Offshore Outsourcing

By John Bartholomew

Offshore outsourcing means exporting work from one country (such as the United States) to an alternate country, often overseas (such as South America, the Philippines, or India).  The rapid growth of offshore outsourcing is due to a number of reasons, including 24/7 global customer service capability, specialized technical skills, multilingual ability, and lower costs due to less expensive labor markets.  Globalization, or the economic integration of countries, is a natural result of the world's technology advances and plays a significant role in the expansion of offshore work as well.

Benefits of Offshore Outsourcing

• Inexpensive labor markets.  Companies move part or all of their operations to other countries to take advantage of inexpensive labor.

• Lower overhead and infrastructure costs.  Cost reduction can be considerable when the outsource partner is handling business operations, facility and staff maintenance, and technology upgrades.

• Higher agent education.  In other countries, such as India, there is a tremendous availability of highly skilled and educated people who welcome the opportunity to work in a call center.

• Multilingual capabilities.  Mexico, Central, and South America each have a large population of bilingual workers who can converse with customers in Spanish.  They also understand the nuances of culture that allow them to build rapport with customers.

• Global reach.  Offshore outsourcing provides global reach into new areas.  If a company does a lot of business in overseas, having a presence in that country to serve that client base is vital.  Global clients need global call center agents.

• Maintenance of a global network.  By outsourcing, a company doesn't need internal resources to implement a sophisticated worldwide network.

• Capacity for 24/7 customer service and operation in real time.  The advantage of multiple time zones allows for multiple shifts that can operate around-the-clock, getting US work completed overnight.

Challenges of Offshore Outsourcing

• Logistical challenges.  It's imperative to have a firm grasp of labor laws and local regulations in different countries.  In India for example, a company may be required to provide transportation or meals to its employees.

• Language barriers/accents/acculturation.  A call center agent in New Delhi, India or Cordoba, Argentina may not have been socialized to interact in the same way as someone in the United States or Canada.  Acculturation coaching and accent training is a necessity.

• Hidden costs.  Companies need to consider the additional time and expense associated with international travel.  Telecommunications and other costs could potentially be much higher overseas.  While outsourcing generally saves money on labor costs, a company might be less efficient than it first anticipated.

• Legal ramifications.  International trade law is more complicated than U.S. law and more difficult to enforce.  Labor laws can also vary.  It's the responsibility of the call center partner to understand these regulations.

• Enhanced security for operations and sensitive data.  Personal privacy is paramount and extra resources may be required to appropriately secure customer information.

In contrast, onshore outsourcing is work conducted in the same country.  Services performed in neighboring countries (such as Mexico or Canada) are near-shoring examples.  The close geographic proximity of these locations allows for easier travel, better communications, and cultural similarities.

John Bartholomew is an executive Vice President at LiveBridge, a global call center services company headquartered in Portland, OR.