When Senate Democrats introduced a bill last month that would discourage companies from moving customer service operations overseas, it resurfaced the long-debated issue of the merits of outsourcing.
The legislation, which is currently in committee, could withhold federal grants from companies that relocate operations overseas, among other penalties.
It’s unlikely that the bill will pass in the near future, according to Elena Lopez, senior legislative specialist at Communications Workers of America, a communications and media labor union. Either way, keeping customer service at home has its advantages, she said.
"I think the benefit is that you can say we are an American company that uses call centers here,” Lopez said. “Our workers know what's going on, can better help you and they're more available.”
Yet, CX leaders are under pressure to deliver results on limited budgets, and call center outsourcing is an attractive way to cut costs, despite customer service quality and data collection risks.
When money is on the line, cost savings trump many other concerns, according to Max Ball, principal industry analyst at Forrester. Call center operations in general suffered from budget cuts in 2023, bringing offshoring conversations to the forefront.
"The truth is when the economy goes down, contact centers get their budgets cut,” Ball said. “So, to the extent the economy has been going down, they're going to be doing more offshoring because it's cheaper.”
Pros and cons of offshoring customer service
It’s hard to measure the quality of customer service solely based on where a call center is located.
The biggest global call center providers offer agents on par with those employed by U.S. companies and give them access to modern technology, according to Cantor.
“The truth is, there's not a guarantee that the actual customer experience delivered by outside agents is worse,” Cantor said. “I can tell you, as someone who's toured contact centers in other regions, they've had a lot of awesome technology and valuable training for a long time.”
It’s easier to have 24/7 coverage with global operations, according to Ball. Workers in other time zones can pick up shifts that would be difficult to staff in the U.S.
However, local call centers can hold an advantage in understanding the finer details behind a query, particularly for service-oriented businesses like wireless network providers and utility companies.
An agent in a regional call center is more likely to be aware of up-to-the-minute information regarding major disruptions, which can help them sympathize with a caller’s plight, according to Lopez.
“Having someone like in the area that knows what's going on is an advantage,” Lopez said. “They can tell you there's a power outage because a truck hit like a power line, or there's a bad winter storm going on in Minnesota, so it's affecting our internet coverage.”
Security isn’t the only data consideration
Data security and analysis can be complicated for call centers, and outsourcing even some of the work can add further wrinkles.
Some consumers and lawmakers are concerned that countries with cheaper labor also have weaker data protection laws, according to Lopez. Personal data can be at greater risk when companies and their employees have less incentive to protect it.
However, major offshoring companies do business globally, use the latest security technology, and have every incentive to keep data safe, according to Cantor. There are some minor risks due to data crossing more hands, but many concerns are “superficial.”
Outsourcing can still have a negative impact on data best practices even if it’s handled safely, according to Ball. The problem isn’t that bad actors will access sensitive information — it’s that splitting data between companies makes it harder to track.
“Typically, companies don't have all their agents outsourced. It's a percent,” Ball said. “So having some people on your internal systems, with your hardware and software, and other people on an external system makes it really tricky to control everything.”
Generative AI will change the face of support
Generative AI is poised to change the nature of offshoring as much as every other part of the customer service industry. If automation takes on a larger share of customer service inquiries, the cost saving from outsourcing could become diminished.
Many companies route the most complex calls to in-house teams; those calls will remain beyond generative AI’s capabilities, according to Ball. But for simpler cases, not even the least expensive human labor can compete with the price tag on automation.
The burden will fall on outside call centers to provide a certain level of automation alongside the talent necessary for an appreciable share of complex inquiries, Ball said. Certain tiers of calls require certain levels of service, and the best offshoring companies will be able to handle them all.
“Their story can’t be ‘I'll get you a bunch of bodies real cheap,’” Ball said. “Their story needs to be, ‘I'm going to take care of all of your needs.’”
