Strategic Outsourcing Professionals

In this economic downturn, businesses are doing everything they can to weather the storm.  Unfortunately, most are taking a simple approach by making cuts in the easiest way – its people.  That is understood; human capital is expensive and business needs to do what must be done.  However, by going lean, businesses are putting themselves at risk of losing market share when the economy picks up.  Management teams need to think about positioning the business to outpace their competition and capitalize on the economic rebound.

To do this, Executives should focus on achieving operational excellence to position business for rapid growth.  Operational excellence isn’t a form of just managing the way business is done; it’s also about how the business is organized.

In my view, there are low-cost investments that can add significant value to the operating model of a company.  Further, their measured success will allow a company to scale and grow operating income at a faster pace.

1.     Continuous Improvement: Measure, Adjust, Improve, Iterate

2.     Develop a Strong Product Feedback Loop: Your angriest customers are the source of your greatest learning.  Use that to your advantage and build what people want and require.

3.     Enable Self-Learning: Drive content and metrics for everyone to learn about the business.  An organization’s ability to learn, and translate that learning into tangible action, is the ultimate competitive advantage.

In the words of Walt Disney, “The way to get started is to quit talking and begin doing.”  

It appears that HCL’s CEO, Vineet Nayar has heard enough about the inferior Indian educational schooling that most tech graduates receive in India.  He recently sounded off as saying American Technology graduates are “unemployable”.  While I see his perspective of trying to win business for offering a cheaper option, I don’t understand his tact.  HCL just signed a $170 million dollar outsourcing agreement with Microsoft.  According to Steve Ballmer, “That extra mile walk by the team (at HCL) has increased our mutual trust and has taken our relationship to newer heights. “

I respect Vineet’s tenacity, but man-oh-man, let’s hope Steve Ballmer doesn’t change his tune!

Read the original article here: http://bit.ly/K7RPZ

When I was blogging regularly, I would get requests to talk about pricing and what would be considered a competitive rate in the call center industry.  I have finally decided to do a short piece on pricing, and this article will briefly discuss what I am seeing in the marketplace.

The times were much different 24 months ago.  Offshore call center pricing in the Philippines and India was appreciating because the Peso and Rupee had gained so much on the dollar.  Most vendors didn’t hedge currency and the only way they could operate was to increase their pricing models.  With the dollar weakening in the global economy, business started to rethink their sourcing strategies.  The value of going offshore wasn’t necessarily a slam dunk anymore. 

About 12 months ago, the American economy fell hard.  The macro economic factors then pushed the rest of the world down.  Countries that were dependent on American business started to tumble.  As the rest of the world started to feel the pinch, the American dollar started appreciating against foreign currency, even in the dire economy. 

When economic conditions got tough, business got more diligent.  They started scrutinizing every proposal and really performed their diligence on pricing.  This then drove offshore rates down.  With vendors losing clients, it became (and still is) a frenzy to win business.

If you were ever going to consider outsourcing, now is the time to take the plunge.  Rates are cheap and you can negotiate most setup costs and telephony costs away from your contract.  Also, you can pretty much get any type of skill set at the rates I mention below.   This would include Outbound, Inbound, Service-To-Sales and Telemarketing.

This all being said, this is my assessment of hourly FTE rates that are now being presented to accounts with 100 seats or more.  Add 10-20% if your operation is less than 100 seats.  If your operation is less than 50 seats, you should seek out a mid-size vendor and pitch that the business will grow together.  This will help keep your rates in these ranges.

• Philippines       $9.50 – $12.00
• India                $9.00 - $11.00
• Costa Rica       $12.00-18.00
• Guatemala       $9.00 – $11.00
• El Salvador     $8.00 - $10.00
• Mauritius         $9.00 – $11.00

NOTE: Outsourcing to El Salvador may require a helmet and kevlar vest.  All kidding aside, it is a beautiful country.

Hey all.  It has been almost a year since my last post and I appreciate the notes for more content.  While I know I disappeared, this past year has been both insane and great.  The startup life has consumed me; however, the career move has been highly rewarding.  I have learned a great deal and all the experience has been worth the effort and sacrifice.  I have enjoyed the work and job immensely.  It was a great change for me and I am happy I made the switch.

