By Matthew Hall

Businesses and customers are looking for each other in the wrong way.

Is the traditional call centre finished as a customer service platform now that social media and crowd help are the new fashion?

Strutting the floor at a promotional event for Salesforce.com in New York earlier this year Marc Benioff, the cloud computing company’s founder and chief executive, declared landline call centres antiquated, if not entirely deceased.

Benioff would say that – Salesforce sells products enabled by social and mobile technology. That aside, he also has a point. As communication technology rapidly develops, Benioff said businesses must rethink how they approach servicing customers.

Significant numbers of customers today will turn to online FAQs, email, instant messaging, online forums, and virtual agents rather than pick up a phone.

Research from industry analyst Forrester suggested that while a majority of customers in the US at least still use the telephone for customer service, that number is declining. Forrester’s research indicated Twitter was the least-used but fastest-growing channel for customer service.

“There is so much change, there is so much happening today in the world, that the ability to listen to customers, empathise with them and understand them, is the single most important thing that we can do,” Benioff said.

More than 4.5 billion people are connected on social networks, according to Forrester, and each is connecting through social media with friends and colleagues both at home and at work. That’s not only a big audience for enterprise customer service it is a huge platform for customer relations. The market is also growing – more than 1.7 billion touch devices were shipped in 2012.

Research in Australia, however, suggests that while businesses are trying to use social media for customer service, consumers are slower to use those channels for their own benefit.

A report on Australian customer service trends by Fifth Quadrant found that businesses and customers were looking for each other in the wrong places.

Australian consumers consider Facebook to be their number one choice for customer service engagement, followed by online forums and communities, and YouTube.

Networks like Twitter, LinkedIn and blogs were the least popular options. Tweet this – according to Fifth Quadrant, more than seven in ten consumers claimed they “rarely” or “never” turn to Twitter, LinkedIn, or blogs for customer service.

Yet Twitter is used by more than three quarters of Australian organisations and businesses, perhaps tweeting at themselves rather than customers. Company blogs, websites, and online communities were ahead of Facebook, YouTube, and LinkedIn as preferred tools for businesses.

“Simply creating a new service channel then standing back and waiting for the customers to come won’t work,” said Chris Kirby, Fifth Quadrant’s head of research. “If organisations want to offer customer service through social media, they need to go to the networks that their customers use.”

Anecdotal evidence is inconclusive for the merits of social media over a traditional telephone. For every customer that says an issue was resolved through Twitter, another claims their tweet to a company was ignored.

There may, however, be some firmer evidence that call centres have a short-term future. Reaching out to the Philippines, US and Australia, no call centres or industry organisations, including the ATA (previously known as the Australian Teleservices Association), responded to requests for comment on this story.
Read more: http://www.smh.com.au/it-pro/business-it/pulling-the-plug-on-call-centres-20130508-2j6m6.html#ixzz2T4LCDlUa

By Katherine Rushton

TalkTalk has been fined £750,000 for bothering thousands of would-be customers with nuisance calls, but has ruled out paying any compensation to the individuals affected.

The telecoms company, which has spent the past three years battling to shake off a reputation for poor service, made around 9,000 silent and so-called “abandoned” calls to prospective customers, as part of a drive to drum up new business in 2011.

The calls were made through two of its call-centre operators, who relied upon automatic dialling systems to contact people but did not always have anyone to speak when the call was connected. Although it is legal to make a certain number of these silent calls, or abandoned ones – where people are greeted with a recorded message rather than a human – TalkTalk far exceeded the limits set by Ofcom.

The telecoms regulator said it was coming down hard on TalkTalk to send a “strong message” to companies that they have to stick to the rules about nuisance calls, “or face the consequences”. “Silent and abandoned calls can cause annoyance and distress to consumers,” said Claudio Pollack, Ofcom’s consumer group director.

The £750,000 fine will be handed to the Treasury. TalkTalk has already sacked Teleperformance and McAlpine Marketing, the call centres that landed it in hot water, and has vowed to recover the funds from them.

However, on Thursday the company faced calls to go further and compensate the people who had to deal with the nuisance calls in the first place.

“It’s not enough just to pay a fine to the Treasury,” said Gillian Guy, chief executive of Citizens Advice. “Silent and abandoned calls can be very distressing. The elderly often bear the brunt as they are at home more often and it can be particularly unsettling for people waiting for an urgent call from family or friends.”

Other companies guilty of silent calls, such as Homeserve, have put their hands in their pockets to compensate the people affected. However, TalkTalk ruled out following suit because the individuals being bothered are not customers.

Homeserve, which offers repair insurance for home appliances, was fined £750,000 last year – setting a new record at the time.

However, TalkTalk scoops the prize for the largest ever fine from Ofcom. In 2011, it was forced to pay £3m for billing errors at its subsidiary Tiscali UK. TalkTalk has since focussed its attention on improving customer service, and has made considerable headway.

