Offshore Call Centers Get a Bad Rap… and Other Thoughts

I had a candid conversation with a IT/BPO services company CEO yesterday. That I was on the phone with an executive at an IT vendor is not itself unusual. I talk to them quite often for one of two reasons: either I’m working on a story they can provide some insight about, or I’m taking what’s called an editorial briefing to satisfy my publisher. This call was actually the latter. These calls fall into two camps. Either the CEO sounds like he’s reading from a press release and has a ready (and boring) answer to every question or he lets down his guard and we have an actual human conversation that’s enlightening or funny or just plain old enjoyable. This call was actually the latter.

The conversation was with P.V. Kannan, co-founder and CEO of 24/7 Customer, based in Los Gatos, Calif. with the bulk of operations in India and an expanding presence globally. 24/7 Customer’s web site says it’s “the world’s first global integrated customer lifecycle management services company.” Which means, the company operates call centers.

Usually you can tell within the first few minutes of these vendor briefings what kind of call you’re in for (and whether you might be best served trying to “multi-task” while on the phone). But when you mention your theory that everyone’s been quick to put a stake in the ground in China, but no one seems to have an actual strategy… and instead of equivocating or explaining his own reasons for setting up shop in China, the CEO actual agrees wholeheartedly, you perk up.

On that note, I thought I’d share a bit more of what Kannan talked about.

The declining state of “customer service”:

Part of the issue, says Kannan, is that most of his clients view customer care as a “problem” they want to get rid of. “That leads to very narrow thinking,” says Kannan. On the other side of the phone is a customer who already thinks the company is rying to evade him, having to hunt for number to call about the Byzantine bill he just got in the mail from company X.

Company X, meanwhile, thinks with all the technology out there, the problem should already be solved. “They think you have IVR (interactive voice response systems) and a kick-ass web site and everyone will go there,” says Kannan.

“No one owns the customer in large companies,” Kannan says. You can’t go into any large bank and say, “I’m your customer.” You’re divided up. You’re a credit card here, a mortgage there, a high-net worth individual or a customer you don’t want. Then there are the divisions of marketing, IT, customer care, etc. “It’s time someone stepped back and said what are we doing with this?” Kannan says.

The end-customer complaint that Indian call centers are frustratingly “process-driven”:

The process complaint is a problem with any call center, whether located in Chennai or Chatanooga. The process issue just comes to the fore when “the caller also thinks, this guy doesn’t understand me so he’s being mechanical.” The issue is that is what those call center agents are compensated for: adherence to process. “You get dinged if you don’t say, ‘Is there anything else I can help you with at the end of the call, even if you can tell by their tone that they’re in a hurry and just want to hang up,” says Kannan. “It gets subtracted in your QA score and you lose some portion of your variable pay.” Call handle time is also important: “You have to finish the call so you stick to the process.”

So who’s fault is that? Kannan says 24/7 is working on predictive customer service, doing data modeling on customer behavior so they know the issues a customer is likely to have, say, within the first 72 hours of purchasing a product. But even the seemingly simple things, like giving an account number or your mother’s maiden name, takes up time. And then, of course, there’s the issue of typing your account number into a phone keypad or recording it by IVR… then having to repeat it again when the live agent gets on the line.

If you could actually get that out of the way via automation, that would give call center workers time to have those human conversations and solve problems. But that doesn’t happen largely due to systems and processes on the client side of the outsourcing relationship. “A lot of companies are acquiring all the time,” says Kannan. “They’re always tying up systems and haven’t completed the last integration. They never have time to catch up so they give up on functionality.” A big bank may need to open a call center in Florida, like, yesterday, so they put in some phones and put some people in there to answer them. Or a customer of 24/7 may not have fully upgraded to Siebel. Thus, the call to customer service is never quite seamless.

Kannan says his clients may want to create more helpful self-service web sites for their customers, something more like the consumer technology they interact with daily (Google, iPhones, etc.) But, says Kannan, “that’s the worst job CIOs have today, matching (consumer technology) expectations. The may build a system like that, but Google and Apple are already building something fundamentally different that will come out in the next couple of years.”

Moving out of big city centers to tier-2 and tier-3 cities in India and elsewhere:

“It’s not a stupid idea,” says Kannan, but 24/7 Customer is staying away from less developed cities. It’s firmly entrenched in city centers in Bangalore, Chennai, New Delhi, and Hyderabad. In Guatemala, 24/7 set up shop in downtown Guatemala City. In the Philippines, “We’re in the heart of Manila and would not step out of that.”

“The infrastructure in Tier 1 cities is in no way comparable to first world countries and China is way ahead of that,” says Kannan. “It’s taken the last five years to get reliable bandwidth in tier 1 cities. In tier 2 cities, those issues get compounded. And there’s the coordination costs of managing multiple locations.”

The complications of Latin America:

For IT and BPO providers, Latin America can be a tough nut to crack, with so many smaller countries, slightly different cultures and language, and varying systems standards. So how do you succeed?

“Dumb luck,” says Kannan, who opened up a center in Guatemala a year ago. “You can wake up one day and find the country you’re operating in decided to move away from democracy to something else.”

That’s the trade-off with low-cost locations, he says. “If they had better standards of living, great infrastructure, and perfect democracies, they would cost as much as the first world.”

Operations in China:

24/7 Customer is doing some work in China to handle calls in Mandarin. Cantonese, Japanese, and Korean. Driven in part by its U.S.-based customers with Asian operations, 24/7 Customer is “very serious about understanding China. China in long run will be a big market for us.”

But, he admits: “You go there and get drawn in, but as a businessman, you don’t really know how to make money there.”

English as the Microsoft Windows of the world:

If China is going to be such a major force, I asked Kannan, should we all learn Mandarin? I got an unequivocal “no.”

“English is the Microsoft operating system of languages,” says Kannan. “It’s ugly, but it’s global. You live with it the way you live with Microsoft Word.” Kannan predicts that within ten years, everyone in China will be speaking English, thanks to some very

ambitious programs there. They see the benefits India’s gotten from the language. (Though, he notes, English was largely forced on India by British colonial rule.)

Indian call centers shouldering all the blame for bad customer service experiences:

“What can you do?” says Kannan. “I always tell people when I emigrated to this country as a programmer, people would accuse me of stealing there jobs. And I had to say, there’s nothing I can do (about that).”

Offshoring pushes people’s buttons, says Kannan. “It takes time for people to get used to things. Change is hard”

Finally, thosebars in Bangalore with the early closing times?

It’s only in Bangalore, but it stinks, says Kannan. The southern part of India is more conservative. Once they saw these great dance clubs and bars staying open until 3 or 4 a.m., “the moralists killed it. They shut it down at 11.” What can you do?

With that, I open this up for discussion. Do offshore call centers get a bad rap? Does any company actually have a solid, strategic plan for China? Are tier-2 cities worth the trouble?