Voice technologies and highly trained agents could reverse outsourcing trend

FT.com site; May 04, 2005
By Rod Newing

A mix of voice technologies and highly trained agents in call centres could reverse the migration abroad, writes Rod Newing.

Working under pressure to achieve the often contradictory aims of reducing costs and improving service is the burden shouldered by most customer contact centres. The difficulty many organisations have in achieving these goals has driven the rapid growth of the offshore outsourcing of call centres, but moving operations overseas is just one solution.

In fact, call centre agents are only one channel of communication with customers, along with e-mail, web self service and voice portals that use speech automation technology.

"You have to get the correct channel balance between the different components," says Adam Klaber, global customer relationship management partner for IBM Business Consulting Services. "In a perfect world we would like to be able to speak immediately to a person, but similar service can be obtained with a much lower cost mix of channels."

IBM analysis puts the average cost of an agent at Dollars 6 a call, whereas speech automation can cost between 75 cents to Dollars 1.50. Similarly, Daniel Hong, voice business analyst at Datamonitor reports that offshore call centres can reduce transaction costs by between 25 and 35 per cent compared to domestic services, but that self-service speech-enabled technology can be 15 to 25 per cent cheaper again.

Chuck Berger, chief executive of Nuance, a speech technology provider, claims a Dollars 5 call with a US-based agent might cost one-tenth of that once automated.

While such savings might sound very attractive to the cost-conscious, Alexa Bona, research director at Gartner, warns that there are hidden costs when automating processes. "People don't realise that when you offer a self-service solution you often need to hire more expensive agents," she says. "They will be dealing with more complex problems that require judgment or more detailed technical capability to answer. You cannot take your existing agents with their existing skill sets and make them answer more complex inquiries for the same salary."

Ms Bona says that the key to achieving targeted savings lies in ensuring that automated processes are tailored to customers' needs, and can respond to a broad range of demands with suitable information. This can require a large up-front investment and must be followed by a constant updating process that reflects product and market changes. "You can potentially save 15 to 25 per cent by offshore outsourcing," she says, "but if you pick the right processes, you can save up to 40 per cent with speech recognition and get payback within a year. However, if you do an unprepared process you can pay 15 to 20 per cent more than using agents in your own country."

Speech automation can be critical for dealing with high volume, low transaction customers. For example, Littlewoods Bet Direct, a UK online betting site, takes 80 per cent of its calls in the five minutes before the start of an event.

It channels customers placing bets of Pounds 5 or under to NoQ, a service based upon a VeCommerce voice application, leaving agents to deal with its higher stake customers. Phil Morgan, the company's operations director, reports that this has cut the cost of a call from Pounds 1.50 when placed through a domestic outsourcing service to only 40 pence.

"Once people experience the speed and convenience of the system, they tend to choose it as their preferred channel, a bit like cash machines," he says. "It has solved the problem of making low stake gambling commercially viable and helped manage high peaks. It gives us the edge in being able to guarantee to all customers that we can take their last minute bets."

Recent research of managers responsible for call centre operations conducted by Intervoice, a voice technology provider, revealed that while 93 per cent of respondents believe that customers want to speak to a human being, 88 per cent believe customers will never be happy being held in a queue.But a majority regard voice automation in call centres as a better long-term solution to offshoring and three-quarters believe that voice technologies will replace many of the tasks performed in call centres.

Mr Klaber says that industries such as aviation and retail have reached self-service levels of 70 per cent, which spreads those costs very widely, while Mr Berger says that Nuance's most successful clients have achieved 90 per cent, but adds they have worked hard on marketing it as the new way to do business.

A survey by ScanSoft, a voice technology provider, showed that the cost of implementing its speech systems was between Dollars 0.5m to Dollars 5m while average annual savings were Dollars 1m and the average payback was nine-and-a-half months.

A further incentive for companies to invest in automated procedures is a potential decline in quality in the offshore market.

Mr Hong says that as the offshore call centre market matures, it moves to rural areas, where there will not be such high quality staff. "Companies that have offshore call centre operations can further reduce costs with speech," he says.

Paul Barnes, director of Fluency Voice, a provider of speech technologies, points out that every year offshoring gets more expensive, while speech technology gets better and cheaper. "They are still different channels and the best approach is often to blend them," he concludes.

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