Buyer View: Prioritize Compensation Leveraging Incentives

In the ongoing debate between cost and quality in outsourcing, Brad Meiller doesn’t see a contradiction. He sees a messaging problem.

“There’s definitely a disconnected messaging there,” said Meiller, senior manager of North America consumer services at Spectrum Brands Inc., pointing to the industry’s tendency to sell quality while buyers still prioritize cost above all else.

As a buyer himself, he recommends that his peers ease up on initiatives that prioritize cost too heavily. Some of his most successful contracts resulted from lucrative compensation packages that prioritized excellence, he said.

The Problem With ‘Race to the Bottom’ Pricing

A growing number of BPO providers are pitching ultra-low rates tied to aggressive performance incentives. The model tries to promise alignment, but in practice, Meiller says it often creates volatility.

“I see a lot of different BPOs in the space right now, ‘We want to introduce these ultra-low rates, but with the performance incentive,’” he said. “I know that tactic. It’s getting the foot in the door.”

The issue isn’t incentives themselves — it’s unpredictability. Buyers need stable business cases, especially when presenting to finance teams.

“When you have to pitch that, your business case can’t have all these peaks and valleys,” Meiller said. “The finance team will chew you up and spit you out.”

Instead, he advocates for a more balanced model of setting market-rate pricing paired with structured incentives and penalties.

“Set a baseline metric. Put an OKR in, and then also there should be a stick or a discount element to it,” he said.

Where Performance Actually Comes From

For Meiller, the biggest mistake buyers make is focusing too much on vendor pricing — and not enough on agent compensation.

“The way to do it is to compensate the agents the best,” he said. “They’re going to be the true test of whether that relationship is going to be successful.”

He points to a high-performing Jamaica-based program as proof. Agents were heavily incentivized, with some earning up to $2,000 per month in commission.

What resulted was impressive. Attrition dropped to around 4%, performance targets were consistently met and the client had no interest in switching vendors.

“We had a really good run rate. Low attrition, low shrinkage, high performance,” he said.

But when the contract was later shifted toward aggressive penalties without matching incentives, the results reversed.

“You’re going to kill the contract,” Meiller recalled speaking out. “You are going to ruin this relationship.”

Attrition eventually surged above 25%.

Talent Shortage Reshaping the U.S. Market

Even as wages rise, companies are struggling to hire, specifically in U.S. markets.

“I think a lot of companies have made good adjustments to get them to that $21, $22 range,” Meiller said.

But even higher pay hasn’t solved the problem.

“They’re anywhere between $20 and $25 an hour, and they’re still not able to fill them with quality people.”

In one case, a hiring effort for 25 agents yielded only five who made it through training.

“We’ll just have to ramp up at the BPO,” Meiller said, describing the increasingly reactive approach many companies are forced into.

The result is a growing reliance on outsourcing — not just for cost savings, but for access to talent, Meiller said.

AI: Promise vs. Reality

While AI is often framed as a cost-cutting solution, Meiller says most companies are moving too fast and skipping foundational work.

“They’re running before they can walk,” he said. “They’re putting in these AI workflows and it’s referencing broken articles in their knowledge base.”

The result is often worse customer experiences, not better. In some cases, AI is even increasing the workload by creating rework and repeat contacts.

“Customers are having to reach out a second or third time,” he said.

The Next Five Years: Fewer Seats, Better Talent

Long term, Meiller expects AI to reshape the workforce but not eliminate it.

“I think wages up, number of seats down,” he said.

As routine interactions disappear, remaining roles will become more complex and require better-trained, higher-paid agents.

“You’re going to need a higher tier of an individual to handle those types of things. … People who know the technology can ramp up their career and make more money.”

A More Mature Outsourcing Model

Ultimately, Meiller believes the industry needs to move beyond simplistic cost narratives.

The most successful programs, he argues, are built on alignment — between buyer, vendor, and agent.

“You don’t want to kill the margin on the BPO,” he said. “You want them to make money — hire the right people.”