What do you get when you combine the cost advantages of outsourcing offshore services with the quality and control achieved from outsourcing onshore? "A Nearshore Experience”. The term first introduced by Softtek (a global provider of process driven IT solutions and global nearshore operator) in 1997, is defined simply as a form of outsourcing that refers to services delivered from a nearby location, very close in geographical proximity. Businesses willing to venture into such strategic partnerships do so with the mindset of gaining access to World Class Capabilities. However, the achievement of world class capabilities and competitive advantages in some instances isn’t met without challenges and concerns that operators (both vendors and clients) must seek to address before engaging in any form of exchange. These concerns include (but are not limited to):
- Infrastructural challenges
- Cultural differences
- Language ability
- Contractual constraints
- Possibility of reductions in service levels
The Nearshore model seeks to address and remedy these concerns as a strategic alternative to achieving business excellence through process outsourcing. Nearshoring primarily allows business consumers gains in the following three main areas:
- Proximity: close geographical locations
- Close cultural affinity
- Cost savings
While additional benefits of this type of engagement include:
- On par hourly rates with offshore labour
- Lower travel expenses
- Time-zone advantages
- Highly skilled & talented workforce
- Lower political risks
- Comparable IT skills & infrastructures
- Considerably lower attrition rates
Let’s take the experience a step further. Nearshore operators enjoy the added benefit of having a lower Total Cost of Engagement (TCE) than offshore operators. What is this? TCE evaluates the total expenditures of offshore engagements. It is easy for an offshore vendor to advertise or boast lowest costs and lowest hourly rates in comparison to onshore based vendors. But what about the additional costs they incur making them essentially more expensive than a nearshore choice? Hence, the term TCE was coined, highlighting the competitiveness of opting for a nearshore vendor.
Additional costs include:
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Engagement Managers: These managers are tasked with the responsibility of liaising with the outsourced vendor ensuring programs are run in alignment with the organization’s goals. This more than likely includes travel to the remote locations at least twice a year, or as the client sees fit given the program’s duration.
Team Leads: The bigger the contact center the more team leads are required. It is recommended that there be a team lead for every 6-10 center agents. These leads primarily connect directly with the client (Engagement Manager), where all reporting is done. This being the case, team leads need to be highly competent and proficient to ensure constant effective and relevant communication to the engagement managers. Not having the right employee fit in the role may result in time wastage, deviation from functional and operational goals and a slow-down in the decision-making processes. Thus it is expected that a team lead is hired at a higher pay grade than your agent seats.
Staff Turnover: The monetary costs as well as time cost invested to recruit and select a skilled competent workforce adds its weight to the concept of TCE. High staff turnovers usually seen in offshore operations increase the overall costs incurred by a company. When training is constantly repeated as a result of high attrition, it frustrates the productivity of a company when benefits to be gained from the learning curve effect cannot be fully realized.
Travel: Increases in global fuel prices, have caused travel to become an expensive luxury, especially to locations not within a close geographic proximity.
Where's the focus at for 2014?
Industry professionals report that one of the growing trends for 2014 is that increasingly more businesses currently outsourcing their customer contact operations will shift focus from cost savings to realizing higher quality in the delivery of customer service. Companies are now willing to pay more to have their process outsourcing services onshore or nearshore.
KPI Connect has recognized the industry’s need for the provision of world class capabilities and has thus aligned operations with this trend. We exist to provide world class support that seamlessly integrates with our clients, enabling growth through enhancement of the experience of their customers.
Author: Dexter R. Norville, Director Marketing (KPI Connect)