In the short span between 2001 and 2003, more than 250,000 call center jobs were outsourced to the Philippines and India alone. This heyday of outsourcing call center operations which began in the 1990s and extended through the early 2000s was driven by simple economics, but lately, call centers have been coming back to the United States. Here’s a behind-the-scenes look at why.
Hands-down, the biggest reason for the offshore boom was reduced costs. Virtually every aspect of call center operations was reduced when moved overseas. Labor was pennies on the dollar and infrastructure cost less. However, America was hit incredibly hard by the 2008 recession, and the cost to operate locally dropped. The shift reduced the profit of moving offshore considerably.
While the shrinking U.S. costs reduce the benefit on one end, rising costs overseas cut into the other end. Some of this is because early offshore opportunists weren’t all offering employees fair terms to begin with. At the same time, globalization has increased costs across the board, so profit margins are shrinking regardless.
Early call centers were largely built around the premise of cheap service, not necessarily good service. Cultural and language barriers became major issues for some, and the challenges were amplified in situations where employee morale was low due to poor working conditions.
Moreover, customers expect higher levels of service than ever before and businesses that deliver on these expectations perform better. Although it’s not impossible to deliver top-tier service with offshore outsourcing, issues like employee morale and barriers must be addressed in order to make it work. DATAMARK has always taken these things into consideration, but companies that work with other BPO providers often deliver poor service in their offshore call centers, which damages trust and relationships, ultimately cutting into profit.
Interestingly, the shift to onshoring was predicted back in 2012 by economist Dr. Winston Chang of the University of Buffalo. Even back then, his research found that offshoring had contributed to the economic growth of developing countries enough that the cost to do business overseas was rising to the point of profit negation and more jobs would start to be “reshored.”
Chang’s research uncovered two other interesting details. First, outsourcing saved businesses money—enough that they were funneling more cash into other projects, which bolstered the U.S. economy. Secondly, job loss was far less than people assumed, accounting for as little as 0.1 percent of service positions annually.
So, although offshore outsourcing was not a major concern for the U.S. economy as some feared, the trend to bring more jobs back to American soil is still a boon, and it’s certainly a positive thing in the eyes of working Americans.
Offshoring a call center may work for some, but if your overseas call center isn’t working for your business due to diminished gains and poor customer experiences, it may be time to bring operations back home or explore nearshore options instead. With decades in the industry, DATAMARK can walk you through all the options, so you get the right mix of value and service for your company’s needs. Contact us to learn more.