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GOOD PRACTICE GUIDELINES FOR THE ESTABLISHMENT OF CONTACT CENTRES

SECTION 4: OUTSOURCING YOUR CONTACT CENTRE ACTIVITY

Lists of contact centre members are available from bodies like the Call Centre Association (CCA), but knowing which organisations are in the market for outsourcing is not enough. It would be a serious mistake to underestimate the analysis, planning and internal organisational change required to maximise the success of the outsourcing relationship. Before deciding on whether outsourcing is an option you wish to pursue, you must consult your organisation's procurement department to get their advice on formal procurement procedures that apply to your organisation.

Why and what are you outsourcing?

When dealing with such an important decision as outsourcing, you must understand clearly why you have chosen to outsource, the benefits and the risks of doing so, the available options and the financial models and implications associated with the decision.

Research consistently reveals that the main reason for outsourcing contact centre activity is to focus on core competencies, reduce costs and improve quality and effectiveness.

It also shows that, where outsourcing did not work successfully it was because the client organisation outsourced for the wrong reason, for example they:

• failed to specify its requirements clearly, resulting in inappropriate implementation based on assumptions, not agreed facts;
• did not allow the service provider enough of a profit margin to enable it to provide an adequate service; or
• failed to give sufficiently skilled management of the service provider, leading to an irreparable emotional gulf between the two organisations.

In addition, many outsourcers expect too much too soon. The cost savings from any outsourcing contract are likely to be maximised over many years as processes and operations are refined and improved. A good working relationship, essential to optimise such savings, needs time to develop.

It is vital, therefore, that you:

• identify the parts of the business that are non-core and thus appropriate to be outsourced.
• establish robust reasons for outsourcing and demonstrate the business case for it in order to understand the fully loaded cost implications and return on investment.
• evaluate total outsourcing against other options for achieving your objectives.
• define meaningful measures of success and set realistic expectations of the outsourcing contract.
• commit the appropriate level of experienced resource to managing the outsource relationship.

There are a number of different outsourcing options from you can choose. The principal ones are as follows:

• Total outsourcing: responsibility for all processes, infrastructure and service is delegated to the outsource service provider.
• Selective outsourcing: component parts are outsourced to one or more suppliers, but you retain the elements that match your own competencies or that you prefer to keep in-house.
• Alliancing: you work with another organisation to support each other to your mutual benefit, for example to complement one another's activity peaks and troughs, though neither party expressly sets out to be a third party service provider.
• Co-sourcing: working with third party suppliers with a greater degree of partnership (for example where the client's customer management team is located at the outsource service provider's premises) through to more formal joint venturing.
• Hosting: you manage the operation and own the service responsibility, but the physical infrastructure (premises, workstations, IT, telephony hardware) is rented from the hosting organisation. Usually, you would be responsible for the systems integration and application software. Potentially, any or all of the other component parts (staff, training, etc.) can be provided by you, contracted via the hosting company or sourced separately.

Apply a disciplined methodology

Applying a methodology does not necessarily involve undue delay. Failure to use one often leads to 'more haste, less speed'. A procurement methodology provides a rigid process and framework for reference and comparison, thus eliminating subjective elements and ensuring that a decision is made on as objective a basis as possible.

Define the requirement:

The first and most important step is to develop a full Requirement Specification. This will enable you to understand key information collectively, so that there is a commonly agreed way forward and a reduced chance of a last minute change of brief from an internal source.

The Requirement Specification should address these issues:

• The business objectives and background to the outsourcing decision.
• Descriptions of the services and processes to be outsourced, with documented business processes and flows.
• Current activity sources, volumes, durations and patterns.
• Forecast activity levels and reasons: marketing plans, organisation growth forecasts, etc.
• Current service level and key performance indicator achievements.
• Systems requirements, management information, quality and reporting requirements.
• Timetable for the project, with milestone dates to be achieved.
• Key personnel and responsibilities.
• Costs, budgets and projected return on investment.

Once the requirement has been specified in detail, it is possible to identify the type of organisation most likely to meet your objectives in terms of experience, size, capabilities, location and management style.

Identify and qualify potential outsource service providers:

With the primary qualification criteria in mind, it is now time to draw up a list of potential outsourced service providers (OSPs). Key factors to be considered include the OSP's:

• experience in your area of business and with your type of contacts;
• size and capacity to handle your volume of work;
• management of its other clients' business;
• ethos and quality accreditations; and
• culture and whether it fits with your business.

You can gain this information by asking OSPs to complete a pre-qualification questionnaire or by visiting them personally with a strict agenda that enables you to obtain the information you want.

Enter your collected information and views into a spreadsheet to facilitate comparisons and, ideally, develop a scoring system to help you draw up a list of six or so companies which are to be invited to tender.

Before issuing the Invitation to Tender, it is always prudent to ask the organisations to sign a confidentiality agreement.

The Invitation to Tender:

Prepare the Invitation to Tender document, drawing the main elements from the Requirement Specification document. If you intend to have a high level of involvement in the ongoing management of the outsourced activity, you may wish to be very prescriptive in your requirements. Alternatively, you may look for a high degree of proactivity from your OSP and seek to be challenged with creative solutions. Whatever your approach, the Invitation to Tender should enable participants to:

• understand the requirement in sufficient detail to identify how they will be able to meet your requirement;
• propose their solution or demonstrate how they intend to meet your requirements; and
• cost their solution.

The Invitation to Tender should include directions on:

• how to respond: what to include and what to avoid;
• deadline for the response and format of the response; and
• how to obtain answers to questions about the tender.

Make the decision:

It is important to be as objective as possible. Though price is important, it is not the only measure by which you should choose an outsourcing partner if you are to avoid entering into a contract that is more likely to fail.

You should develop a scoring mechanism that matches the principal requirements laid out in your Invitation to Tender. This enables you to allocate scores against the criteria most important to your organisation. If some factors are more important than others, each item in the scoring model should be individually weighted to reflect its relevance and importance.

Having assessed the responses, you should arrange to visit the top three or four organisations to gain a complete understanding of their operations. Prepare very carefully for this meeting, ensuring you obtain satisfactory answers to all your key questions. Only then can you be sure that any of the organisations can provide a service in line with your requirements.

Contracting and negotiation:

The aim of both parties in any negotiations should be to achieve a 'win-win' situation. The OSP should not overcharge the client. Similarly, the client should not 'screw down' the OSP to a price that makes the OSP's business unsustainable. The ideal situation is where the OSP makes a profit margin that meets its corporate requirements but is reasonable enough not to be too onerous on the client.

All negotiations should be conducted in good faith and positions should be backed up by logical, non-emotional solid argument. It is much easier to agree on a point when both sides fully understand and respect each other's position.

Once the contract has been agreed, it should be filed away. As far as possible, business should then be conducted on a good-faith basis within the bounds of, but not strictly ruled by, the contract.

Managing the ongoing relationship:

Many outsourcing relationships fail because of bad management of the OSP by the client or failure by the OSP to deliver to agreed expectations. Both parties should view the relationship as constantly evolving and should behave accordingly. The client's or OSP's market dynamics may change and a good relationship will develop if each party is willing to adapt its business, within certain guidelines, to meet the other's evolving requirements.

As the client, you should view the OSP as a strategic partner. The OSP should prove its partnership credentials by adding value to the relationship: developing innovative solutions, reducing your unit costs, etc.

The customer is the lifeblood of any organisation and the outsourced contact centre is its public face. Every effort should therefore be made by both sides to ensure that customers have a positive experience whenever they contact the centre.

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