Here are some highlights of the past year:

1.      I was interviewed and cited in a great book,  The Services Shift, Seizing the Ultimate Offshore Opportunity, written by Robert E. Kennedy who is a professor at the University of Michigan’s Ross School of Business and Executive Director of the William Davidson Institute

2.      Built an entirely new service strategy at my new employer, Shopatron.

3.      Bought a new house – I need to give thanks to TransUnion Interactive, my old employer, for providing me with knowledge and insight to the credit markets.  Seriously, that was huge.

4.      My wife decided to go back to work and teach 5^th grade - this severely reduced the free time I once had and blogging went away first.  Sorry.

a.       It should be noted that I have an awesome wife and she is as passionate about teaching as I am about business.

5.      The gray hair on my head doubled.

Well, that was the year in a nutshell.  Now that I am back to blogging, I have to commit to a few new blogging rules.  Going forward, I am no longer going to write the long and lengthy articles that you were accustomed to reading.  In order to keep generating content, I need to keep it simple.  So, this will probably be the longest post you read from me in a while…although, since most of my readers unsubscribed, not many of you will read this one.

Last, but not least.  I want to reach out to my ‘anonymous’ friend over at 360VendorManagement for inspiring me to blog again.  If you haven’t seen his recent makeover, go check it out!  I am eagerly awaiting more content.

Hey All –

I have been extremely busy the past few months and I have not been blogging on the site. I have seen my readership fall dramatically, and I am sorry that I have not been able to provide you content.

This being said, I have resigned from my current position. In late August, I will be starting a new role with a company called Shopatron.

I will not be managing outsourcing operations at Shopatron, but am excited about my new opportunity. I will continue to blog occasionally, but may need to change some of the content every now and then. I will continue with the series I promised six weeks ago. I know it was a giant let down that I did not continue with my assessment of proactive customer service, but I promise to get something out soon.

Best,

Brad

Let us begin by stating the obvious - The Internet has empowered consumers, and the online consumer wants their products cheaper, faster and without hassle.  For this reason, online business needs to have a great customer experience to ensure the level of satisfaction necessary to set itself above the competition; the first impression by users will determine the success of the business over time.

In the online world, there are so many opportunities to provide world class customer service in a manner that is smart and cost effective.  Most organizations look at customer care as a cost center that only needs budget to keep the revenue stream flowing; it is viewed as a burden of doing business versus the cost of providing service.  I hate to say it, but this is ‘Old School’ thinking.

When companies forgo the opportunity to capitalize on ensuring customer satisfaction through all contact channels, companies are impacting both the top and bottom lines because the experience of their consumers is purely reactive.  In other words, the services offered are only established to assist a customer when there is a problem.  In general, this can leave a poor impression upon consumers and they are more likely to abandon a product for another if there are competitors proactively retaining their business. 

The successful online business will incorporate proactive customer care programs into their operations to ensure customer satisfaction (CSAT), stronger customer loyalty and improved brand recognition, which in turn promotes customer persistency and improved customer lifetime value for the business.  The beautiful thing about proactive customer care is that companies actually enable themselves to outsource more of their operations to drive down the ‘burdensome’ cost of providing service.

This is going to be the first article in a series of posts that discuss different methods of building a proactive customer care organization.  This article lays the foundation for the governance structure, and follow-up articles will explicitly detail how to improve the customer service operations of any online business.  The goal is to demonstrate that great customer experience and proactive servicing techniques translate into stronger revenue, higher margins, cost reduction strategies and additional revenue opportunities.

The building blocks for an online business to deliver proactive customer service are as follows:

• User-Friendly Website
• Customer Loyalty Programs for Customer Rewards
• Tailored Newsletter for Product Reinforcement and Value Proposition
• Leveraging IVR, CTI, ACD and CRM to Promote Superior Consumer Experience
• Leveraging Chat to Increase Acquisitions and Transactions
• Skills-Based Routing for Both Email and Contact Center Services
• Optimized Knowledge Base for Customer Self-Service
• Tailored Value Retention Programs
• Organizational Readiness to Outsource Operations

In each article of this series, I will present best practices for building proactive customer service organizations.  These posts will specifically discuss cost control, revenue production and transforming all customers into happy consumers of more products and more services.

