Outsourcing to a Call Center in India: Benefits and Caveats

“So my message is simple. It is time to stop rewarding businesses that ship jobs overseas, and start rewarding companies that create jobs right here in America. Send me these tax reforms, and I will sign them right away.” Barack Obama, January, 2012

Will Barack Obama be re-elected, and will he actually do something to make outsourcing less feasible for U.S. businesses? Will he tax outsourcing in some way? Will he give tax breaks to companies that hire U.S. workers to do jobs that we are currently outsourcing, and would this make outsourcing to a call center in India, for example, less attractive? In such a future, what would be the best way for a business to save money? Predictably, President Obama himself is reported to save money in his campaigns by outsourcing to foreign call centers, and many companies–even the traditionally “American” General Electric–send jobs abroad. Wind farms and get more than 50% of their materials and products from overseas manufacturers, and many industries outsource portions of their needs or daily work. Obama has said again and again that he wants to create “jobs that pay well and can’t be outsourced,” but are there such jobs, and is outsourcing detrimental to the U.S. economy–or to our sense of satisfaction with customer service and our material lives? Does outsourcing to India create unhappy consumers? Or is outsourcing here to stay?

According to a 2010 survey of consumers, the Contact Center Satisfaction Index, many unhappy consumers felt that when their customer service calls were outsourced to countries where the callers cannot manage well in English, the issues were not resolved or they had to speak with multiple representatives because the call center representatives are not as knowledgeable or well-trained as call center workers in the U.S. That perception is slowly changing, and in 2012, it seems outsourcing is here to stay. In fact, in July, the Senate killed an anti-outsourcing bill which would have given companies a 20% tax credit for moving work back to the U.S. rather than extending tax credits for moving work out of the U.S.

After the U.S., India is the country with the largest English-speaking population in the world. The average call center worker in India is also better educated than the U.S. call-center worker who gets $8 an hour and works from home. Since 2010, for example, there are more than 60,000 workers in the U.S. doing calling from home, but the cost of hiring U.S. firms that take customer service calls from home is still not comparable to outsourcing to a call center in Bangalore, for instance, where workers are generally young and well-educated. The average call center worker in Bangalore can live on about $300 a month, so the amount you will pay a call center in Bangalore is still less than hiring workers in the U.S.: wages in India are 80% lower than for their U.S. counterparts. Furthermore, workers at the best call centers in India undergo extensive training to become part of a call center staff. For weeks, they attend trainings, learn how to speak using a neutral accent, and learn how to engage a person on the phone; then, they continue their training after being hired. Call centers we spoke with in Bangalore, for instance, are also training managers better, and looking at retention of successful employees.

The benefits of outsourcing to a reputable call center in Bangalore, for instance, are legendary: reports from companies like Chase about how they saved 50% by outsourcing to India put the stamp of approval on the practice of outsourcing to a call center. Also, in 2012, telecommunications costs and equipment make it cost-effective for a call center in India to handle a volume of calls for less. India is expected to earn almost $20 billion in call center business in 2012, and call centers in Bangalore may reap up to one third of that amount. Call centers in Bangalore are training their callers to answer the phone in a professional manner, and to understand and use American idioms and accents, which creates outsourcing success. “Not only will you save money,” says one CEO, “but you have the opportunity to get to know how another culture works. And it is far better than you may think.”

Some fear that if Obama changes the tax structure, the pros and cons may become more even. Outsourcing success may look different: instead of outsourcing to a call center in Bangalore, XYZ Company in Los Angeles may choose to outsource to U.S.companies that hire at-home workers. There was no noise in Congress this past month, however, about anything remotely to do with outsourcing, and tax cuts will be dealt with in November. But considering the fact that the U.S. Postal Service is losing $25 million a day, for example, there are other issues the U.S. has to deal with and other sources of unhappy consumers. The record shows that outsourcing to India is much more of a help to the economy than a hindrance. Call centers with the highest number of workers who are proficient in English get and retain more business from overseas, and according to one Yahoo survey, 80% of businesses say that outsourcing to a call center is a benefit. “Of course,” says one CEO,” you have to create a good working relationship with a call center, and that starts with the very first phone call.”

The most important factor in outsourcing success is the relationship you establish with the call center in India. One quarter of all outsourcing relationships fail in the first two years, according to Dun and Bradstreet. The key to any outsourcing success or any successful contract with another business is the relationship itself. Strike up a conversation with the call center management on the phone, and be sure there is clear communication. Read our Sept 29 blog. If you can develop and nurture a heart-to-heart and head-to-head communication with a call center in India, it makes sense to give them some work. After all, it is a call center! So call them, try to have a conversation, and see what develops.