Outsourcing: West Corporation Interview (Part 4)

By guest author Tony Scott

Culture Gaps and Management Challenges

Tony: Do you find a cultural gap between the agents who are working for West who are based in the Philippines or who worked for you previously in India compared to your U.S. agents? Has that impacted your ability to move into higher value services when using offshore agents?

Matt: That’s a very interesting question. I think we have a little bit of a different model when we go into these markets than many of our competitors. For example, in the Philippines a lot of outsourcers that we compete with put an expat in charge, and then they plant additional expats over there. When we go into a market, we identify local individuals to run those operations because we think it helps us with our retention and recruitment. In the Philippines we have Filipinos working for Filipinos, and we view that as an investment. If we are going to go into a market, we will “slow walk it” on the front end to ensure that we identify if there are any cultural gaps – and we address them quickly. Granted, labor laws are different in different markets, but we have managed our call centers for all intents and purposes the exact same way we would manage them here in the United States. So to answer you, I think there are cultural gaps, but from our perspective they are minimal and we make sure to address them upfront.

Tony: Have rising labor rates in other countries had any impact on your ability to hire the kind of people whom you want as a part of your organization?

Matt: My answer to that is no, but I think other outsourcing companies would tell you yes. We have seen others putting in thousands and thousands of seats in the Philippines, as an example. In that market there are companies that have put a lot of investment there in a lot of seats, and in order for them to utilize those seats, they have to come down on price. As they come down on price and on margin, I think the first thing that’s impacted – because it is such a large part of their expenses – is labor. And if you are trying to cut labor costs, it impacts the quality of individual you can recruit. When we go into new markets, we want to make sure that our footprint is controlled and that we are a size that allows us to provide an alternative service at lower cost, but that it is a sustainable and controlled alternative. I have seen prices charged for outsourced service come down in the Philippines, and we have had to come down to compete, but not to the degree that others have because we haven’t had to go out and fill thousands of empty seats.

Tony: Have you seen more emphasis over the past couple of years on U.S. companies looking for the domestic or near-shore alternatives as opposed to the typical Indian or Philippines offshore model?

Matt: I think that a lot of the growth that we have seen in Latin America over the past few years has been to some degree at the expense of the Philippines and India, because you are getting similar rates and you are not flying halfway around the world for meetings. I think there are advantages, and it’s also a diversification strategy. If a client needs to take advantage of labor arbitrage, to have all their eggs in a one basket is not necessarily good from a business continuity standpoint, so they might integrate some of their outsourced activity to a near-shore location such as Central America because they can maintain similar rates and provide diversification.

Tony: Do your clients like the fact that a lot of what you do is domestic, and do you think they are pulling back from the concept of the pure offshore model?

Matt: I think so. We have made a heavy investment in our home agents. We think that’s an attractive alternative to simply providing a labor arbitrage model. I think our ability to provide a blend of services, whether it be offshore, near-shore, or domestic, has attractiveness in terms of flexibility for our clients and for us.

This segment is part 4 in the series : Outsourcing: West Corporation Interview
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