Why do people outsource anyway? Approximately 46% of companies that outsource say they do it in order to save money. For example, in the Philippines, you can get a call center to do a 3-minute outbound call for about $12 an hour; in India, it will cost you about the same once you add in set up charges and find a place where you will have competent and intelligent English-speaking callers; in the Caribbean, it will cost you $15; in South Africa, it will cost between $11 and $16 per hour. But will outsourcing solve your problem if you depend on quality and callers you can trust?
Many firms actually outsource because, in some industries, American companies are too busy to take on new clients or give enough time to clients…and the combination of high prices, inflated American egos, slipshod workmanship, and bad attitudes is too much to palate. Has outsourcing solved these problems? Are workers in other countries more humble, more careful, more diligent, or more polished? Finally, some CEOs may outsource because they have an affinity for the culture (it might be their country of origin, they might have lived there for a time, or they might belong to a religious group that has a presence there) and may choose to give work to that country. For whatever reason, according to one source, outsourcing grew by more than 40% between 2001 and 2009. More than 2 million jobs were outsourced by the U.S. in 2011 alone (a conservative number); however, the numbers are deceptive, and do not include jobs in companies that actually built factories, offices, and call centers in other countries. In that same year, 2011, 53% of U.S. manufacturing companies, 43% of U.S. IT companies, and at least 15% of call centers had “a large portion” (75%?) of their work done outside the U.S. Add to that reports that show, for instance, that Russia’s income from taking on IT outsourcing doubles every year, and we now have an idea of the volume of jobs being outsourced by the U.S.
The reality of outsourcing, however, is that communication is never as good as it might be. Americans have higher standards for communication than other cultures, and it is like driving 40 miles an hour into a brick wall when you discover how low or non-existent the communication standards are compared to yours…or you find out that your “senior programmer” has only six months’ experience…or when, every time you call to find out “what’s going on,” you are put on hold and then the phone disconnects while you are on hold…or when you generally discover how incompetent, inexperienced and slow are the “excellent” staff who have been randomly assigned to your project.
Many U.S. companies that have tried outsourcing in the past few years are now looking for alternatives: in the end, they found that they did not save money but lost money because of jobs not completed or not done according to high work standards. Even though this may have been simply a result of not getting to know the company well enough or not finding the right fit, many companies in the U.S. are now wondering where to find competent, affordable help. Look no further, ya’ll: just mosey on down south of the Mason-Dixon line. In the U.S., the good ole South may be the place to do business.
In our experience, Southerners have an easy manner and a politeness that goes a long way. They try to make you feel comfortable, and will try to come up with solutions that work for everyone. Second, in the IT industry, for example, they have a great work ethic, and take pride in doing a great job. In the South, because the cost of utilities is less and wages are lower than in other parts of the country, “insourcing” is worth looking into. Office space in some parts of the South is as low as $1 a square foot, so companies can afford to work in an office and have a professional staff on board… whereas on the West Coast, for instance, where office space can be $5 a square foot for a modest office, many IT companies have virtual offices or a loosely monitored team of “experts” who claim to have known each other for over a decade but never meet in the office to collaborate and don’t really work for the company. IT developers, for example, are often independent contractors who are not interested in “your dumb project” and are not held to any standards. In this type of company, the business manager is at the mercy of the programmer and really has little control over which clients are accepted and whether or not work gets done or even started at all.
But it’s not like that in the South, ya’ll. It is not hard to find real offices with real employees, a manager who tries to get things done fast…but is likely to be good-natured and may want to go at a slightly more relaxed pace just to get to know you and find out what you really want. Statistically, not only is the price of office space less per square foot in the South, but the cost of labor is less. Although it is still more expensive than outsourcing to India, the superior communication and effort are well worth the difference. Doing business with the most expensive companies in India costs only a bit less than doing business with the South–but the communication and productivity will be a lot better in the U.S.–not to mention the time-zone factor. If you compare the least expensive parts of India to the least expensive part of the U.S. (the South), the U.S. comes out on top. If you look at the relative costs of doing business with India and California, the cost of doing business in the South may be the perfect solution.
For example, South Carolina is among 10 states with the lowest cost of labor in the U.S.–yet is ranked among the top 10 states in terms of business environment. Compare these rates, for example: India, $30 an hour (IT) for a senior developer…but the work often seems to take double the time; $75 an hour (IT) for a senior developer in the South…while in CA, you may pay $150 an hour for roughly the same quality developers. If you are talking about call centers, in Charleston, SC, for example, it is possible to find a call center that will do outbound calls for $25 an hour and will create extremely flexible terms. This is not only less than NY or CA prices ($35-45 an hour for the same number of calls and information), but is better quality–and a better deal, call for call–than call centers overseas that will cost you approximately $15 an hour.
Why? Because it’s not just about the rate they quote you. One of the first things you will find out is that some companies will not guarantee that they will “penetrate” the entire list for this money, and it seems that the level of commitment and feedback on the part of the callers is not as great at that of their U.S. counterparts in the South. In addition, many Americans have been turned off by calls from overseas call centers, particularly when Americans need the caller to inform or explain or reassure. In fact, although there is as of yet no official law requiring foreign call centers to forward calls to a representative in the U.S. if asked, many U.S. citizens have made this request and many companies have a policy of transferring calls to U.S. operators when asked to. And these requests have become more and more frequent in the past few years. Americans are also uncomfortable with the loss of call center jobs to foreign countries. Looking at these issues, many companies have chosen to insource calls to places like the U.S. South.
In 2013, many U.S. companies are already discovering the virtues of “insourcing” and are bringing call center work back to the U.S. Wages of call center employees in many other countries go up as much as 15 or 20% a year; this plus communication issues, security/ privacy issues, poor workforce training, and time-zone issues have made many companies reconsider outsourcing to India or other overseas destinations. According to one report, in 2013, given all the hidden costs of obtaining competent callers, it is about 15% cheaper to use a call center in the South than one overseas. At one point in the last few years, 30% of call center jobs in the U.S. were sent overseas, but now, in 2013, only about 10-12% of calls are made by call centers outside the U.S., according to one source.
These and other factors make the South worth exploring if you want to “insource” to a U.S. company that can take over a portion of your IT or call center workload.
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http://bpo.123outsource.net/2013/10/19/outsourcing-to-russia-hour-padding-seems-to-be-cultural/
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http://bpo.123outsource.net/2013/10/04/5-reasons-why-you-should-have-your-company-under-one-roof/