By Jagdish Dalal

George Santayana once wrote: “Those that fail to learn from history, are doomed to repeat it.” I also like what Albert Einstein wrote, “Insanity is doing the same thing over and over again and expecting different results.”

So it is for many providers who do not have a structured process for learning from their past performance. Customers expect their providers to continuously improve their performance. In a competitive world of outsourcing, providers benefit by reducing service defects, thereby improving customer satisfaction and their bottom line. After all, failure to meet performance levels ends up costing them in their margin – directly or indirectly.

Working with providers, I have encouraged them to use a formal “lessons learned” process. I advocate that this be an ongoing, established program rather than a periodic event.

Lessons Learned Process

It is a formal process and a foundation for quality review. It provides a method for clinically dissecting performance, documents factors impacting the outcome and creates a framework for learning. It is not a “witch hunt” or “who shot John” game. The intent of a successful lessons learned process is to identify factors influencing results and delve deeper into the root cause for each of them. Therefore, the process is designed to evaluate both failure – missed performance –and success– expectations met. In quality process, this is often associated with creating a “fishbone” (or Ishikawa) diagram. Let’s look at how to design and successfully conduct a lessons learned process.

Creating Lessons Learned Framework

A structured framework for the lessons learned helps not only in identifying factors but also as a learning tool for future performance. A typical “fishbone” diagram describes the outcome and then creates a set of categories for factors that affected the outcome. In a structured lessons learned framework, it is important to have these categories standardized, so that over a period of time, we can establish patterns and trends. The following diagram shows one of these standards that I have recommended to providers with whom I work.

Conducting Lessons Learned Exercise

It is essential that a lessons learned exercise is formal, consistent and involves all people that are directly, and at times, indirectly, engaged in the activity. As mentioned earlier, these exercises should be for both successful and unsuccessful outcomes, so that learning can be analyzed from both perspectives. I recommend the following seven step process:

1. Assemble the team that will conduct the exercise. A discussion leader and a scribe need to be appointed so that the meeting rules and etiquettes are followed. Ideally, the conference room is organized so that there are seven category flip chart pages and a separate flip chart for documenting brainstorming items. I have found that a conference room without chairs (where everyone is standing) is more conducive to brainstorming than people sitting around a large table.

2. Agree on the “head” of the fishbone, describing the outcome as specifically as possible. For example: “project metrics were not met” or “project completed ahead of schedule and under budget.” Clarify categories for everyone involved, so that they do not become a matter of interpretation later during the exercise.

3. Conduct brainstorming session. Typical brainstorming process is:

a. Each person (on a round robin basis) lists the contributing factor. These factors should be as factual as possible and not just “here-says” or opinions regarding the cause. Causes will be determined later.

b. As each person contributes a factor, no discussion takes place (except for clarification purposes only).

c. Round robin process continues everyone has exhausted factors to contribute (people can “pass” during the round robin if they have no new factors to contribute).

d. Document all of the factors on a flip chart (as they were stated).

4. Once brainstorming is complete, each of the factors are discussed, categorized and placed on the appropriate flip chart. Discussion can lead to adding more factors or eliminating ones discussed.

5. Once all factors are categorized, each category is studied to see common causes and a more thorough “root” cause analysis done. Root cause analysis is conducted by asking the question “why” until there can be no further drilled down. Typically it will take at least five “whys” to get to the root cause. These root causes, by each category are documented separately and if necessary, prioritized by their perceived influence on the outcome.

6. Final steps in the lessons learned exercise is to document these root causes, and projects created, to either reinforce their impact (if they resulted in a positive result) or come up with a solution to avoid/mitigate them on future projects.

7. Final outcome, lessons learned categories and root causes are then stored in a single document so that others can study them later and learn from past mistakes or accomplishments. When I worked at Xerox, we called this our “book of knowledge” and each project manager was required to study the book prior to launching a new project. This is a process that allows one to learn from history.

Honest, open lessons learned exercises and in depth assessment of root causes, helps create an environment where past performance becomes a guide for future improvements. As George Washington wrote in a letter to Fielding Lewis (July 6, 1780): “To rectify past blunders is impossible, but we might profit by the experience of them.”

