It becomes more and more difficult to separate the industries “Business Process Outsourcing” and “IT Outsourcing”. While in the beginning the latter had priority, the BPO industry is catching up so fast that today they go hand in hand. What started with some outsourced IT departments, was developing quickly. The global top 10 consultancies and some niche players soon offered the same services and integrated them increasingly with their consulting services. No wonder that business process focused consulting companies like e.g. Accenture took the next step to buy, launch and integrate the process operations as well. Today, companies like this are running huge contact centers on several hubs integrated with their outsourced IT services.

From the other end outsourcing bureaus offering telemarketing and customer services integrated into the same direction. The amazing consolidation process, which I will talk about further down, lead to increasingly larger players, some of them realizing IPOs, some of them gaining larger investments from outside the industry. It was their clients who drove this. Their requirements grew increasingly complex. What began with some outsourced telesales campaigns, led finally to the complete outsourcing of whole direct sales and customer service departments and organizations. The latter included more and more highly sophisticated technology: ACD equipped PBXs with skill based routing technology, CRM (operational and analytical) and Customer Interaction Management systems, Workforce and Performance Management systems, to the modern speech technology – only to mention a few.

The buzzword Business Process Outsourcing or BPO includes all key processes that a company might outsource, such as Manufacturing, Financial, Accounting, Human Resources, Marketing, Sales, Customer Service etc. Outsourcing started with manufacturing processes and probably the most famous industries to realize this were the Automotive and the Fashion industry. A lot of other industries followed their concept first to outsource the production of end product modules within their own country, later to so-called low wage countries. The USA was one of the first nations were such concepts were driven forward. From their perspective everything which is beyond the Atlantic or Pacific is off their shores – in countries mainly in the Southeast Asia regions. From a UK perspective pretty much the same perspective applies.

Therefore BPO is a quite common practice in the manufacturing industries regarding manufacturing processes, but a quite new trend regarding service and supporting processes such as the ones mentioned above. The latter were increasingly outsourcing from two ends: (Tele)marketing- and –sales plus Customer Services processes and User Help Desks, later all other end customer related processes (billing etc.) were given to Call Center outsourcing companies. IT processes including User Help Desks and later whole IT departments and organizations were outsourced to respective IT Outsourcing providers. I have mentioned this before.

Today, the BPO term includes Call Center Outsourcing. If you play with this on the Search Engines you will see that the latter is more a niche within the former – even if the market reality shows a certain convergence of both. Bear in mind my remarks about the highly sophisticated technology in contact centers today as well as their expansion into more and more directly and indirectly customer related processes. In a nutshell this means for this book that I will use both terms synonymously.

In 2006 nearly all analysts and research reports stated that the call center market is increasing worldwide. The growth rate varies between some 3-4% in mature local markets like the US and in Europe the UK, Germany and France – and some 40-50% in the so called emerging markets, meaning young markets like e.g. Poland or South Africa. One thing is for sure: this market continues to grow.

But depending on whether you are dealing with mature or emerging markets the typical challenges there differ accordingly. In mature markets you can see consolidation leading to ever larger players on the one hand – while new call centers are launched typically in small and medium sizes. In emerging markets two trends typically lead to larger centers in the first place. First, some countries’ bureaus offer their services as nearshore or offshore providers thus targeting larger international clients. These clients require many seats at a time. Second, the internal demand within some of these countries, like e.g. in Spain at the moment, is typically driven by the Financial Services, Telecoms and Utilities sectors. These industries require large volumes of seats as well, eventually serving often Millions of customers.

The terms “large”, “medium” and “small” have different meanings in each country. While global analysts tend to use the same class sizes for all markets there are significant differences in the local perception. In the USA large contact centers are widely considered to have more than 1000 seats.

In the Utilities industries across Europe many companies tend to be quite locally oriented, thus building their own call centers and usually working with local outsourcers. Many of these companies still face restrictions when it comes to run a competition. They have to gather a certain amount of proposals and they have to run the competition according to rules fixed by their government or related bodies.

The Telecoms sector has gone international much faster and more effective. This is probably due to the nature of products and services. Mobile providers quickly acted upon roaming agreements allowing them to serve their customers anywhere in the world and still earn their share per minute. This is hard to imagine with e.g. water supply. Moreover there is a growing convergence of Telecoms and Information Technology, leading some people to aggregate both into the so called ICT or Information and Communications Technologies sector. Information Technology, then, was a global industry from the very start.

