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Outsourcing: West Corporation Interview (Part 1)

Posted on Friday, Apr 9th 2010

The Future of Call Centers

Last week I talked about the double-edged sword facing outsourcing companies that are playing a pure labor arbitrage game because of lower cost of communications and the potential to virtualize call centers. This week I’d like to share with you some of my interview with several senior executives from a company that has taken advantage of the opportunity to virtualize call centers – West Corporation.

West is a $2.4 billion dollar company headquartered in Omaha, Nebraska, that among other products and services provides call center and BPO services to companies across the United States. In addition to brick-and-mortar call centers across the United States and offshore call centers in the Philippines, West provides home agent services to their customers. West took a quite cautious approach toward building off-shore call centers. Outsourcing companies that undertake rapid expansion sometimes have hundreds, if not thousands, of seats sitting idle while their sales teams shop to find customers. West was concerned that this approach would lead to poor quality service. With seats sitting idle, companies are sometimes forced to service customers with sites that aren’t the best fit because the location has been sitting idle the longest, or because it has the most seats open and needs to increase its utilization. This is a problem facing many outsourcing companies that provide pure labor arbitrage plays and that have invested heavily in call centers and the people to staff them while chasing the lowest cost of labor in the market.

West was in India and the Philippines for a number of years to test both markets. After several years West compared the two and eventually shut down their Indian operations because they felt that they could get similar, if not better, performance out of the Philippines. The company continues to have a presence in the Philippines, and is considering opening a center or centers in near-shore locations.

But their real growth – and most interesting aspect to the outsourcing services they provide – is in virtualized call centers using home agents. West has combined their on-shore and off-shore call centers along with home agent virtualized call centers as one of the ways they are trying to deal with the challenges facing companies providing call center services – namely, commoditized services and eroding pricing for those services, while at the same time the desire for clients to have highly qualified call center agents.

West Corporation Interview – Part I:  Offshore versus Home Agents

Tony Scott: West Corporation was in India operating call centers, but you’re not there anymore. What led you to leave India?

Matt Driscoll, Executive Vice President, Customer Management Group for West Corporation: When we went in to India, it was just taking off in terms of off-shoring, and we went in with a joint venture partner. At the same time we were looking at expanding into the Philippines as well. We elected to extend into the Philippines on our own as a stand-alone operation as opposed to a joint venture.

We ran those two operations in parallel for some time. We ultimately felt that we could provide just as good, if not better, quality at a similar price point for our clients in the Philippines, so we elected to end the relationship in India and focus on the Philippines.

Tony: You now have both Philippine and domestic call centers, plus your domestic home agents. How has that been working for you and for your customers?

Matt: A lot of outsourced service providers who have migrated offshore are trying to find the next great country from a labor arbitrage standpoint. We haven’t gone as heavily offshore as some of our competition simply because we want to maintain a controlled growth. We believe our value to our clients is that we can provide them that labor arbitrage component while still maintaining the quality that is one of our core values. Additionally, we can provide a blend of services, so if my client wants labor arbitrage and quality is important, we can offer a mix of things, whether it be completely offshore or whether it be offshore with domestic facility-based agents as part of the solution as an escalation point. We also provide our at-home agents, which are at a slight discount to a traditional facility-based agent cost in the United States, but because of their demographics, they are providing a higher level of quality.

We think that collective blend has served our clients well, particularly in this economy. Some clients are saying, “I am not going to spend dollars on marketing, but I am willing to spend dollars on my existing customer base to make sure that I retain them. I am not out trying to acquire new customers, I am just protecting my existing customer base.” What we found is those particular companies are focused on quality of service, and that’s how they focus on reducing customer turnover and maintaining their customer base. We think we fit that model very well, particularly with our home agents.

Tony: You said that your home agents provide what you perceive to be a higher level of quality. Do you have any statistics that you can share in terms of the demographics of your agents that are at home versus those who are in traditional brick-and-mortar call centers?

Matt: What we see from a demographic standpoint is that an agent working in a traditional call center might be a 23- or 24- year-old individual, whereas home agents are typically in their mid thirties. Home agents typically have at least some college with many having a degree, where facility-based call center agents are skewed more towards a high school education with some college. We also find that overall quality is also better because of life experience.

Tony: How does your model work with home agents – do you have them in some geographies and not in others?

Matt: We are not geographically bound to a particular call center for our home agents, which I think is a little different from our competition. Many companies are doing what they call a hub-and-spoke model where agents have to be located within a certain geography, or perhaps within a 20- to 25-mile radius of a call center so that they can tie into that particular switch or physical plant.

What we have is a completely virtual model, so we don’t need to have our home agents located near any particular physical facility. What we find is that this gives us much greater diversity, a wider demographic in terms of our agents and the ability to be more selective. We have disabled veterans and others who are disabled, stay-at-home mothers, and people who may be looking for a second income.

This segment is part 1 in the series : Outsourcing: West Corporation Interview
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