Regulators are cracking down on nuisance calls after the government called on them to take tougher action and increase the maximum fine they could levy from £50,000 to £2m.

By Katherine Rushton, Media, Telecoms and Technology Editor

UK Telegraph

By Rosemary Howard

Offshored call centres can often produce superior service to domestic ones. But companies already doing this badly should beware thinking that moving it overseas will solve their problems.

We have all had at least one bad experience with dialing through to an Australian firm’s call centre. A long wait. Finally an operator. Answering lots of questions the firm already has in their database. Getting disconnected as they transfer you to another division, and then having to start all over again.

We often assume that these experiences are with outsourced, offshored call centres in India or the Philippines. But this is not always the case.

Sometimes offshored call centres can provide superior customer service (and at lower costs) to Australian call centres, and provide better data analytics.

When we think about the offshoring of Australian financial institution jobs, what questions should we ask?

The first I suggest is why is an organisation thinking of doing it. If the answer is as simple as cost due to Australia’s high wage structure and high dollar, then one probably needs to ask more.

As revenues are harder to come by, there is no question that Australian financial institutions (like all Australian firms) need to manage costs more carefully.

However, the outsourcing or offshoring of call centre and IT jobs should be a more strategic decision.

All firms – including Australian financial institutions – need to consider their long-term strategy and therefore how they operate in that context. They need to reflect on the key trends of our time, namely globalisation and digitisation.

In the constrained post-GFC world, Australian financial institutions cannot grow sufficiently to meet investor expectations without the support of offshore markets, particularly in the Asia Pacific region. This insight is reflected in the Government’s recent Asian Century white paper.

As companies consider the optimal destinations for the demand side of their business, they need to also think about where to best locate supply side functions.

This raises the question: what supply side functions are best located in Australia, and what are the sources of our national competitive advantage?

With the finance sector, the GFC has demonstrated we have some real competitive strengths. These include the strength of our banks, our financial regulatory system, our universities and our superannuation system. Given this, what jobs are best located here versus offshore?

There is no question that on face value at least, lower paid roles such as call centre and IT processing can be delivered more cheaply offshore. India and the Philippines come to mind and even our nearest neighbour, New Zealand, guarantees at least a 25-30% cost savings based on wages and overheads.

But then some strategic questions need to be asked. Can these roles be performed to a high standard offshore? Will customer satisfaction data be readily available to drive innovation? Are there hidden costs or risks from having functions offshore? What is happening to wage relativities given wages are rising faster in China and India?

Australian organisations often send offshore the functions that may not be working for them. But you cannot offshore what you cannot manage well yourself.

Organisations also need to consider that by offshoring, they may throttle their employment pipeline of younger workers. Up to half of call centre employees in Australian financial organisations are university-qualified and may likely be suited to progressing to higher-level positions in the firm.

If offshoring is strategically right (not just short-term cost cutting), and the whys have been thought through, then it can work. In fact some specialist offshore firms who focus on call centre management or IT processing can offer superior services to some available in Australia or delivered in house.

Outsourcing particularly offshore requires a high level of partnering between the Australian firm and the outsourcer, and this requires the right supplier.

Proactive communication is needed with all stakeholders so as not to tarnish the brand, reputation and image of the Australian firm with customers and employees alike, and affected employees need to be given every chance to be supported and move to a different role.

But there is no question outsourcing often fails and is followed by a period of insourcing and onshoring – we are seeing this happening at present with many US and UK firms.

Many would argue that more regulation is required to stop jobs going offshore.

Australia now ranks 96th in the World Competitive Index in terms of regulatory barriers to business performance, down from a ranking in the 60’s. We also rate more poorly than we should for strategic, people and sales management.

Australia’s focus needs to be on developing high value-adding jobs. That’s why we should only regulate where necessary but educate and develop wherever possible. I am a strong advocate for the ongoing development of those in leadership positions to enable optimal strategic and people management decisions to be made.

To optimise our firms’ performance, business and government need to work collaboratively together. We need to work harder at improving in the areas of management practice, active stakeholder communication, long-term strategy, sales, marketing, innovation and creativity.

Better-educated and developed leaders will ensure that the right strategic decisions are made and the right jobs stay onshore.

AUTHOR

Rosemary Howard

Adjunct Faculty AGSM Executive Education and CIFR at University of New South Wales

DISCLOSURE STATEMENT

Rosemary Howard does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

Telstra says its customers will get better service from Filipino or Indian call centre workers who will take over from many of the 648 staff the telco axed last week.

The managing director of Telstra’s Sensis directories business, John Allan, told BusinessDay ”the vendors that we are considering provide services for customers that go beyond our service today, such as 24/7 operations and unique technologies that assist in processing efficiencies, which they do for many directory businesses around the world”.

Earlier , Mr. Allan reportedly told union officials that ”Australians will get better customer services from Manila or India. They have better technology and innovation.”

The Community and Public Sector Union spokesman Julian Lee said the comments were made during a meeting with union officials after Telstra announced the job cuts at the ailing Sensis unit.