Jagdish(Jag) Dalal is Founder and President of JDalal Associates LLC (JDA) and Managing Director, Thought Leadership for IAOP and a world-renowned consultant in the field of outsourcing. Dalal is a Certified Outsourcing Professional (COP®). He can be reached at JDalal@JDalalAssociates.com

Red tape, scalability, labor analysis, financial incentives and investment risk are among the burning issues for a Nexus panel joining together Ann Harts, Kevin Parikh and Fabrizio Opertti

By Luke Bujarski

 Mexico’s telecoms sector has gained a bad reputation for under investment, poor quality and high costs. Fixed line and mobile telephony rates are among the most expensive across the OECD and bandwidth is subpar compared to download speeds in other LATAM markets.  While government initiatives poised to foster competition continue to hit roadblocks, America Movil is feeling the heat and things are slowly changing.  New carriers like Nextel are building stronger brand loyalty especially within the enterprise market.  Pressure from the Federal Competition Commission has also pushed telecoms czar Carlos Slim to pledge greater investment in ICT infrastructure and more fair pricing strategies.  We spoke with Ernesto Piedras the CEO of CIU – a Mexico-based telecommunications industry consulting firm to give us a breakout of the current landscape and how things might play out over the next two-three years.

 NSAM:  Can you give us an overview of Mexico’s current telecoms landscape?

Piedras:  Mexico is a very dynamic market especially in the mobile sector where we have 98.7 million open lines and see 10 percent annual growth.  Last year’s revenues for mobile services were 17.7 billion dollars – out of 35 billion for the entire sector including fixed lines and internet.  Seventy percent of the mobile market is held by Telcel.  Movistar controls 35 percent and Nextel holds 3.9 percent of total lines. Nextel is a growing competitor as it has become the image of good service particularly with the business community.  Nextel actually accounts for 12 percent of total mobility revenues. Virgin Mobile America is also set to enter the market this year.

NSAM:  What about fixed lines?

Piedras:  The fixed line segment is 19.5 million lines which is very little under any standards considering the country’s large population.  What’s interesting is that traditional fixed line players including Telmex are losing customers to the cable companies that offer bundled phone services to their 11 million paid TV subscribers.  Cost for a dedicated fixed line tends to be high and doesn’t make much sense to consumers that have mobile phone options, but people are willing to pay for premium television which also offers telephone services.

 NSAM:  How does quality and bandwidth in Mexico measure up?

Piedras:  Mexico is 2.5G as a whole with major cities well covered, but rural areas and small towns have virtually no service.  Until recently infrastructure investments have focused on coverage expansion and not so much on increasing bandwidth.  Telcel recently announced a very important investment for 3G services and Nextel will be launching 3G as well.  When you talk about broadband internet you also have to distinguish between what is considered broadband in the world and what is broadband in Mexico.  The OECD says that you cannot call it ‘broadband’ unless download speeds are at least 2megs per second.  In Mexico download speeds are much lower.  When I travel it’s always a shock to come back to Mexico compared to download speeds in places like London.   Essentially you are paying top dollar for minimal service.

NSAM:  Are Mexico’s telecoms costs as expensive as experts claim?

Piedras:  Mexico has the highest telecoms costs across the OECD.  Also remember that Mexico has a relatively low GDP/capita compared to other OECD countries [10 thousand USD] so mobile services are very expensive for the Mexican consumer.   Out of 98 million lines only 16 percent are contract while 84 percent is prepaid services.  However, the smart phone market is growing rapidly and people are willing to pay top dollar for the latest technology.

NSAM:  Will government be able to bring additional competition into the market?   

Piedras:  Overall I am optimistic about the future and what’s coming in terms of competition and alternatives for customers.  In the past we had absolute regulatory capture with government authorities controlled by the main telecoms companies.  In the current administration there has been more independence of the regulators but government still lacks ‘teeth’ when it comes to antitrust regulation.  Last week’s decision to drop the $1 billion dollar fine against America Movil for unfair pricing practices demonstrates the limited power of the Federal Competition Commission, the main regulatory body in Mexico.  Lack of competition is also negatively impacting infrastructure investments.  Although the main companies [America Movil & Movistar] comprise 90 percent of the market, they only invest about 40 percent of total investment.  Every year they come out with generous announcements but when you look at actual investments they don’t commit.