Vince Lombardi was not only a great football coach, but an inspiring leader who knew how to get the most out of his players. He was a fierce competitor and ensured that he instilled solid values of hard-work, perseverance and a winning attitude into all that listened. He has provided America with some of the most memorable leadership quotes of the 20^th century. More importantly, his views on leadership are not only relevant to achieving success on the field, but parallel that of a successful business leader.

When managing business, successful leaders need to demonstrate and project the same attitude and values that made Vince Lombardi so famous. Successful leaders bring people together to collaborate, work-hard and focus effort to a common goal – winning.

Here are some favorite Lombardi quotes that are applicable in the business world:

“The achievements of an organization are the results of the combined effort of each individual.”

“The difference between a successful person and others is not a lack of strength, not a lack of knowledge, but rather a lack of will.”

“Individual commitment to a group effort - that is what makes a team work, a company work, a society work, a civilization work.”

“The leader can never close the gap between himself and the group. If he does, he is no longer what he must be. He must walk a tightrope between the consent he must win and the control he must exert.”

“Dictionary is the only place that success comes before work. Hard work is the price we must pay for success. I think you can accomplish anything if you’re willing to pay the price.”

“Football is like life - it requires perseverance, self-denial, hard work, sacrifice, dedication and respect for authority.”

“If you are not fired with enthusiasm, you will be fired with enthusiasm.”

“Once you learn to quit, it becomes a habit.”

“Perfection is not attainable, but if we chase perfection we can catch excellence.”

“Practice does not make perfect. Only perfect practice makes perfect.”

In the call center or transaction processing environment, employee attrition seems to always be a continuing struggle for operations. Historically, the industry sees high turnover for reasons that include low-pay, repetitive work, lack of career path and difficult customers. A theory with outsourcing operations in emerging economies is that attrition risk is reduced by providing better pay and opportunities where they otherwise did not exist. In my experience, this theory has not exactly been proven, and employee attrition seems to be just as much of a problem offshore.

When examining the economies and markets of where business operations are outsourced, it becomes apparent that attrition occurs for different reasons. The largest impact is economic growth of the emerging economy. An influx of competition drives wages upwards and produces turnover for incumbent vendors and/or captive centers. An even bigger problem is that employees do not feel loyalty to provide notice; they simply leave for a better opportunity. This becomes extremely costly when dealing with outsourcing operations and is a key performance indicator that needs to be managed and governed appropriately.

For managing attrition in an outsourcing paradigm, be sure to think of creative ways to protect the operations from experiencing this pain.

Here are a few tips to help with managing attrition:

• Define and develop an attrition metric that can be agreed to at contract. Look to drive vendor behavior with incentives and penalties associated around attrition.
• Drive individual behavior by developing incentive plans that can be lucrative for tenured resources. For example, in a sales paradigm, drive commission structures to be both quality and annuity based. The higher the quality rate coupled with the persistency of sales drives larger commissions over time.
• Track all attrition on a monthly basis; this should be the minimum amount of time used to measure attrition. It is important to track both voluntary and involuntary attrition across the skills, management structure and geographic location. Also, track an annualized rate on a monthly basis.
• Develop earned value metrics to validate the cost of replacing more experienced and tenured resources; new resources will have longer cycle times and be more prone to error; this adversely effects budget and operational costs.
• Develop a governance model that ensures resources feel a sense of corporate pride and ownership.

Attrition can be devastating to a business if not properly managed. To drive higher quality, increased customer satisfaction, better resource efficiency and lower costs, attrition management must be incorporated into an outsourcing governance model.

Within the Vendor Management discipline of a Global Operations organization, the process of a Quarterly Business Review (QBR) should be established to achieve high-quality performance and ensure a healthy, successful partnership with your vendor(s). While some people use the QBR as an excuse for a boondoggle (which isn’t always a bad thing), I feel that they are extremely valuable for managing your business; I wanted to share my viewpoints and guidelines for facilitating successful meetings and enriching partnerships.