The cuts, which include moving 391 customer service positions to the Philippines or India, come just two weeks after the telco booked a record half-year profit of $1.6 billion.

Telstra is slashing costs to arrest falling revenues at Sensis, which was once a cash cow for the company.

It hopes to turn the struggling print-based media business, which produces the Yellow Pages and White Pages directories, into one that is better suited for the digital market.

”Until now we have been operating with an outdated print-based model – this is no longer sustainable for us,” Mr Allan said. ”Our future is online and mobile where the vast majority of search and directory business takes place.”

The Prime Minister, Julia Gillard, described Telstra’s decision as ”really dreadful news particularly for the staff members”.

”It’s always incredibly tough when someone loses a job,” Ms. Gillard told the Adelaide radio station 5AA.

The union condemned the company’s actions. ”Telstra has done well out of Australia, its profits have risen off the back of hard-working staff and loyal customers and this is how it repays them – by sending almost 400 jobs offshore,” the union’s national secretary, Nadine Flood, said.

”And to add insult to injury, we have been told that one of the reasons why they are doing so is because Australian consumers can get better customer service in the Philippines or India.”

The Sensis business has been under pressure in recent years as customers desert print for digital advertising. At Telstra’s most recent half-yearly results, the unit reported a 12.6 per cent fall in revenue.

Telstra remains obliged to produce the White Pages as part of its license conditions.

Read more: http://www.smh.com.au/business/outsourcing-will-deliver-better-service–telstra-20130221-2euby.html#ixzz2MApdPaDa

By Clay Lucas - Workplace Editor for The Age

Telstra and other companies that reap millions of dollars in public money from contracts with the Australian government should lose this work if they send large numbers of jobs overseas, unions argue.

Telstra’s fully owned subsidiary Sensis last week began the process of sacking 400 staff, many of whom are based in its Melbourne office.

Telstra will out-source sales and call centre staff, graphic artists, web designers, online editors and production employees.

Much of the work is likely to be moved to the Philippines or India, where wages are significantly lower.

The move by Sensis, which provides directory services, to sack 20 per cent of its workforce came just weeks after Telstra posted a first-half profit of more than $1.6 billion.

A report by two white-collar unions recently found that, in the past four years, 80,000 jobs in Australia had been moved to countries where labour costs were cheaper.

Among the firms to move large numbers of jobs overseas is insurer QBE, which this week confirmed it will shed 700 jobs and hire staff in the Philippines, to save $250 million a year.

The move by Telstra’s Sensis to sack staff and likely hire overseas workers has enraged unions.

”Should Telstra get public money and government contracts if they offshore jobs?” asked Paul Bastian, the Australian Manufacturing Workers Union’s national secretary.

Staff and unions rallied outside Telstra’s Lonsdale Street offices to protest against the sackings.

The manufacturing union demanded the federal government step in to punish firms like Telstra when they took jobs overseas, by denying them access to projects like the National Broadband Network.

Mr Bastian said corporate Australia had an obligation to keep jobs in Australia where possible, and that their record on offshoring must be directly relevant to bidding for federal government contracts.

The Gillard government in February released its ”plan for Australian jobs”, which provided new incentives for companies to use local goods and services.

Mr Bastian said it should also have included new rules on sending jobs overseas.

But Industry Minister Greg Combet’s spokeswoman said making companies ineligible for government contracts in this way would be in breach of Free Trade Agreement rules.

”It could also put at risk the ability of Australian businesses to win overseas contracts and the jobs that come with them,” she said.

And she said 98 per cent – or work worth $22.5 billion – of government service-based contracts entered into in the last financial year were with Australian suppliers.

Read more: http://www.theage.com.au/opinion/political-news/union-rage-as-jobs-go-offshore-20130228-2f98u.html#ixzz2MQgHpvdx

By Allison Mathiebe

It’s frequently the case that there are differences in performance between permanent and temporary staff, but there may also be a big divide between the two.

Alison Mathiebe looks at the practical steps that you can take to overcome this divide.

Temporary agents are often effectively employed in call centres to handle simple transactions and call peaks, or to run short-term campaigns. Call centres may also consider employing temporary agents on a longer-term basis in order to avoid a commitment to increasing or replacing permanent staff. In this case, the employer needs to be aware of staff resentment issues which can emerge when the same duties are performed by both temporary and permanent staff on a long-term basis, and how to prevent and resolve these problems.

Once temporary staff are fully trained and have sufficient experience, a performance division can occur between the temporary and permanent agent groups. In particular, where permanent staff are burnt out and no longer find the work challenging or interesting, they can be outperformed by newer temporary staff wanting to prove their capabilities so they can be kept on for more work.

At the same time, temporary staff can resent being paid less for the same work and being strung along with hopes of permanent work which may never materialise.

Despite ongoing positive feedback, temporary staff may feel that their good work is unrecognised because they haven’t been awarded a permanent role, when the reality may just be that these roles are rare because of the organisation’s hiring restrictions and there is a lot of competition when a permanent position becomes available.