Atul Vashistha of Neo Group and Steve Rudderham of Capgemini with Mark Pfeiffer and Henri Sas of Teleperformance at Nexus 2012

By Jon Tonti

Teleperformance, the customer care and technical support giant with over 135,000 employees worldwide and almost $3 billion dollars in revenues in 2011, took home the Foundations for the Future Impact Award presented at Nearshore Nexus. Teleperformance bested a competitive field of applicants in part because of its exceptional ability to transform the company’s corporate social responsibility efforts into community based grassroots campaigns with sustained local support. For companies in the Nearshore industry benchmarking their Corporate Social responsibility (CSR) program against that of Teleperformance, get ready to push the limits of CSR strategy.

The archaic criticism that CSR distracts a profit driven business has long since lost out to the Creating Shared Value model which accepts corporate success and social welfare of the local community as interdependent. The Foundations for the Future Award, born out of collaboration between Nearshore Executive Alliance and Nearshore Americas, aims to raise awareness about the important influence of CSR in the Latam outsourcing industry. “Corporate Social Responsibility is increasing in its global recognition and value, so with the award we (Nearshore Executive Alliance and Neashore Americas) want to drive that awareness throughout the Latam region to an even greater extent,” says Steve Rudderham, Vice President of Global Transition at Capgemini and main organizer of the award.

Employee Engagement: Key Factor

The approach of Teleperformance’s CSR initiatives precisely designed for the communities which they target and launched in conjunction with local organizations and employees seemed to nudge Teleperformance past other finalists Johnson and Johnson, Neoris, and Transactel all with very impressive CSR programs. “We looked for a much greater impact on the Nearshore environment. We are impressed by how engaged Teleperformance employees are in their CSR efforts and how Teleperformance develops grassroots campaigns that also focus on building the future workforce,” revealed Atul Vashishta, Founder and Chairman of Neo Group and author of several books including Outsourcing Wisdom.

The award focused on the three areas of impact, environmental, community, and sustainability. Teleperformance was well positioned with two distinct prongs to its CSR program Citizens of the World (COTW) and Citizens of the Planet (COTP) formally launched in 2006 and 2008 respectively. Teleperformance seeks a holistic approach with COTW, efforts range from just making sure infants and children survive to adulthood to programs that help those same adults climb the career ladder. “We want to enable impoverished individuals to reach their potential and self-actualize,” Mark Pfeiffer says casually as if catapulting an impoverished individual to the top of Maslow’s Hierarchy of Needs were some small task. Citizens of the Planet has received recognition for a particular aspect of the program; Teleperformance measures the carbon footprint of its employees in all of its 49 countries of operation.

When asked about the importance of measuring the carbon footprint of each employee Pfeiffer mention that “it is part of an education effort that touches suppliers, employees, and landlords. We are trying to influence pertinent audiences because the impact extends every which way. If the target audience is employees for example, their families can attend the education session.” Pfeiffer stressed the importance of integration of employees into a company’s CSR efforts, “The employees volunteer beyond their core job functions and it allows them to take on leadership roles. It increases respect among employees, reduces attrition, and localizes the CSR effort. It almost brings tears to your eyes because you are so proud of them.”

What surprised Nearshore Americas most was what Vashishta had to say about the impact that CSR may have on buy-side players in the near future. “As of right now it is probably a 5% factor for a buy-side player, but it is on the rise and I think it may become a 20% factor within five years’ time.”

Impact on Competitiveness

Firms like our finalists are careful not to flaunt their impressive CSR records and they know it is not just a nice thing to do and instead the right thing to do, but is anybody taking notice and does it really make an impact on a firms competitiveness? Vashishta, a 20 year outsourcing professional veteran has noted the changing CSR influence, “Employees care about companies that care; companies with strong CSR attract better employees and reduce attrition. Governments also care and the working relationship of a foreign firm and the government where that firm does business can be facilitated by robust CSR efforts.” What surprised Nearshore Americas most was what Vashishta had to say about the impact that CSR may have on buy-side players in the near future. “As of right now it is probably a 5% factor for a buy-side player, but it is on the rise and I think it may become a 20% factor within five years’ time.”

Why? Vashishta and other experts we talk to affirm that good (and increasingly pragmatic) CSR operations are increasingly focused on workforce development that directly impacts the long-term viability of a Nearshore site. This important CSR works with the local government and institutions in the target region to make sure local high schools and colleges are graduating prepared workers so companies can spend less on basic training. It also makes continuing education available so workers careers don’t stagnate and they can move on to fill more diversified and higher valued added jobs and brings those from the lowest economic strata into lower-level BPO jobs so wages rates for those lower level jobs remain sustainable for buyers.

