Onshore outsourced contact center activity to face challenges in economic recovery

Melbourne, 16th December 2009. Ovum’s recent report Profiting From Onshore Contact Center Outsourcing During the Recovery, provides a snapshot of recent trends associated with providing third-party customer-facing services from Western locations. Over the past 18 months, many companies have taken advantage of the lower-cost environments in these countries, brought on by the recession. However, Peter Ryan, Ovum lead analyst for contact center outsourcing and BPO, believes that vendors and clients should not get too comfortable.

”As the economic recovery begins to unfold, contact center outsourcing vendors will be quickly faced with an appreciation of input costs associated with running their facilities”, said Peter Ryan, lead analyst based in Canada. “Specifically, while unemployment is currently sitting at very high levels, this will shift in Western countries as many verticals begin to bring staff back on”. Ryan believes that outsourcers could be faced with a prospect of losing talented agents, unless they are able to offer more money and benefits. This will invariably put up prices paid by clients, which is not a terribly competitive situation for the vendor.

Another aspect of onshore delivery that may be prone to cost increases as the global economy recovers is real estate. Ryan notes that in many Western centers in North America, Europe and Australia/New Zealand, vacancy rates are already substantially higher than usual. However, already this sector is showing some signs of life. Outsourcers will be now faced with potentially higher price-points for purchasing and leasing land. Again, such increases will be borne by the client.

However, Ryan feels that for outsourced contact center vendors, there is still hope of finding onshore opportunities. Specifically, should outsourcers look to economically-challenged areas hard hit by the recession, they may be able to access large pools of talent, as well as reasonable commercial real estate and government incentives. In addition, cost-cutting business models including speech automation and home-based agents may also help mitigate domestic delivery costs. There are also several sectors for which outsourcing offshore is not viable, and will thus be always looking for onshore services.

Cost increases may also render offshore locations attractive once again. With exchange rates favoring many Western currencies, coupled with overseas business environments that are structurally much lower cost, Ryan believes that a return to an offshore play could be in the cards for clients not competing in politically-senstive industries.