When performance levels between temporary and permanent staffing groups become obvious to everyone in the team or centre (e.g. call taking or quality scores are consistently higher amongst the temporary staff) this can cause deep divisions within the team. Long-term permanent agents can resent the positive attention received by the outperforming temporary staff.  As a result, there may also be objections to reward and recognition schemes which publicly reward the best agents and, by default, reveal which staff are never or rarely rewarded.

Permanent staff may believe that their permanent status and long period of service for the organisation makes them superior to ‘the temps’, even when job descriptions and duties are the same. In some sense, this is correct as permanent staff will be treated more favourably in times of cutbacks; however, this feeling of superiority can set up a situation for bullying if left unchecked.

In addition, where there is a performance division between temporary and permanent staff, the call centre’s service provision will be more seriously affected if the higher-performing temporary agents are automatically let go at a time of staff cutbacks.

While these issues are usually caused by the organisation’s HR policies (such as a freeze on hiring permanent staff and/or a performance management system which doesn’t have strict consequences for consistent underperformers), the call centre manager can do a number of things to prevent and resolve any such problems:

• Where possible, differentiate the duties of permanent and temporary staff.
• Set expectations at the time of employment so that temporary staff has an accurate picture of how long their tenure will be, the likelihood of contracts being renewed and other opportunities within the organisation becoming available.
• Continue to call coach and performance manage all staff to encourage continuous improvement, goal setting and career planning.
• Encourage long-term staff to apply for internal vacancies including any parent/subsidiary company or wider government department opportunities.
• Unless there are clear ‘temp to perm’ guidelines in place, let temporary staff know where they can see the call centre’s and organisation’s vacancies and how they can apply. Do let them know that to be in contention for a permanent role they have to apply rather than receiving the job out of the blue as a reward for good work.
• Organise work placements where call centre staff can do buddy/shadow work in other sections of the organisation for a limited time during low call periods.  This is an opportunity for agents to increase their skills and creates awareness of what other work they may like to apply for in the future.
• Encourage career planning for all – good temporary staff to permanent roles, long-term permanent staff to other opportunities within the organisation, and succession planning within the centre such as training possible future team leaders.  While this may be detrimental to the call centre’s attrition rates (and even service level temporarily) it is better than an unmotivated workforce who see no future opportunities and therefore no need to improve their performance.

Alison Mathiebe is the author of How to Survive (& Thrive) in a Call Centre, available from amazon.co.uk

We’re all familiar with images of smiling faces in a call centre wearing headsets. The humble headset has played a significant role in maintaining the level of comfort and productivity of staff working in these areas. But as the level and complexity of communications across an organisation increases, the headset may find it has a significant role to play in other areas of the business.

The vast majority of staff working in contact centres or in back office functions such as IT spend a significant amount of time sitting in front of a computer screen and typing. Ergonomics is about designing the workplace to maximise productivity by reducing stress, discomfort and fatigue. That means giving people a work station and the relevant tools they need to perform their job properly.

One of the most important tools for a call centre agent is a good quality headset. Fulvio Toniotti, managing director for Jabra, has observed, “The quality of the headset an agent is using can have a significant impact on their level of satisfaction with their job. If they are working with inferior equipment where they have poor quality conversations with customers, they will be encouraged to leave.”

“Also, if the aural experience is inadequate there will be a negative impact on the customer”, adds Toniotti. “By having the right devices, ensures that agents are comfortable and confident with the communications tools that can make them more productive and enable them to deliver better customer service”.

Research from Frost and Sullivan highlights the following benefits to using headsets:

1. Multi-tasking: With increasing adoption of Web collaboration tools and various other channels to communicate with customers, agents need to focus on the conversation while e-mailing, chatting, taking notes, or sharing desktops. “Headsets are an oft-overlooked, yet valuable asset to multi-tasking professionals”, says Toniotti.

2. Ergonomics: In addition to enabling hands-free communications, headsets improve ergonomics by enabling agents to shift positions, to take the handset off of their shoulder and to maintain correct posture while talking on the phone.

3. Noise cancellation: Noise distractions can significantly lengthen call times, lead to incomplete or incorrect transactions, or lost opportunities and be very frustrating. The shift from a telephone with a handset to a PC client makes headsets a compelling method of achieving high-quality audio, Toniotti comments, “This allows the agent and the customer to have a better aural experience, which is more conducive to solving a problem or an issue or alternatively, discussing a sales or cross sell opportunity.”

4. Mobility: New models of wireless (unconnected) headsets allow contact centre agents to become mobile within the office, where they can maintain phone calls while searching file cabinets, retrieving faxes, accepting deliveries, consulting with nearby colleagues, or grabbing refreshments.

Headsets improve the user experience and foster technology adoption and utilisation, thus boosting user performance. Toniotti concludes, ”The headset is a key element of the toolset for a contact centre agent. In a contact centre environment, well-equipped agents are poised to deliver better customer experiences and greater customer satisfaction”.