The Financial Industry was different from the other two and a global one from the beginning. However, the private retail banking was typically a local business in each country and often still is. But due to the finance business culture companies were and are always keen to explore ways to optimize their business on the global marketplace. What is more, they often serve millions of customers: therefore the sheer size of communication volume (calls, emails, faxes, letters and other like SMS) is so large that it is worth having a closer look at how to save some Pence or Cents per Call. The total sum makes the effort worth it.

Options to fill the shortlist with well skilled and equipped candidates increase every day. On the other hand the market is becoming less and less transparent. IT Outsourcing and Call Center Outsourcing keep converging, now also on the SME sized level. At the same time the leading corporate sized players keep combining their portfolio with implementation focused global consultancies. The market seems to develop into a direction where BPO truly means to outsource everything related to the relevant business process to be outsourced: people, process, technology. This was the plan from the beginning, and now it becomes more and more reality.

That said, a counter trend can be seen on the market: some clients separate their approach and outsource only the back office activities bringing the customer interaction departments “back home” or at least a little closer to home. This is where emerging markets come in. For European corporations they can fill the gap and deliver some cultural closeness, while back office activities may stay in South East Asia or South Africa. For North American companies the Latin American outsourcing markets play that role.

While the market keeps diversifying ever more, it seems as if orientation is more important than ever. Offshore BPO companies begin to understand the seriousness of the cultural gap and start purchasing local players to acquire the critical local sales skills. These companies, often some of the largest in their home countries, in fact do outsource operations themselves – to the SME sized BPO companies in their home markets. Companies hardly anybody in Europe and North America would know of.

This food chain keeps evolving and it is good for the clients. The aim is to be able to support the client’s managers locally with critical local industry knowledge and sales skills, with short reaction times. Operations, however, are carried out as needed: culture- and language-sensitive customer interactions locally or near-shore, back office processes offshore.

From the client’s perspective there is no need any more to search for offshore players in their home countries – many of them are right in front of the door.

Call Center leaders frequently face a huge challenge when it comes to apply for a larger or even a stable budget. The normal trend in the call center industry is an ever rising amount of customer contacts, due to many reasons. Thus, option one is usually to apply for a larger budget. Option two is to increase productivity to be able to cope with a higher workload with the same budget. But often only a mix of both allows the company to catch up with the rising scope and scale of call center services. And in some cases the board even asks the Head of Call Centers to reduce the amount of customer contacts – through automation or outsourcing. The latter, of course, does not mean a reduction in contact volume, but in some cases it allows to shift the budget to another department or even company. Let’s have a look at the options.

When it comes to applying for higher Call Center budgets, the tricky thing is that they are often spread across diverse departments. This makes business decisions complex and has a tendency to slow them down. While the Head of Call Center usually owns a part of it, the IT part often belongs to the IT budget. In some cases both positions have to agree upon the budget. Human Resources might have a stake regarding training and coaching in the Call Center, having a word to say regarding respective systems (think e-learning, monitoring systems, performance management). But in most cases there is at least one of the following positions involved since call center activities are part of “macro processes” (see above): Head of (Direct) Sales, (Direct) Marketing, Customer Service/ Operations / etc. The larger the company, the higher is the probability that the Purchasing department will play a strong role as well.

Boardrooms are usually not familiar with call center jargon. They are used to the terminology of balance sheets and P & L. A long time ago, Kaplan/Norton introduced the Balanced Scorecard (BSC) in order to integrate a more process, customer and learning driven view to the existing economic Key Performance Indicators (KPI). Over the last few years we have seen a couple of companies and management consultants applying this concept to produce Call Center oriented KPIs that one can actually present in the boardroom. Besides the usual elevator story facing the question “And how is our Call Center doing?” Call Center leaders should have a robust concept of measurable and explainable KPIs in place which can be integrated into a company BSC. Can be – not necessarily will be.

The type of KPIs may vary a lot depending on the type of industry. But the key is, that typical Call Center metrics such as First Contact (Re)solution Rate, Service Level, AHT (Average Handling Time) ASA (Average Speed of Answer) an the like will need to be consolidated further measuring their impact on a higher level KPI. The latter may be, for instance ARPU (Aversage Revenue Per User) in the Telecoms and Media industries or CLV (Customer Lifecycle Value) in Finance, Telecoms and Utilities businesses. I will elaborate further on these topics in upcoming articles.

Now, the second option I mentioned was to increase Call Center productivity. There are many ways to do that and whole industries such as Call Center Technology and Call Center Outsourcing live from these needs. But before applying any new technology, it is usually a good idea to have a look at the way how the customer operations work at the moment. This leads us to business processes in customer and call center management. In the front office you may call summarize the as customer interaction processes, as opposed to back office processes. The key here is to 1) align the processes with targets, strategies & according metrics and 2) find a way how to optimize the processes to achieve the targets, also called Business Process Reengineering (BPR) or Business Process Optimization. Again I will elaborate on these topics in upcoming articles. For now let us focus on BPR, creating an example.

