Report Finds “Nearshore” Australian Contact Centres A Viable Alternative To OffshoreWednesday 10th March 2010 | 6:04 AM« Back to Listing
In fact, extensive cost analysis by Access Economics has found that the price gap between operating a contact centre in Tasmania versus offshore locations such as India and the Philippines is actually minimal. Despite common perceptions that Asia is much cheaper because of lower wage rates, once total operating expenses are factored in together with other risk factors the price gap is substantially reduced. The report (Nearshoring: Examining true value in customer contact networks), jointly commissioned by Excelior and Tasmania's Burnie City Council, has found that, for many call centre functions, nearshoring compares extremely favourably with offshoring when all the costs of outsourcing and managing a contact centre are considered. Indeed, the gap in upfront costs is considerably narrowed and even eliminated in some scenarios. "In addition, and perhaps even more importantly, there are common concerns that the pursuit of lower costs through offshoring has come at the expense of service quality," the Access Economics report found. "The perceived trade-off between cost and quality, for so long an enduring issue even in more mature industries, has now emerged as a key issue in the choice of contact centre location. "Quality differences between offshore and domestic locations represent real differences in the nature of the product that is provided," Access Economics said. "The impact of the service quality of a contact centre on its parent company (e.g. through customer loyalty or brand perception) will depend on the nature of that company's business, and there is no single location or type of contact centre that will be the best solution for all companies." Excelior Chief Executive, John Watkinson, said it was important for Australian companies to consider a "right-shoring" approach to their contact centre outsourcing. "Offshoring services to other countries has undoubted merit in certain situations, and in the right circumstances can be seen as sound business practice in a global economy. However, for many Australian companies, nearshoring in Tasmania will represent the right balance between price and service quality, with access to a highly educated and skilled workforce with lower staff turnover, cultural mirroring and the benefit of operating in the same time zone as key considerations." The Access Economics research has found that the advertised price of offshore contact centre services in India and the Phillipines generally hides a range of other indirect costs facing the outsourcing company. These include staff training and indirect cost considerations such as overseas call charges and higher rates for call escalation, international travel expenses, management fees and other incidental costs such as extended hotel accommodation costs if Australian managers are required to be on the ground for long periods. Lower staff retention rates in offshore centres also lead to greater training requirements, and Australian companies also face risks associated with offshoring to less stable socio-political environments. The costs of lower quality, where a minute of call time per seat in an offshore environment might not achieve as much, from the customer's perspective, as an equivalent minute in an Australian context, are also considered as an additional 'cost'. "The inclusion of these indirect, but nevertheless real, costs into the regional comparison serves to significantly reduce the cost advantage of offshoring," Access Economics said. "Profit maximisation does not always equal direct cost minimisation in contact centre activity, especially in the low volume/high value type of contact centre function. The case for nearshoring is most compelling for companies whose business is driven by service quality and the relationship they build with their client, where value-building is likely to be worth far more than cost-cutting. "The quality advantages will typically hold across most Australian locations and is used to largely distinguish between offshoring and both nearshoring and metropolitan based activities. The value proposition for a nearshoring location such as Burnie, Tasmania, over metropolitan based activity is largely a cost-based argument. "In summary, nearshoring offers the ability to achieve a similar quality service as the metropolitan areas, but without the same level of cost disadvantage and without the quality trade-off that can accompany offshoring," Access Economics said. Burnie City Council Mayor Alvwyn Boyd welcomed the findings of the Nearshore report and said they underscored the attractiveness and cost-effectiveness of the Burnie region as a business location. "The fact that the independent research by Access Economics has found Burnie to be highly cost-effective as a location for contact centre operations compared with both the mainland and even offshore locations is a fantastic endorsement for our region, and hopefully should lead to more businesses locating here," Mayor Boyd said.
For further information, please contact:
John Watkinson
Dr Daniel Terrill |