• BPO company Aegis opens a 900-seat call center in Costa Rica. The new facility is located in the Rohrmoser section of San Jose and it will be a blend of additional capacity and reduced costs, the statement said.
• CSC announced it signed a three-year business process services contract with AMERISAFE, Inc. Under the agreement, CSC will provide business process outsourcing (BPO) services to manage and automate legal expenditures for AMERISAFE using Legal Bill Analyzer, a component of CSC’s Legal Solutions Suite, strengthening transparency in legal matter planning and communication with outside counsel.CSC’s customized BPO offering for AMERISAFE includes a range of services, such as bill review, resolution, reporting, invoice management and Web hosting support. The agreement provides a low-risk approach to transforming operations and controlling costs, and encourages constructive collaboration between AMERISAFE and law firms.
• Information Services Group (ISG) (NASDAQ: III), a technology insights, market intelligence and advisory services company, today announced winners of the 2012 Australia New Zealand (ANZ) Paragon Awards, which recognise leadership and best practices in sourcing and service management. The ANZ Paragon Awards celebrate and promote organisations and relationships within the sourcing community that have demonstrated high performance leadership and best practices in the sourcing and service management fields.

  The 2012 ANZ Paragon Award winners are:
  Best Sourcing Relationship in Business Process Outsourcing Award: Russell Investments and Mahindra Satyam

  Best Sourcing Relationship in IT Outsourcing Award: Westpac and IBM
  Service Provider Innovation Excellence Award: Wipro, for the introduction and implementation of innovative services for the University of Canberra

• Global Legal Solutions Provider Earns Top 100 Call Center Contest for Second Consecutive Year. ARAG®, a global provider of legal solutions, announced today it has been named to the Top 20 in the Top 100 Call Center Contest by BenchMark Portal. This is the second consecutive year ARAG has made the list. BenchmarkPortal is internationally recognized as the premier research and education organization for customer contact best practices. Each year the organization features a Top 100 Call Centers Contest for centers located in North America.

Well Easter came and went, I am sure that Christmas was only last week , I sometimes feel like my desk calendar is on fast forward and the days and weeks are whipping past like the wind. Where does the time go?

Exciting news – The ABPOA is delighted to be hosting a market place breakfast with KPMG on May the second in Sydney. The Sauce, sponsored by IBM and Fuji Xerox will be showcasing the landmark research report “The Australian BPO Study 2912’ which the ABPOA endorsed.

This is the first time anybody has gone to the trouble to find out what’s really happening on the buy side in Australia and – let me tell you, there is a fascinating tale to tell.

There are only limited seats available so jump in quick if you would like to attend and find out what’s really going on in BPO in Australia.
Please visit http://outsourcingreporting2012.eventbrite.com to book your spot.

A couple of things that I can share with you are that Digital Marketing outsourcing is one of the growth areas and for your interest I draw your attention to the last two paragraphs from the article below about “How the marketing world went digital” and I see opportunities for enterprising BPO companies who can offer support with such services.

Also spotted this discussion on a LinkedIn blog, “The Death of the Call Center”.

Click here

It certainly is topical and has people with very firm views on both sides of the debate and in the context of the upcoming US election a fascinating discussion. (see story below about Joe Biden and Mitt Romney facing off about outsourcing of US jobs.)

Also in case you missed it last week, a story that will affect us all is the debate about the word ‘Outsourcing’ – http://thesauce.net.au/2012/04/buyers-and-providers-are-desperate-to-alter-the-perception-of-outsourcing/

We would be interested in your views about these subjects and please feel free to join the debate and post your comments at the bottom of this page or write to me mconboy@abpoa.com.au

The big SSON event is coming up next week in Melbourne and if you have not got your ticket you will be need to be very quick –
SSON

We are launching the new Australian BPO research report there so watch the mainstream Australian business media for coverage.

There is also some BPO M&A activity in the local market , see the story below by Malcolm Maiden and the further story about the NCO merging with APAC so plenty going on in the market as we now move into Q2 2012.

As always enjoy the read and thanks for all those who have sent encouraging feedback about the work we do- always appreciated and keep those stories coming in.

• Listed business process outsourcing (BPO) firm Paxys Inc. has announced plans to sell off for a significant premium all of its business in Australia, representing about two-thirds of the company’s assets. In a disclosure on Monday, Paxys said its wholly owned subsidiary Paxys NV had signed an agreement with Smart Group Investments Pty Ltd for the sale of Paxys Australia for 84.9 million Australian dollars. “The sale includes all of the subsidiaries of Paxys Australia, consisting of Smart Salary Pty Ltd, Smart Fleet Management, SeQoya Pty Ltd, PBI Benefit Solutions, and Australian Vehicle Consultants,” the listed firm said in a disclosure. As of end 2011, the consolidated net book value of Paxys Australia was at 34 million Australian dollars.
• Talent2, IBM & Fuji Xerox recognised as top global providers of training outsourcing solutions three members of the Australian BPO Association (ABPOA) have been named in Training Industry.com’s Top 20 Training Outsourcing Companies list for 2012. TrainingIndustry.com, a global training industry portal for the learning and development market, continuously reviews companies that provide training business process outsourcing (BPO) services and conducts an annual assessment to determine suppliers’ experience and capabilities. The Top 20 list recognises the leading training outsourcing companies for their high quality services and comprehensive capabilities. All have demonstrated expertise and experience in managing major BPO engagements as well as creating a significant impact on the industry.

