves what level of commitment this firm has to its “home” country,let alone to the local region. They cease to be a player in the local market and are seen to be yet another unfeeling big business.

    Jim Barnes

  3. Jim

    Thanks for reminding us of the local vs not local issue.

    I wonder whether this is another sign of bad-old ‘protectionism’ raising its ugly head again. We seem to be hearing more and more that it is right to keep call centres (etc) at home because they are staffed by people like us, that they keep jobs in the national family so to speak, rather than off-shoring them to lower cost foreigners.

    Protectionism may be politicaly correct in these difficult economic times, but as has been shown time and time again, it is long-term economic bunkum.

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

  4. Graham

    There are undoubtedly elements of protectionism underlying the reaction of many consumers to the offshoring of call centers, but for many, especially in smaller markets, it also represents the loss of the relationship that they used to have with the bank or the phone company, when they could pick up a phone or drop by the local office and speak to Sally or Fred. The protectionism argument would be largely an economic one, while the relationship one is clearly more personal.

    There is also an element of being part of a community. When calls are answered outside the country, it screams that the company is no longer committed to the local area. It’s also interesting that customers react negatively to donations that such firms make to local schools and sports/community groups, labelling them as insincere. If the firm was truly community-focused, they’d be answering the phone locally. It suggests that it’s more important to behave locally than it is to contribute locally.

    Of course, much of this debate will hinge on the segment to which customers belong. For some, this is simply not important and is just another example of the globalization of service delivery. Others who are possibly more relationship prone long for a local touch. I would also suggest that it is more difficult for a company that was at one time an obvious participant in a local community to move their call center offshore than it would be for a company that has always conducted its business with customers via technology.

    Jim Barnes

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