Sample Decision Process Template for US Based Company Considered Moving Customer Support Outside of the US. Assumes Company has some non call center presence outside of the US. Ultimate conclusion of this analysis was PI was best option compared to India and Ireland

1. Options for Customer Service
Call Center
Sample Decision Process Template for US Based Company
Considered Moving Customer Support Outside of the US.
Assume Company has some non call center presence
outside of the US
Bill Kohnen July 2014

2. Goal
• To find cost effective plan for growth of
customer support needs.
• Focus efforts of higher cost US based call
center operations on higher value and impact
Tier 3 issues.
Bill Kohnen July 2014

3. The Philippines
• Good English speaking skills.
• Mushrooming call centers are putting pressure on
labor supply
• Call centers were located only primarily in Manila
and nearby Makati but now big centers in Cebu
and other areas
• High infrastructure costs.
• People are completely in tune with US culture.
• Strength is customer service and less technical
problem solving and resolution.
Bill Kohnen July 2014

4. India
• India has a huge reservoir of educated
workforce comfortable with English language.
• It has a 12-hour time difference with US and 6
to 7 hours with Europe.
• Low labor cost but high attrition rate.
• Low infrastructure cost
• Strength is technical support and cross and up
selling
Bill Kohnen July 2014

5. Ireland
• Shares the same time zone as EU countries.
• Highly developed infrastructure.
• Well educated workforce.
• Language advantage
• Option for European Support
Bill Kohnen July 2014

6. Call Center Cost Elements
Cost Structure Includes % of Total
Variable labor Loaded cost for CSRs and Supervisors 70.40%
Fixed labor Loaded cost for management and operational analysts 5.40%
Tech support labor Loaded cost for IT and Telecom support staff 4.50%
Technology IT and Telecom technology depreciation and maintenance costs 2.60%
Telecom/Networking
Voice network per minute, cell phones, and depreciation and support for voice and data
network infrastructure across sites 4.60%
Facilities Rent, maintenance, utilities
Miscellaneous overhead Travel, chargeback for other departmental services (e.g., HR, 7.20%
accounting), and per-person, budgeted miscellaneous expenses 5.30%
Labor is clearly the biggest cost and Variable labor cost and grow directly as
operations scale.
Other costs will grow upon growth but not at same rate.
Bill Kohnen July 2014

7. By offshoring to India and the Philippines the companies can save as much as 50% to 60% of the
cost compared to the US
Example Compares with 76.7 Spend In US
• India narrowly edges out the Philippines in terms of costs.
• However, India under greater Labor cost growth pressure forcing some call
centers to move to more rural areas.
Bill Kohnen July 2014

8. Labor Makes up major Cost ~ 75%
• Labor costs form a major portion of the total operating expenses in call center economics.
• Low labor costs in India and the Philippines (almost 12%-15% of US levels) make them attractive call center
destinations
• Prevailing attrition levels and the surge in call center numbers in India are adversely affecting
the labor cost advantage Bill Kohnen July 2014

9. Overall Comparisons
• India and the Philippines a very close on overall cost measures. Both the countries have
scored over the others primarily because of low labor costs and availability of an
educated workforce.
• India’s cost may rise at a higher rate than the Philippines in the coming years.
Bill Kohnen July 2014

10. Option 1: Develop own Call Center at Existing Site
in India or the Philippines
• Leverage existing Infrastructure
• Keeps knowledge internal
• Will have to hire Manager
• Will have to create call center operation from
scratch
• Will become fixed cost
• Will still need oversight and interface with US
based Executive Management
Bill Kohnen July 2014

11. Option 2: Engage with Service Provider
in Country you have operations in
• Quick Start Up
• Could still Manage from India or Philippines
• Would not create fixed cost
Bill Kohnen July 2014

12. Option 3: Philippine Based Call Center Service Provider
Short Term Fast Savings and Start up
• Cost comparable to India
• More accessible from West Cost than India
• Arguably English skills more similar to US
speakers.
• Headquarters of many Philippine call centers
based in the US and/or account Managers
would be US based and experienced.
• As needed business trip costs to Philippines
are 60% of that to India.
Bill Kohnen July 2014

13. Option 4: Colocation
• Set up “colocation” call center within another
corporations site.
• More control over hiring
• Can get better people
• Long term more control of cost
• Must set up operation in PI
• If successful could transition out to own site
• More risk
Bill Kohnen July 2014

14. Option 5: Hybrid Model
• Develop Customer Service Team at own site in
India or the Philippines but augment with
third party provider onsite with backup offsite.
• Minimizes investment
• Flexible capacity
• Problem is it adds additional complexity to
manage.
Bill Kohnen July 2014

15. Survey of Main Options
• India – Good for big scale and technical and
script related
• Ireland – Good Base for Multi language EC
support
• China – Emerging for Global support but still
early
• Philippines – Best total cost and capability
options for next 5 years
Bill Kohnen July 2014

16. Suggestions
• Before Developing own center with potential other
providers operating both in India and the Philippines
• Conduct preliminary interviews with potential Mangers
of your own center or those that will Manage 3rd
parties
• Get benchmark pricing
• Interview people at those providers and see how they
compare to the people you could hire
Bill Kohnen July 2014