The consensus from NSAM's readers: Wait for the Castros to move on before taking Cuba seriously.

By Jon Tonti

A mere 230 miles from Miami, Havana’s ultra-attractive geographic positioning continues to push Cuba on to the radar of ‘what ifs’ when looking at explosive possibilities in the Nearshore services sector.

But before floating into dream land – let’s review the facts: Cuba’s BPO market today is nearly non-existent and the Cuban government is not focused on jump-starting it.  Despite an intelligent workforce that is increasingly exposed to private-run business, Cuba still has a long way to go to become viable for global services. We drew upon our pool of experts and did some poking around of our own to find that Cuba lacks a BPO scene because of the Cuban government’s preference for other industries, a weak technological infrastructure, a dearth of transparency, and political and workforce uncertainty.

“The Cuban government doesn’t appear to be that interested in BPO; they seem to be more focused on tourism and natural resource extraction.  You really may need a regime change to get things moving with BPO,” says Peter Ryan, lead analyst at Ovum.  His opinion reflects the results of a recent Nearshore Americas online poll that indicated over 65% of audience members saying “Wait for the Castros to Move On” before examining Cuba.

Cuba already has plenty of experience participating in joint ventures with first-world democracies like Canada and Spain albeit in non-service related industries.  Canada based international mining giant Sherritt Corp. has operations in Cuba.  Spanish foreign direct investment is mostly focused on the Cuban tourism industry, which currently accounts for 12% of the labor market as reported by the US State Department, and was made possible by a series of market oriented reforms in 1993 and 1994 in attempts to stave off fiscal crisis.

Joint ventures occurring between Cuba and international companies would seem to be a signpost of Cuba’s readiness and capability to take on BPO operations, even majority foreign ownership has supposedly been allowed since 1995 despite little evidence of its actual existence. Regrettably, joint ventures between the Cuban government and foreign firms steadily declined in the seven year period between 2002 and 2009.  Reasons cited for the decline are encumbering regulations, grueling bureaucracy, and high-priced inefficient labor.

“Therein lies the problem, it is not a free market,” says Ryan when asked about how a company interested in launching a BPO joint venture with the Cuban government would go about negotiating wage rates.  “Instead you have the DR or Jamaica right there and they are already proven BPO markets with less red tape and more transparency.”

“I am sure Cubans can adapt and provide quality customer service, but it will not happen overnight”

 Is the Workforce There and Ready?

UNICEF data shows that the Cuban population has 100% literacy and youth enrollment in primary and secondary education is on par with that of the most economically successful nations in Latin America.  That reality combined with the fact that 12% of the labor market is employed in the tourism industry, where those workers may be either formally or informally receiving an education in current hospitality standards, is an argument used by some to predict that Cuba is ready for BPO.  How many workers of that 12% are truly focused on guest centric activities?  The impact is overestimated.

BPO would also find it difficult to pinch those few readied workers focused on guest centric services from the tourism sector because of the tips they receive; it is not uncommon for a worker to receive a tip that is half their monthly salary.  As for the vast majority of the Cuban workforce that is not involved in tourism, although highly educated, may take time to deliver high quality BPO services.

“It is hard to conceptualize Cuba becoming a hub for customer service anytime soon.  Customer service is very much an idea rooted in the North American business psyche.  To generalize, Cubans have simply not been exposed to this practice and as a society and they will need time to switch gears.  I am sure Cubans can adapt and provide quality customer service, but it will not happen overnight,” says Sonya Fierst, a research analyst for Centro de Estudios en Economía Sistémica (ECSIM) who recently traveled to Cuba.

Even if Cuba were to become a market economy tomorrow the communism hangover would endure for some time.

 Infrastructure Woes

Internet connectivity in Cuba has been known to be abysmal with the Cuban National Statistics office reporting as recently as 2010 that only 2.9% of the population used the internet over the previous 12-month period.  The arrival of an undersea fiber optic cable in early 2011 from Venezuela evoked wary optimism by freedom of information supporters; all Cubans know that with any increased access to virtual information monitoring and blocking technologies will escalate in lockstep.  As to date there has been little reporting on the anticipated internet access that was promised with the delivery of the fiber optic cable, sources on the ground say internet access for the average citizen continues to be absent.