  Click here to view the Top 20 Training Outsourcing Companies

• Datacom managed Small Business support line that provides expert advice to Australia’s small business sector is about to reach a milestone of 50,000 calls. The support line is a free service that provides one stop shop assistance on a range of issues to small business. The small business support line can be contacted on 1800 777 275

By Martin Conboy, President – ABPOA

As we all know we are moving away from needing to actually talk to a human being when we are doing our day-to-day transactions. There is no doubt that as consumers we are using our smart phones, web chat, email, SMS and social media channels to get what we need to get done. Now it turns out we are falling out of love with cash.

I read the other day that Australians withdrew cash from ATMs 64.7 million times in January, well down on 65.6 million withdrawals made the previous January.

December was even worse. Australians took out cash 71.9 million times compared to 73.6 million the year before.

Mobile phones, EFTPOS, internet transfers and cards that merely need to be waved in front of Point of Sale machines are taking the place of cash, but credit cards aren’t.

Cash is losing its position as the primary method for making purchases.

Reserve Bank figures released last week show the average credit card limit climbed just 0.7 per cent over the year to January, the smallest annual growth on record. The outrageous interest rates charged on credit cards would no doubt feed into that.

Internet transfers jumped 7.5 per cent, making 60 million transactions in January, up from 55 million. Debt card transactions jumped 12 per cent.

So it will follow that as we move too ever more convenient ways to transact our transactional business the less and less we need to actually talk to humans either in person or on the phone. It’s no secret that internet shopping is growing and growing although that may come off the boil a bit as the Australian dollar slips back to parity

Rising uncertainty about China’s growth rate coupled with healthier readings on the US economy are likely to weigh on the Australian dollar, analysts say.

There is no point wringing our hands and be in denial of the evidence that we can see with our own eyes we need to start to make plans to stay ahead of the curve.

By Goutam Das and Sunny
India’s BPO industry losing voice, finds life elsewhere

Two years ago, Barclaycard decided to outsource the customer service of its credit card and consumer lending businesses. The deal was worth a mouthwatering 100 million pounds over five years. Naturally, Indian business process outsourcing (BPO) companies queued up. But Marge Connelly, Barclaycard’s Chief Operating Officer, said the function – all of it voice – had to be done out of the Philippines.

The Philippines was a colony of the United States from just after the Spanish-American war of 1898 to the Second World War – enough time for the US to imbue the South-East Asian country with its culture and language.

Barclaycard, part of the Barclays Group with headquarters in the United Kingdom, and Connelly, an American, were more comfortable with Filipinos, rather than Indians, speaking to their clients.

Eventually, Firstsource, an Indian BPO outfit, took over Barclaycard’s customer service centre in Teesside in Northeast England, and moved a majority of the work to the Philippines. Connelly, who left Barclaycard last December, is not the only one of her kind. Nor was the Barclaycard voice contract the first to go to the Philippines. But, given its size and profile, it provided a curious twist to the BPO story in India.

The story began with a whisper more than two decades ago when Raman Roy took on some work for American Express. It soon grew into a rumble and then into a thunder as the industry rode on Indians’ comfort with the English language to appropriate the bulk of the work being outsourced by companies in the US and Europe. Sanjay grew an alter ego as Sam, Nikhil turned into Nick and Sulekha pretended to be Sally. Hours in training turned a Tamil accent into the Boston twang and the Punjabi gruffness into the Texan drawl.

Images of young men and women, fresh out of college, sitting at a computer with headphones planted on their heads as if rooted there, became the symbol of the new India. Costing a fraction of what a similar professional in the West would have, they spoke and spoke into the microphone. And then the voices got muffled.

A RIVAL RISES

In the last six years, voice contracts coming to India are estimated to have fallen by half. This has pegged back the industry overall. In 2008, a report by industry lobby NASSCOM and research firm Everest said the Indian BPO industry would earn $30 billion from exports by 2012.

Given the “significant future market opportunity”, said the report, the industry could also set itself a “stretch target” of $50 billion. We are in the third month of the year and that market opportunity looks less than significant.

The BPO industry’s growth has lagged that of IT even from a smaller base

The industry may clock less than $16 billion this year – a meagre growth rate of 12 per cent, according to NASSCOM’s latest estimates. In fact, the compound annual growth rate since 2006 has been an underwhelming 13.41 per cent.