The QBR process should be established immediately upon execution of a sourcing relationship. It acts as a forum for all parties to establish clear understanding of business goals, objectives, expectations and future direction for the business. This meeting should be viewed as an important tool to discuss and work through change activities for the benefit of performance improvement.

In my opinion, the QBR meeting should be setup in a similar fashion to what is outlined below:

• Established Agenda and Participants
• Develop Decks for Both Your Company and Vendor(s)
  • Strengths, Weaknesses, Opportunities, Threats (SWOT) Assessment
  • SLA Root Cause Analysis –Both Positive and Negative
  • Performance Improvement Planning
  • Project Updates/Proposals
  • System Enhancement(s)
• Corporate Initiatives
• Forward Planning and Strategy
• Appendix of Agreed to Performance Data
• Action Log for Meeting Follow-up(s)

When preparing for a QBR, I also suggest following these tips:

• Set the date for the meeting no later than five weeks in advance
• Set the agenda and participants in advance
• Share the decks prior to the meeting to ensure discussion points can draw actionable items by each company – remember, this is a collaborative process for the greater good.
• Do the QBR face-to-face (this can be challenging with cost center budgets)
  • Personally, I like to have vendor(s) visit us
• Document and share all actions and discussion points that evolved from the meeting
  Manage the actions to ensure improvement within the organization
  Enrich the relationship with some extracurricular activity

If you would like to read a similar article on managing a QBR, you can check out a site I like to frequent - 360VendorManagement. This author needs to remain anonymous, but he is a tenured professional and I respect his ideas and thoughts. Great minds think alike!

My February has been very busy with travel and work, which is why I haven’t posted anything this entire month. My travels and workload are calming down so I figured I would take this opportunity on a lazy Sunday to get something out on the site. I wouldn’t want to give the impression that I am a slacker.

I started off February in Asia, and my last post discussed the benefits of Cebu as a BPO Destination in the Philippines. I went to Central America the following week to visit facilities in Guatemala; we were impressed with the infrastructure and have started discussions to acquire some Spanish services for our business. After my travels, I have spent the last two weeks getting our team’s 2008 goals aligned, presenting project plans and financial goals to executive management and obtaining buy-in that we are going to accomplish great things throughout the year! The workload is heavy; we have approximately twenty projects to deliver by year-end. As always, I am confident we will come in on time and within budget.

One of the biggest things that we are going to accomplish this year is improvement upon our call abatement strategy, customer self-service and customer retention while also building upon our existing service experience for our customers. When looking at all these projects, it occurred to me that there is an extremely heavy focus on the discipline of Business Process Management. That being said, we instituted a paradigm to manage this discipline by leveraging the core principles of process design and improvement.

Business process management is a common term that means different things to different people. For me, I find this to be a simple core component of an organization and sum it up as the constant improvement of the foundational and ancillary processes that govern the business functions. The goals are to measure the success of processes to keep the ‘trend your friend’ (trend moves Up and to the Right) and demonstrate constant and continuous improvement. In turn, constant improvement drives down operational costs, which will land you in the ‘circle of trust’ (can’t resist, sorry…I liked Robert Dinero’s character in Meet the Parents…a lot).

There are many ‘best-practices’ for managing business process. Within my team, we have implemented a lot of six-sigma methodology to measure our success and improve how we operate. The idea with six-sigma is that you quantify improvement through statistical analysis. It has helped us a great deal on many levels; especially with our quality program. We have also adapted some of Microsoft’s approach to business process management and use this methodology to model our process design today.

• Model & Design
• Develop & Deploy
• Manage & Interact
• Analyze & Optimize

By adopting six-sigma principles and Microsoft principles, our business has and will continue to improve immensely. In my opinion, our business process efforts will improve the following for 2008:

• Increase Customer Retention
• Reduce Operational Costs
• Improve Regulatory/Compliance Objectives
• Improve Efficiencies Across Organizational Boundaries
• Enable Reuse
• Greater Employee and Personal Satisfaction
• Reduce Risk
• Agile Work Environment

I hope this post satiates all of you for now. My apologies again for taking so long to get something out on the site, but my real job and family take priority. Maybe I will develop a process to improve my available time for the website. I think this would be the hardest goal to conquer all year.