Thomas Friedman's The World is Flat was one of a number of best-selling books published in

2005 that looked at globalization. One of the most significant trends in this new global economy
is outsourcing. In fact, call center outsourcing has contributed to the "giant sucking sound" as
upwards of 50,000 jobs per year move out of the United States and offshore. Regardless of
whether you view this trend as an opportunity or a threat, outsourcing is a movement that must
be on the radar of every major call center.
While the general concept of call center outsourcing may be well known, what is less understood
are the new options for outsourcing call center technology. Today, it's possible to host self-
service, ACD, CTI, CRM, or any combination of these, and the options for outsourcing,
insourcing and co-sourcing have become a "Chinese menu" with a significant degree of
flexibility for the call center manager. When compared to the cost and effort of maintaining and
upgrading on-premise equipment and applications, these options can be compelling.
Why the increase in call center technology outsourcing?
The idea of technology outsourcing is not exactly new. But new technologies -- namely
VoiceXML and VoIP -- have made technology outsourcing practical. VoiceXML, for example,
allows you to write a voice self-service application with reasonable confidence that it will work
on different platforms, whether hosted or in house. Voice over IP (VoIP) reduces the cost and
complexity of carrying calls between the cloud, the outsourcing vendor, your facilities and off-
shore locations.
Another driver for the rise in technology outsourcing is the increasing cost of keeping up with
the latest in contact center technology. As this series of articles highlights, there's more new
technology for contact centers than ever before. The cost and effort involved in upgrading your
existing technology, not to mention adopting new technology, is formidable. No matter how good
the savings or how fast the ROI, new technology always requires more work to implement than
you expect -- a proposition that makes technology outsourcing attractive.
Over the last two years, call center hosting has more than tripled in revenue, and the next five
years promise a continued explosion. More and more outsourcing providers are jumping into the
outsourced call center technology market. These providers come from five different "heritages:"
• Traditional "butts-in-seats" outsourcers who are broadening their offerings;
• Telcos and carriers who are adding technology outsourcing as a value-add;
• System integrators who are now providing hosted services;
• Vendors of IVR, ACD and/or CRM who are now offering software as a service; and
• "Pure-play" companies who are focused only on IVR and/or ACD hosting.
Regardless of who provides these services, the model is the same -- the provider will take much
of the capital cost and operational headaches off your hands, in exchange for an ongoing contract
for their services. The variety of ways these services can work is significant -- nearly every part
of the technology can be owned, located and operated by the outsourcer, the client or jointly by
the outsourcer and the client. But this is certainly not an "all or nothing" approach. Many
organizations are choosing to outsource only specific technologies or services.
Examples of this would be a hosted IVR solution or an outsourced contact center for seasonal
volume peaks. Contractually, the market is still deciding which models will work. We can expect
an ongoing evolution of new service options and some challenging lessons in how to coordinate
the efforts of in-house staff and facilities with these new outsourced offerings.
What about the loss of control?
With any outsourcing arrangement, you have less control than you would if everything were
housed within your organization and run by your employees. In fact, the loss of control is one of
the most frequently cited reasons not to outsource, and, coupled with the flexibility of being able
to change things and make them exactly how you want them, is certainly a compelling argument
to keep technology and skills in-house.
For most contact centers, however, the biggest risk with "loss of control" isn't actually in the
functionality of the service. Many outsourcers can provide as much flexibility as your own staff.
In addition, the overhead and extra delay involved in making changes can actually be a good
thing. Take a look at an area you are changing frequently -- routing, reporting, recorded
announcements, whatever. Are you making changes in this area because you need to, or because
you can? Frequent changes and creeping complexity can be detrimental; take this into account
when discussing change management with your outsourcing vendor.
The larger risk of "loss of control" actually has to do with service quality, such as service
performance, uptime, correctness, etc. You are dependent upon your outsourcer to manage this
well. Many times, an outsourcer can provide superior service on these counts. The trouble
happens when they can't, or don't.
The value and risk of outsourcing
Clearly, having specialists provide the highly technical services promised by technology
outsourcing can offer an enterprise real cost savings. The ability of call centers to gain access to
the newest technology without overcoming a great learning curve is just as powerful. The speech
self-service technology described in the last column of this series (Speech Self Service: A New
Technology Trend for the Call Center) is one such an example. It is possible to outsource the
design, implementation, operations and management of these applications entirely.