“I will take a bet,” says an industry veteran who does not want to be identified. “No BPO company in India can show double digit organic growth in 2012/13. They will show growth only by making small acquisitions or by passing off information technology work as BPO.”

As voice in Indian BPO gets muted, the buzz around the Philippines gets louder. Last year, it became the biggest provider of voice-supported services as its BPO industry jumped 21 per cent to $10.9 billion.

The Business Processing Association of the Philippines expects growth to touch 19 per cent in 2012, very similar to how India had been growing before 2006/07. If you look at pure voice operations, the Philippines, with $5.2 billion in revenues, has already become No. 1 in the world, pushing India, at $4.8 billion, into the second spot.

What’s more, a chunk of the voice contracts going to the Philippines has moved out of India. According to estimates, in the last two years, about 75,000 seats that could have been added to call centres in India went to the Philippines.

In this period, US Retailer Target, Australian telecom firm Telstra, Manila-based food and beverages company San Miguel, US-based Aetna Insurance and Canadian carrier Air Canada – none of whom gave details – are understood to have preferred the Philippines to India. “We make decisions about engaging vendors based on the global needs of our business,” said a spokesperson for Target.

SLEEPING WITH THE RIVAL

“In the next decade, India as a destination can lose $25-30 billion in foreign exchange earnings to the Philippines. Indian service providers will earn a large chunk of this but India will lose out,” says Sandeep Aggarwal, who is part of a strategic transformation group at Intelenet.

The company, for its part, has made sure it is one of those gaining even if India loses. About a year ago, hospitality giant Hilton decided to give out nearly half a billion dollars worth of call centre work spread over five years.

It wanted the centre to be in the Philippines and Intelenet won half of that contract by setting up a centre there with 2,000 employees. The other half went to Aegis, part of the Essar Group, which followed suit.

Neither company was willing to discuss the contract, but when IBM’s Global Locations Report of 2011 says the Philippines has become a top destination for Indian investors, you can be sure the bulk of that money is going out of BPO coffers.

BPO rivals to India

“Calls requiring empathy towards the customer are best handled from countries like the Philippines, as they understand the American culture better than Indians,” says Rohit Kapoor, who heads EXL, India’s ninth largest BPO company. EXL has not added many new voice processes in India since 2008, choosing to add most of them in the Philippines.

Jerry Durant, who sits in Manila as Chairman Emeritus of The International Institute for Outsource Management, says of the Indian approach: “We hear complaints on voice-based services, linguistics as well as the tenor. It is not uncommon to be told ‘no problem’ and this has become a sure sign that there is a big problem.”

Beyond empathy, there are other areas in which the Philippines has the edge. It gets trained manpower, thanks to a government programme, and its employees travel on their own.

In comparison, the fresh-out-of-college look in the Indian call centres may look cool, but does not make a great business case, especially when the employer has to spend on training its people, arranging transport for everyone working nights and providing escorts for the women.

And then there is the matter of skill in certain areas. Some time ago a large health care company wanted EXL to handle processes like medical summarisation and disease management. It wanted US-registered nurses. India did not have any. The Philippines, on the other hand, had 100,000 nurses who had returned from the US after the financial crisis and were unemployed. EXL hired 400 of them and put them in front of computers.

According to industry estimates, 30 per cent of the graduates in the Philippines are employable, compared to 10 per cent in India. And they last longer. The attrition in the Philippines is about half that in India.

As the Philippines has emerged as India’s biggest rival in voice, several others are vying for the same pie. So if empathy tilts the scales in the Philippines’ favour, culture swings it for Egypt, which, with costs comparable to India’s, has been getting more and more contracts from companies based in West Asia.

Dalian in China has become an important outsourcing centre because a large population of the former Japanese colony is conversant in Japanese.

It does not help that the manpower in India is becoming costlier, with a 10 to 15 per cent rise in BPO salaries and training expenses in the last five years, leaving the Philippines just about 10 per cent higher in manpower cost. Brazil, West Asia, Poland and Romania – with costs comparable to or slightly higher than India’s – have also started giving Indian BPOs a run for their contracts.

To keep pace, Indian BPO companies have spread out. “Some voice work we cannot take offshore because of regulatory reasons and customer demand. A larger geographic spread also helps in reducing transfer of operations from one centre to another, and helps us grow in other markets,” says a Genpact executive.

The company, the largest in India’s BPO industry, is present not only in Dalian but also in several other countries, including five locations in the US and one in Mexico.

“It is only if a client asks specifically that its calls be handled out of India that we do so,” says N.V. “Tiger” Tyagarajan, President and CEO of Genpact. It operates in 25 languages, of which only English can be handled in India with a high degree of proficiency.

“Few clients, if any, are served from one location. We are also increasing our onshore activity in the US, some of it due to regulatory and licensing issues,” says Tyagarajan.

There is one more issue. As Mitt Romney, Rick Santorum and Newt Gingrich battle for the right to challenge US President Barack Obama in elections later this year, there is pressure on US companies to keep jobs within the country.