Political and Economic Uncertainty

Any BPO buyer has political and economic stability on the top of their due diligence checklist.  Unfortunately, Cuba remains a wildcard in terms of its post-Castro future.  The island is also preparing for an altered relationship with Venezuela and the Cuban government, which now employs 85% percent of the Cuban workforce, claims that within the next 4-5 years 50% of the country´s economic activity will be in the private sector as reported by NPR.

However, the Cuban regime has a track record of making claims and not following through or reversing course, especially when it comes to the issue of economic liberalization.  It remains true that the small subset of Cuban entrepreneurs cannot deal directly with foreign firms, and until a big shift occurs an unpredictable Cuban government still controls everything.

Beverly Burke, Director, Information and Promotion at BELTRAIDE, talks about how Belize is making a name for itself in the Nearshore.

By Michael Blankman

In my recent article, we concluded that the most important aspect of managing remotely is building a strong and trusting relationship. Creating a partnership that doesn’t rely solely on the contract for the outsourcer to get performance security. The partnership is critical because once operations are outsourced, real influence over daily management will and should be limited, or why outsource at all? The partnership needs to be based on respecting each other’s expertise, ensuring roles and responsibilities are clearly defined and that the underlying business model justifying the decision to outsource is protected.

Managing the ongoing performance (real time, daily, weekly, etc.) is the second most important area on which to focus. Performance management is conceptually aligned with the concept of trust, but verify.

Customer service expectations that are critical to the outsourcer can seem at odds with the operational efficiencies targeted by the vendor.

Recapping what we have covered to date:

• The toughest decision, which is to outsource has been made.
• A general observation is that businesses aren’t unique and that it is important to let go and to fit into their operating model.
• The outsourcer has created a small but influential and agile group of subject matter experts to be the primary interface with the vendor; the vendor has assigned dedicated account management.
• Depending on the size of the business, it is important to accept that the overall number of support and management staff dedicated to a program may be small.

Customer Satisfaction / Quality Management

The vendor and the outsourcer may have service and quality goals, which seem contradictory. Putting a process in place is the moment of truth between the supplier and the vendor. That is why it is critical during due diligence process that the vendor’s commitment to quality is understood that they are not providing lip service or view quality as a necessary evil. A vendor’s true commitment is easy to recognize by understanding what local processes they have in place and if they are followed consistently.

A good way to see if customer service and quality are truly integrated into the management process is to ask the staff their opinion and to find out from them what reward and recognition programs are in place. Everybody in every function, whether or not they are writing code or answering calls, wants an opportunity to be recognized. Integration and consistency, although seemingly obvious, are critical. It is interesting to see how many initiatives are the “flavor of the day” and dwindle in importance, replaced by new programs that also dwindle in importance. For example, consider when the last employee of the month was awarded.

Additionally, during contract negotiations change of control protection is critical. It is very easy for a change in ownership and management philosophy to alter customer service dynamics. This is as important as protecting the financial model contractually.

Qualitative versus Quantitative

Many of the relevant statistics will be relatively easy to track and done systematically.

In call centers, vendors will focus more on agent performance and outsourcers more on qualitative data that will enable them to understand the underlying reasons for a call and to apply that data to specific customers, where appropriate. In the call monitoring process, vendors will target a statistical sample by agent to quantify performance versus call type and client specific metrics favored by the outsourcer. Important also is the ability to disposition calls correctly. Vendors often bristle at free form wrap and want to rely on system driven algorithms to deliver MIS. Attention needs to be paid to the integrity of this process or the data derived will not be useful.

Call Monitoring: Call monitoring is the best process for both parties to really understand quality and make improvements. It is also labor intensive but can be done efficiently.

The Program

• Call monitoring has to be a dedicated function on both sides: don’t engage with a vendor unless it is already a part of their quality process.
• There needs to be agreement on what metrics are tracked during monitoring and the vendor should try to accommodate the outsourcer’s needs, especially where regulatory attention must be paid. Some expansion to the vendor’s current process will most likely have to take place.
• Whatever the final process looks like the outsourcer will always have to monitor additional calls. There are nuances to the businesses and clients that the vendor will never understand completely. To avoid undue bias and potential line of business conflicts, call monitoring at the vendor should reside as part of an independent quality group. This is not an attempt to create layers – the assumption is that the vendor already has this group in place for their own monitoring and other quality initiatives.

