Contact center services are among the most mature from a global delivery viewpoint. Many companies offshore a variety of contact center services – especially voice — to a number of offshore locations.
In a recent study, we assessed low-cost locations for offshore contact center services, and identified 37 countries which are currently being leveraged. Surprisingly, 18 of the 37 countries are from the Latin America and Caribbean and provide capabilities to support offshore voice services across English and Spanish languages. Selecting the appropriate location is unquestionably a non-trivial challenge.
Selecting the Right Location
When seeking to select the optimal location for offshore contact center services, specifically voice services, three key issues need to be addressed in addition to evaluating costs.
1. What languages need to be supported?
2. What scale of support is required and at what fluency?
3. What services need to be supported (e.g., customer service, telesales, collections)?
Language needs are an obvious influencer of the location choice. Most buyers are now aware that the availability of language skill-sets varies significantly across geographies, and even within different cities in a country. However, most buyers tend to ignore two critical determinants – scale and fluency levels required.
Countries and cities within a country have varying ability to support scale and fluency. For example, ramping up to a 500 FTE scale for high-fluency English language operations in San Jose (Costa Rica) or Panama City is less challenging than achieving a similar scale in Guadalajara (Mexico). The stronger concentrations of English language talent in these two cities, relative to Guadalajara, make them more attractive especially if seeking to attract talent from existing delivery centers.
The key determinant is the employability of the labor pool at the appropriate fluency level. While graduate pool statistics are commonly viewed as sufficient, in most locations in Latin America, only 5-12 percent of graduates have appropriate language fluency and other skills to make them suitable for employment in global delivery centers.
However, if the threshold of English fluency required is lower, Guadalajara may be more attractive. It has a larger overall talent pool and at a lower fluency requirement, the size of the addressable talent pool becomes larger than San Jose or Panama City. Further, as illustrated in the following section, the answer may also change based on the type of sub-functions under consideration.
A Tale of Four Sub-functions
Cultural nuances and attitudes impact the suitability of the location for different sub-functions within the contact center area. We looked at four sub-functions within the contact center space – Inbound Telesales, Outbound Telesales, Customer Service and Collections – and the maturity of different locations varies across these sub-functions.
For Spanish language services, Mexico and Argentina are the most mature for Customer Service and Collections, while Argentina and Colombia are more mature than Mexico for Inbound and Outbound Telesales.
For bi-lingual services combining English and Spanish support, Mexico is the most evolved with the largest number and scale for service providers. Within Customer Service, for example, Argentina, Chile, Colombia, Costa Rica, Mexico all have 3,000+ FTE supporting Spanish language services, but only Argentina, Costa Rica and Mexico have similar scaled presence for English language skills.
While demand for Customer Services being higher than other sub-functions influences the scale view, the availability of language skill-sets and cultural attitudes have a strong impact on the success of a specific function being delivered from a location. A customer-centric cultural attitude is more suited for resolving customer issues, while a more aggressive cultural attitude lends itself better to more success in Collections and Telesales.
Beyond the Obvious
In our work with clients looking to identify the appropriate service delivery location, we have identified three areas that are commonly overlooked and which are important to develop an accurate view of location capabilities:
1. Define fluency based on a standard framework: The Common European Framework of Reference for Languages provides a robust baseline on which to base such a definition. It defines multiple levels of skills which provides a relevant and simple framework upon which requirements can be described
2. Evaluate skill availability for the appropriate fluency levels: The key determinant is the employability of the labor pool at the appropriate fluency level. While graduate pool statistics are commonly viewed as sufficient, in most locations in Latin America, only 5-12 percent of graduates have appropriate language fluency and other skills to make them suitable for employment in global delivery centers. In other words, out of 45,000-50,000 university graduates in Guadalajara, only ~5,000 graduates will be employable.
3. Determine the extent of current absorption in the industry: Understanding the extent to which the target pool with the right skill-sets is already employed is critical. In other words, if a city provides an employable graduate pool of 5,000, but all of these graduates are already employed with service providers and captives, recruiting the right skills will come at a higher cost as compared to a city where only 50% of the target pool is already absorbed. In addition to changing the relative attractiveness of cities, this assessment also informs the entry-strategy i.e., go-to-market with a view to poach talent from others or go-to-market with a view to drive university recruiting via partnerships.
A comprehensive view of locations comprises cost, availability and scalability of skills, and the risk profile of the location. When setting up a captive delivery center, this view informs the entry strategy for the location, helps develop an accurate perspective of scale that can be attained, and helps to develop an accurate cost baseline.
When entering the market with a third-party provider, this view provides a perspective on competition in the labor market and the consequent risk of losing individuals on the account team. It also helps to anticipate potential future spikes in attrition and inflation, thereby helping smoothen the distribution of services across different delivery locations.
Anand Ramesh is Research Director for Global Sourcing at Everest Group and a member of the 2010 Nearshore Americas Power Rankings.