The pressure is more telling on BPO than on IT, mainly because there is a shortage of coders in the US but BPO jobs, particularly on the voice side, do not need much skill. With an unemployment rate of more than eight per cent, the US has enough people who would want to work in a call centre. And they may show more empathy than even the Filipinos.

“The perception that we are taking away jobs is the biggest challenge. The CEOs of client organisations are trying to weigh the benefits of offshoring against the pain they would suffer,” says Swami Swaminathan, who heads Infosys BPO.

Back home in India, the Manmohan Singh government has not done BPO any favour by withdrawing tax incentives under the Software Technology Parks of India scheme and imposing the Minimum Alternate Tax on Special Economic Zones. The inadequate infrastructure takes its own toll.

“I think part of the problem was the early success that Indian companies enjoyed. You really didn’t need to do much in order to get business as demand exceeded supply. But now Indian companies have to compete head-to-head with others in every aspect,” says Durant.

MUFFLING MURTHY

Phaneesh Murthy, dressed in his usual attire of jeans and T-shirt, reaches into a small, crystal bowl of fruit. Nibbling on something he picked, he says: “Companies like WNS are dead.” And you wonder if it is a case of sour grapes.

Murthy, whose iGATE acquired Patni Computers in 2011, tried to acquire WNS Global Services four years ago, but dropped the bid because he found that it was not a “strategic fit”. Maybe he is just bitter. WNS, after all, is a leading provider of BPO services, with 22,500 employees in 25 locations across the world.

It is then that Murthy brings you out of your conspiracy reverie. “There was a downturn in the market in 2008. All our prices were down. The tech industry got hammered. Our share price was $4. WNS’s was $11. Today our share price is $22, WNS’s is still at $10.” At the time this article was written, WNS’S share price on the New York Stock Exchange was $13 while iGATE was trading on NASDAQ at $16.62.

On second thought, WNS is not all that hot right now. Its revenues declined 23.2 per cent in the quarter ended December last year and its operating margin was a wafer-thin two per cent for the year ended March last year. Experts say staying focused on pure BPO services and not getting into IT has hurt the company.

However, where there is WNS, there is also Genpact, which reported a 27 per cent rise in revenue last year and boasts a 16.5 per cent margin. Genpact has done it not just by spreading out geographically, but also by moving up the value chain.

Several others companies, notably EXL, have done the same. They hire doctors to handle medical claims, chartered accountants to look at large loan maintenance and portfolio tracking, and lawyers to handle legal processes. Genpact also offers technology services, which acquired a big boost with the acquisition last year of Arjun Malhotra’s financial analytics services provider company Headstrong.

Gopinathan Padmanabhan, head of global delivery at MphasiS, owned by Hewlett Packard, says: “I can manage the customer’s infrastructure, the applications, and also the business processes that run on top of the application.”

Milind Godbole, who runs the Asia Pacific operations for Aditya Birla Minacs, the BPO arm of the group run by Kumar Mangalam Birla, says the industry is moving from an assembly-line model to more intellectual capital oriented work.

“Call centres were always like a line assembly. Now, the BPO industry is looking more at creating platforms and introducing automation to add value,” he says.

Platforms use cloud computing and bundle business process with technology.

The BPO firm hosts an application at its own or a third party data centre and customers pay only for using the platform. The BPO revenues through this stream are not linked to the number of people the company employs. Like a product, a platform is built once and sold to many customers.

Infosys is an aggressive platform builder. One of its BPO platforms, Source to Pay, manages a customer’s indirect spending. After a purchase request from the client, Infosys BPO executes the range of processes from managing requests, generating purchase order, following the goods shipment, invoice processing and vendor payments.

The customer pays for the usage or outcome and incurs no capital expenditure. WNS, the target of Murthy’s ire, is dismissive of his prognosis. It sees itself on the growth path again after “a period of uncertainty”. It is investing in its technology-enabled practice.

“We have aggregated dozens of platforms, automation and new tool kits,” says Keshav Murugesh, its CEO. WNS has created a platform for the travel industry, which can check irregularities in the way travel agents function. It helps fare experts tell airlines how much more they should charge from an agent in case of irregularity.

The evidence of the transition is more than visible in the industry’s revenue split. In 2005/06, voice constituted 75 per cent of the industry’s revenues, which stood at $5 billion. As the revenue has grown more than three times, non-voice is more than half of it. The larger Indian firms do not have more than 20 per cent of their revenues coming from voice. It helps that the margins in non-voice are higher – 10 to 15 per cent higher than in voice.

Some companies have started distancing themselves from the term BPO. Bangalore-based [24]7 in which Microsoft invested recently, wants to be seen as a technology company. Essar-owned Aegis calls itself an “experience” company, managing different experiences for its customers.

The CEO of a rival firm sniggers that these companies may be facing an “identity crisis”. With time, we will know if the crisis had an opportunity lurking inside.

Source: In Today