A multi-tiered process should be established. For example:

• Both quality teams should monitor calls together according to a formalized schedule for calibration purposes. Ultimately the vendor will monitor the majority of the calls therefore both sides need to be in synch.
• Calls need to be monitored separately as well with the results distributed and reviewed by all parties.
• Underlying clients, where possible, should be included in some of the monitoring sessions (relationship management should also be involved so the vendor hears the voice of the client).
• Utilization of third party remote monitoring organizations as an independent counterbalance should also be considered.
• An underutilized and sometimes poorly managed tool is mystery shopping. Mystery shopping is a tool to gage your own service and an opportunity to compare the metrics and best practices of your competitors. The outsourcer can accomplish mystery shopping internally by calling both competitors and the vendor or by hiring an independent firm.

Anytime multiple sites or vendors can be utilized, the ability to competitively benchmark and drive improvements is enhanced. To emphasize, quality and reward programs need to be consistent and tightly managed with tangible goals.

Michael Blankman, a global outsourcing senior advisor, can be reached at: michaelblankman@aol.com

By Robert L. Scheier

Service level agreements (SLAs) are the heart and soul of many outsourcing contracts. They define what the provider must deliver and their penalties for failure, in anything from application uptime to the time required to solve a customer’s problem on a help line.

But at least as currently defined, SLAs often fall short of detecting (and, more importantly, correcting) problems quickly. That was the message at the recent SIG Spring Summit from Senior Corporate Counsel Richard English of Ingram Micro and Shaalu Mehra of Sheppard Mullin Richter & Hampton, who helps the electronic distributor negotiate outsourcing deals.

SLAs fall down, said Mehra, because they don’t change with the customer’s requirements, aren’t defined precisely enough, and often aren’t structured to do a root-cause analysis of the root problem behind multiple failures.

“I love SLAs,” Mehra said in a session on “Best Practices for Ensuring Quality of Service in Multinational Outsourcing Engagements.” However, he continued, they are limited because they are just one “data point” measuring a provider’s performance.

While SLAs are the subject of intense negotiations at the start of engagement, he says, they may not be based on the right metrics to measure the effectiveness of the outsourced service for the customer. In addition, he said, SLAs “can be undermined by even minor changes” to the processes or systems they measure, and are often not updated often enough.

Another factor that limits their usefulness is “single incident limitation, (which makes) root cause analysis subject to an agreement of the parties,” said Mehra. Understanding and correcting the reasons for past failures can also be hindered by what English called a “statute of limitations” requested by vendors on how long a customer can ask for a service credit after a failure.

Both strongly suggested using a common approach to SLAs and other terms with all outsourcing providers, regardless of their location. “While that company may be India-based, and might be doing work for us in Asia, or might be doing work for us in Latin America…we don’t care,” said English. “We’re going to build in one global SLA.”

Two areas where the pair said specialized SLAs might make sense were to measure English language fluency and attrition. While Mehra agreed that “fluency” is subjective, he said it could be measured through a sampling of calls or surveys of whichever end users were being served.

Mehra said such SLAs often measure attrition on a rolling 12-month basis, and is an area where definitions (such as whether promotions, reductions in force or departures for personal reasons count as attrition) are often the cause of hard bargaining. “However reasonable the vendor’s concerns may sound, at some point, we have to draw a line” about where and how the customer will be protected from excessive turnover, he said.

In addition to SLAs, Mehra recommended regular payments based on the achievement of milestones, as well as periodic payments with provisions for holdbacks as a penalty to the provider for failures in delivery.

By Rosanne D’Ausilio PhD

Average turnover, reported at 40% to 50%, has always been, and continues to be, a chronically costly problem for call centers, a problem that seems to be tolerated rather than solved. Respondents to a FurstPerson survey reported an average monthly attrition rate of 7.18%. Annualized, a 40% annual turnover estimate becomes an actual turnover rate of 87%. As you read further, you’ll see what that costs!

Although 90% of corporate executives say that employees are the most important variable in their company’s success, a Towers Perrin survey reported that in practice they rank people-related issues far below other business priorities. Executives agreed improving employee performance would improve business results; 73% even said their most important investment was people. However, people-related issues, such as training and compensation, consistently ranked at the bottom of the list. It seems the mouth and the feet don’t always go in the same direction.

Training is Crucial

A profitable workforce requires well-trained, knowledgeable, conscientious, service-oriented employees who enjoy their responsibilities. Training is crucial. Recent studies in service industries link increased training to decreased employee turnover.