Let’s assume we run a Telecoms or Media Call Center. We want to prove our excellent results to the Board, so we decide to set up a Balanced Scorecard for all Customer Operations. Besides the economic, the customer (I have written about that before) and the learning perspective (and related KPIs) there is the process view. The target in this quadrant is to increase the efficiency of all customer related business processes. How can we make the processes more efficient, more productive? We will make them faster (process duration) and better (increase process quality through decreased fault ratios. And we will deliver results faster, through a higher – yes – First Contact Resolution Rate (FCSR).

• Optimizing the process duration does not necessarily mean decreasing it as much as you can. There is a trade-off with the quality of results. If we hassle your agents to finish the calls as quickly as they can (and many call centers still do that), they will only focus on finishing the customer call quickly instead of providing good service, which might take a minute longer.


• A second thought is, where the process we analyze should start and where it should finish. This may sound ridiculous but has an enormous impact on how to define the according metrics. A process “Outbound calling debitors”, for instance, may start with calling the customer (debitor) and end with the result a) has paid in the mean time b) announces to pay until end of the week or c) will not pay. Then someone else needs to bother with category c). Or, a process “Debitor Management” could start with receiving the list of “good payers” and “bad payers” – and the result would be to increase to ratio of “good payers”/”all payers”. Obviously in the latter case, the according KPI is on a much higher level, the scope of activities wider and the potential for positioning the Call Center as a solution provider much higher. However, this scenario takes more effort.

Now, let’s look at what we need to do in the Business Process Reengineering arena to improve our Call Center performance related to the discussed targets and metrics.
First we need transparency: how do we operate at the moment? The tricky thing is that business processes, procedures and policies keep changing frequently. As a result, many call centers have analyzed and documented their processes only once. After they have seen how much it takes to keep them up to date they just gave up on it and rely on some of their key staff to have everything on top of their head. The problem with this is that the attrition rates in Call Centers is (depending on geo market and industry) largely between 20% and 40% in average, making the probability to retain all these key staff very low. So how do we keep our documented processes up to date?
In a larger corporation we would employ or hire a team of business analysts and train them to work according to a pre-defined methodology. This does not have to include the many fashionable certification methods. In many cases it is a good start to define process templates on e.g. Visio and run a course how to run process interviews and what to consider then using the templates. Of course this generated costs, but on the other hand it will decrease the cost of professional services whenever we need to implement new technology.
It will decrease the costs of training programs because the coaches can build their manuals based on the existing processes and there is actually somebody there to explain them. Also, recruitment costs can be reduced because we can build our welcome manuals for new call center reps on this firm ground of business process documentation. But most importantly, we know where we are now, and we can have a look at what we can do better – which leads us to the Business Process Reengineering (BPR) part.

We want to build a BPR cycle like this:

1. Check for which KPIs our performance is not on track


2. Analyze the according process and alternative how the process could be more efficient. Weigh the pros and cons of every option and make a decision what and how to implement it.


3. Change the process accordingly involving relevant staff and learn from them as well. If it makes sense, go back to the last step and refine it. In many cases call center agents will know best what to change, because they are working on it every day.


4. Update the process documentation accordingly.


5. Measure the performance again and compare to the results from point 1. We consider seasonal influences. In a retail business, for instance, we would not compare a “normal” business month’s performance with a month in peak time (before Christmas).

What can we do it we run a Small or Medium sized Enterprise (SME)?
Our budgets may be smaller, but the workload of BPR will not be as high as in the corporate segment either. The degree of specialization should be lower: if we can afford analysts, they should be generalists in matters of customer operations. Also, we should consider going for Workflow Management (or Customer Interaction Management) software instead of documenting processes in separate tools such as Visio. Why? Because many of these tool contain an editor to document business processes which is connected to the according screens that agents will see at every step of the process. This way, we can integrate BPR and screen design and save time and money.
We have seen that Business Process Reengineering can play an important role in achieving higher budgets for Call Center operations. If we know our targets and align our KPIs with them; if we integrate typical call center metric into our KPI system, so their impact will be transparent; if we avoid call center jargon. And, of course, if we do our homework to actually document, analyze and improve the relevant processes that are behind these KPI. In the short term the BPR work will increase management costs for customer operations, but in the medium term (within the financial year at least, and often within the same quarter) the effort pays off enormously – in matters of both cost and quality.