But, it is important to be cautious. Along with the benefits of technology outsourcing comes a
loss of control -- and these are technologies upon which your customers' interactions with your
organization may rest entirely. As you consider options for outsourcing, insourcing and co-
sourcing (see the Glossary at the end of this article), think about these "top 10 gotchas" that we
saw over the last year.
1. Latency matters. Applications built and tested at an enterprise and then shipped as
VXML to a hosting service rarely run with the same performance. For example, a recent
test of the same application, local versus hosted, showed almost one second of additional
latency and substantially less capacity per platform in the hosted configuration.
2. SLA monitoring. Most outsourcers provide reporting as part of their services so that you
can tell how well things are running. But this may be a case of the fox watching the hen
house. In addition to reviewing the outsourcer's own information, you should require a
way to check performance against an SLA.
3. The form of the SLA. Understanding what matters to your customer and how it relates
to the service level that you receive from your outsourcer can be challenging, and
negotiating an SLA can be even more complicated. As a result, many existing SLAs are
very weak. It may be more important to have a strong relationship with your outsourcer
than it is to have a strong contract, but operating without a meaningful SLA and regular
 measurements can lead to problems. Consider this: would you work without a meaningful
SLA if you were outsourcing your staff? So why would you work without an SLA when
you outsource your technology?
4. Carriers in the middle. Phone calls in hosted scenarios often traverse three or four
networks, from the caller to the hosted IVR to the agent, both in house and off-shore. A
failure or issue in any of these links can cause quality problems in the calls. And when
things start to go wrong, a "finger-pointing" party often ensues. It's critical to understand
all the links in the chain and to be sure that each party in the process has a view of the
whole picture. Most providers want to deliver great end-to-end service, but they often
only control a piece of the puzzle.
5. Start-up troubles. Starting a new service is complicated, and you rarely know how well
everything will work together until the service is actually running. At this point, it is
much harder to create a "lab" to do a performance evaluation, and it is more important to
undertake effective testing across specific windows that are agreed upon with the
providers. There is no substitute for system testing and too many deployments have
suffered from "infant" mortality.
6. Back-end system performance. The most common latency issues and system failures in
self-service are not in the telecom equipment itself; they're in the IT systems behind the
equipment: the data base, corporate intranet, application servers, etc. These may be
outsourced at a completely different facility with a different outsourcer than the one
hosting your self service and ACD, for example. Understanding this performance
relationship is key to delivering a good customer experience.
7. Failover mechanisms. One of the great advantages of hosting call center technology is
that business continuity is built in. Proper disaster planning, however, requires
collaboration between the enterprise and the outsourcer and is not something you can
ignore. Too often, failover mechanisms don't work properly and the coordination of
multiple outsourcers in an emergency can be horrendous.
8. Start of day. Machines are supposed to work the same way all the time, but we've all
experienced issues that are based upon the time of day. The most common of these are
start-of-shift issues as new grammars are cached or moved from one machine to another.
Some callers can hear very long delays of up to 30 seconds when this occurs, and it's not
something you can identify without testing this scenario in advance.
9. Security. You have worked hard to negotiate outsourcing that promises to keep your
customer and company data secure. It's not possible to avoid this sensitive information
traversing the outsourcer's facility; in some cases, clients have made special arrangements
to ensure that it's not stored anywhere. But security is a dynamic, never-ending battle. It's
not uncommon to discover security vulnerabilities in services that have been running for
more than a year. Typically, these have crept in over time, so it's important to inspect the
call flows, information flows, and data security measures in place on a regular basis.
10. Changes. Your routing and self-service configurations change much more frequently than
you might think, and change management involves clean communication and
coordination with outsourcing providers. Most providers have a great system for this, but
you should be sure that this is the case when you make your selection.
These issues can make the concept of technology outsourcing intimidating, but in fact, call center
technology outsourcing can be a very viable option for most call centers. For it to succeed,
however, you should be aware of these pitfalls and bring them up in your discussions with your
service provider. An intriguing model is one in which the outsourcer and the enterprise keep
parallel systems, with the outsourcer handling high-load or routing transactions, just as you
might do for highly skilled or less skilled agents. This might seem like double the work, but it
will keep you aware of how these systems are working.
What's next for technology outsourcing?
Three years from now, "virtual" will be a given and the majority of call centers will have several
elements of their operations housed outside their own walls. This trend is clear today and makes
the concept of technology outsourcing one to watch and to plan for.