For example:

• Ryder Truck Rental discovered that among employees who participated in training programs, the turnover rate was 19%. For employees who did not participate, the rate soared to 41%.
• Guest Quarters Suite Hotels report their low turnover rate is one indication of employee satisfaction. Additionally, but not surprising, there is a positive correlation between training, employee satisfaction, and guest satisfaction.

Turnover is a Priority

At this time when nearly all businesses, are looking for ways to cut costs and save money, turnover should be a priority. Disruption of workforce stability should also be of concern to those who manage the customer care process.

FurstPerson reports the average cost of attrition at $5,466 per person. Interestingly, the cost of attrition in an internally managed contact center was reported at $7,994 per person, more than twice the cost of attrition at an outsourced center which was reported as $3,420 per person.

The disparity in cost is most likely related to the amount of time and money that is dedicated to training individuals in an internally managed contact center. And we’ve seen turnover in other reports as high as $8,500 per person +++

Following is a typical scenario with 100 people and a 30% turnover rate:

100 people

x30% turnover

30 (people are leaving annually)

x$7,500 average (conservative) cost of new hire

$225,000+ + + = Turnover cost

Note: The +++ represents the additional cost of the learning curve. For instance, when senior representatives, supervisors, and/or managers need to sit with or give time to new hires this obviously takes away from their productivity.

Also, you need to factor in consideration of the people having to take on the additional workload because of the short staffing, or because new hires are too ‘green’ to be on their own. Then there is the subsequent declining morale that goes along with these examples. All of this impacts productivity negatively, customer (internal and external) satisfaction, and employee satisfaction.

Can you see the easy justification for investing in a training initiative of say $60,000 that could reduce turnover for almost a 4:1 return on your investment? Sounds like a slam dunk to me.

Rosanne D’Auslio, Ph.D., President of Human Technologies Global, Inc. known as ‘the practical champion of the human,’ is an industrial psychologist, consultant, master trainer, bestselling author, executive coach and customer service expert.

By Robert L. Scheier

Hourly labor costs in the Latin American Nearshore are still slightly higher than in traditional low-cost leader India. But other factors such as faster time to market and simplified communications often still make the Nearshore the better choice, according to speakers at the Nearshore Nexus outsourcing conference in New York City last week.

As a result of wage inflation in India caused by strong demand for talent, the total cost of ownership (including costs such as travel to the outsourcer’s site) of using a Nearshore company are currently only about eight percent higher than those in India, said Esteban Herrera, COO and advisor, of outsourcing consultancy HfS Research. But “when you consider the intangibles, the advantages of Latin America will erase that in a short time, if they haven’t already,” he said.

The increased awareness of such benefits by customers has, he said, driven significantly more interest in the Nearshore over the last two years. Among the most popular countries which are close to price parity with India, he said, are Colombia, Argentina, Mexico and Costa Rica.

Look Beyond Rates

“If all you’re doing is looking at rates, for the most part, Latin American countries will not appear to be least expensive,” said Mark Peacock, CIO of Pegasus Solutions, a provider of ecommerce and transaction processing services to the hotel industry. “But when you really, truly think about TCO, and start thinking about the cost of complexity in your operation, and the cost to coordinate and reach out and train people, and deal with people, there is a kind of hidden cost to going fully offshore.”

With customers in both North America and Europe, it’s difficult enough for Pegasus employees to keep track of time zones without also factoring in the time difference to a service provider in India, said Peacock. Forcing workers to stay up late, or get up early, for phone calls with an Indian outsourcer for too long will eventually mean the loss of skilled talent, he says. “People will walk out the door if their lives are miserable.”

As a startup, the biggest challenge Noodle Education faces is “the need to pivot so quickly” as market needs change, said CTO Jason Rodriguez. Because it uses the agile development methodology to make rapid changes to its education-oriented search service, working with an Asian outsourcer is “very difficult to do in an efficient manner” while working with a Nearshore vendor “makes sure everyone is in sync, and we still get the benefits of the low cost.”

Challenges Remain

Despite such advantages, Nearshore geographies still face challenges in rising to the level of world-class providers. “It all comes down to the talent that is serving the customer,” said Alex Camino, VP marketing and communications of IT and business process outsourcer Softtek.

While Mexico boasts of graduating 90,000 potential outsourcing employees each year from college, “the challenge (is) bringing that talent to the next level, “ he says. especially in areas such as English fluency. “If you’re starting to teach English at the university level, you’re already late, he said, recommending English education begin in kindergarten.