Many companies are going though this challenging choice. With a dance partner your choice only lasts for the length of the song, when choosing an outsourcer it lasts much, much longer.
If you are lucky your partnership can last years and will be the right choice for you and your outsourcing partner. Marking the right choice in the beginning for the right reasons is critical to your long-term success and happiness.
Most companies are making this decision in order to reduce their costs, keep up with high quality standards and be profitable. Let’s take a look at your dance partner options and see if we can help you come up with a good match!
The domesticoOutsourcing partner or the in-house partner
Most of the news being presented about bringing your manufacturing or call center outsourcing operations back to the USA is difficult to understand, particularly when you are trying to figure out how it can benefit your business.
The general perception is that the cost of labor and corporate taxes are cost prohibitive in the US overall. That was true for many, many years but since the beginning of the economic downturn the US government has been doing everything in its power to provide incentives to companies to bring their outsourced work back to the USA.
For example, in January of 2012 President Obama announced that the US Treasury Department will continue providing special tax incentives to companies in order to keep jobs in the US. One of the incentives will be continuing the 2% payroll tax cut.
In 2011 the employee Social Security payroll tax rate was reduced from 6.2 percent to 4.2 percent this cut will extend thru 2012.
There are many other incentives to consider when hiring a US company, for instance: small and minority businesses that provide outsourcing services, and providers that have locations in chartered economically depressed locations. There are government incentives for these types of entities that equate to lower costs to their partners. Check out www.sba.gov to learn more about these companies.
Here are two main points of president Obama’s incentives:
- Extend 100-percent 1st year depreciation deduction for certain property: Part of the tax package is that in the additional first-year depreciation has increased to 100% for qualified property, the budget proposes to extend this incentive for companies to invest for an additional year. Extending 100% depreciation would give $58 billion USD in benefits in tax year 2012; this will be active at a time when tax relief is needed.
- Temporary 10% tax credit for new jobs and salary increases: It proposes to give a new income tax credit for employers who increase their wage. It would be no more than $5 million USD per employer, addressed to the 98% of firms that have a payroll below that threshold, for a maximum credit of $500,000 USD. The credit would be available for wage increases in 2012 and would provide $18 billion in benefits over the next 10 years, whether through job creation, increased wages, or both.
We already made a sketch on the dance floor for the domestic outsourcing panorama, but what about the partner next to this one, the “in-house” partner?
There are pros and cons of an in-house operation as well, for example from a positive perspective; the in-house operation is very flexible because you can set, arrange and rearrange things at will. You have full control over your floor, you decide how to staff your working hours to meet your goals. The cons are centered around maintaining and supporting your core business, while at the same time setting up and maintaining an entire call center operation. This may include adding additional facilities, buying and maintaining call center tools, heavily focusing on hiring, training and quality management. If your products are extremely technically advanced or your service requires highly qualified individuals, or is of a very sensitive nature then it may require a dedicated contact center managed by you. But even in the most unique examples, some form of oursourcing may be recomended. You may use your center to develop the knowledge base that can be used by your outsourcing partners, then your partners can answer the first calls and direct calls that require higher levels of service than they can provide.
The partner named offshore
Seems like everyone wants to dance with the “offshore” partner. And up until recently there was no way for any of the other partners to compete with cost benefits achieved from partners from places like India and the Philippines. India provides a very highly educated agent population, and Filipinos are superb at providing excellent customer care services. But there are challenges to dancing with partners that are so far away from where your customers are located. The biggest issues are related to language and cultural issues. This problem will be solved over the course of time, but as India gets more and more successful they also become more and more expensive. We are finding that we can find support services here in the USA and near shore that are coming close to the same costs as outsourcing to India and the Philippines and with no language or cultural issues. This is especially true when you consider all the costs associated with setting up support so far from home, like travel time and costs, as well as housing and maintenance for your managers in a foreign country.
The “Near Shore” Partner. The closer you get to the US border the better the understanding of bilateral culture becomes. US consumers feel very comfortable communicating if the person on the other side of the line understands American Culture, and communicates in clear English. This is particularly important when the subject matter of the calls is personal, like healthcare, Insurance and finances. The big deal here is how comfortable you are having a contract in place with an entity in a foreign country, particularly with one that doesn’t have any reciprocity with the USA. How do your customers feel about their personal information being passed around in a place where the privacy laws are non-existent.
Just like dance partners all centers are not created equal One of the prime reasons that Canada and Mexico have been so successful at developing outsourcing relationships with US companies is that they will up hold US laws. Another great option is to contract with a US company that has its facilities in another near shore country. This option will likely give you the best of both Worlds. Lower costs, up to 60% less than domestic US and full compliance with US laws. So you can maintain your privacy rules and give peace of mind to your customers.
One more thing to keep in mind as you go through the process of choosing your partner, always, always take the time to get to know who they really are by visiting their center. Anyone can show you pictures of a nice facility, and a fancy switch and data room. But believe it or not there are centers out there that are using “Magic Jack” ® orv similar apps to support their calls. Before I use any company that is going to support my customers and their data, I go out and look at their network and see how it measures up. If they don’t have an A or A+ move on and look at other partners. (I use DNSTUFF.COM to run the network tests; there are many tools out there that can help with this part of the interview.)