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With the upswing in offshore call centers and business processing, HR has a key role in determining where centers are located.
Look at any daily newspaper in India and you’ll see reflections of a country whose economy is looking toward the future while its culture clings to traditions of the past. In the “help wanted” section you’ll see column after column of ads for call center workers. Turn the page to another section and you’ll find ads in which people are searching for appropriate marriage partners for eligible Indian singles.
Like those Indians in search of partners, forward-looking U.S. companies that run call centers also are looking for matches made in heaven. They’re searching for offshore operating locations that offer the right combination of lower costs, a skilled workforce, a sturdy yet flexible communications infrastructure, a stable political environment, government incentives and a favorable position on the global time zone map.
By now, the recent Forrester Research advisory on the offshore migration of U.S. service sector jobs has hit the radar screen for businesses and workers: According to Forrester, an information technology (IT) forecaster based in Cambridge, Mass., 3.3 million service industry jobs and $136 billion annually in wages will move offshore by 2015. And the flow is already under way, from IT services, to business process outsourcing (BPO) such as HR services, to call centers.
How does HR fit into the puzzle? Although the decision to send work offshore is driven initially by cost, the where and how of such a decision must be driven by people issues. Among them: the availability of a labor pool with the right skill sets to meet your business needs; the type of training needed to supply skills or knowledge that the offshore workforce may lack; tapping the right offshore HR team to provide expertise on compensation and benefits as well as on legal and cultural matters; and ensuring your company’s values are represented and implemented in your offshore location.
“An HR director needs to be very proactive,” says Peg Brenn, vice president of HR at Omaha, Neb.-based Sitel Corp., which operates multiple call centers around the world serving blue-chip clients. “The key is being part of the business process.”
Adds Kathleen Flanagan, senior vice president for global outsourcing solutions at eFunds, an electronic transactions processing firm in Scottsdale, Ariz.: “HR is a function that really has to bridge both cultures in your organization.”
Location, Location, Location
HR’s involvement in offshore call center operations begins right away. From the moment the company floats the idea of “offshoring,” HR needs to step in to offer its expertise. The first question is where to locate.
India is the success story of the moment; industry leaders are reporting high customer satisfaction with offshore operations there. The country’s urban centers have large numbers of bright, English-speaking university graduates competing for jobs in call centers. Despite high infrastructure expenses and employee benefit packages that include transportation to and from work, meals, and sometimes financial assistance for advanced degrees, the cost of running a call center in India is roughly half that of operating one in the United States. In a recent study by Chicago-based global management consulting firm A.T. Kearney, India ranked as the most competitive country for locating an offshore business processing operation when factoring cost, environment and labor.
But costs in India are not remaining static; inflation is kicking in. “In fact, we expect our costs to go up close to 10 percent in India this year,” says Karen Bowman, president of Convergys’ Employee Care, an HR outsourcing firm based in Jacksonville, Fla.
And India is not the only location being scouted by U.S. companies. Canada, Ireland and the United Kingdom already are popular locations because of language skills, cultural compatibility and tax incentives. In addition, the Philippines is picking up steam as a desired call center location for companies such as Delta Air Lines and America Online. South Africa is generating significant buzz because of its large English-speaking population and favorable dollar-to-rand exchange rate. Central America is home to Columbia House and Procter & Gamble for call center and shared services work. And Eastern Europe, notably the Czech Republic and Hungary, has begun to attract interest because it has well-educated populations with considerable language skills, both in English and in a variety of European languages. And the U.S. military’s exodus from Panama several years ago left that country with a bilingual workforce attuned to the American work culture.
“Clearly, all these locations have a shelf life,” says an industry source who asked not to be identified. “Right now, people are looking at the Philippines and Malaysia. Probably in 10 years’ time, it will be China’s turn.”
Regardless of close cultural or language links, keep in mind that local culture and laws dictate employees’ compensation, benefits and even work schedules. In some countries, for example, night shifts are taboo. In India, employers typically provide meals and transportation between home and work. And Indian customs that would make U.S. workers envious if they knew about them are the anniversary bonus—awarded to a worker on his or her wedding anniversary to buy the spouse a gift—and the dating allowance provided to a company’s unmarried employees. “That [practice] would never occur to us,” Flanagan says.
National holidays are the most obvious dates around which to plot a work schedule, but then there are the occasions of great local significance, which are not as obvious to outsiders. Take athletic events. In India, absenteeism would soar around the time of cricket final matches if workplace accommodations weren’t made, such as placing a TV in the call center. “In Brazil, you have to plan for people to work extra hours around the time of the [soccer] World Cup,” because many people won’t want to work during any Brazil matches, says Randy Harris, president of Sitel’s Offshore Services Group.
A country’s cultural norms can sometimes determine where a certain process should or should not be located. Call center operatives in Mumbai, India, for instance, handle early customer delinquency issues effectively for Risk Management Alternatives, a debt collection, accounts receivable management and call center service provider based in Duluth, Ga. But given the general dislike of confrontation among residents in the region, “if we were talking really true delinquency, it might be an issue,” says Rich Plachta, the company’s senior vice president for operations.
Customers’ needs, too, must be kept in mind when deciding which process should go to which offshore locations. “Someone is going to be more tolerant of an accent when they are getting help for a technical problem than when they’re being asked to buy a magazine subscription,” says Jon Anton, director of benchmark research at Purdue University’s Center for Customer-Driven Quality in West Lafayette, Ind.
Training needs for an offshore operation usually fall into two general categories: a company’s specific business practices and processes, and cultural understanding and accent neutralization. Watching American movies and TV shows and learning the nuances of American idioms are the most publicized aspects of call center worker training, but some centers take such training farther by teaching offshore workers to understand, if not necessarily to adopt, specific American accents so that they can specialize in serving individual regions of the country.
Training in a company’s processes can be done by sending the offshore team to the company’s headquarters or by sending trainers to the call center’s location, says Ramkumar Akella, European manager of Progeon, the call center and BPO subsidiary of Bangalor, India-based software company Infosys. Training at headquarters is generally the more expensive option, Akella says, but training costs are part of the deal that is ultimately negotiated between vendor and client.
Attrition remains a concern for the industry; high turnover is universal. One Indian call center reports turnover percentages in the high 20s; others are not willing to discuss even general figures. But efforts are under way to help ambitious workers turn their call center experience into careers. An extreme success story is Sitel’s Javier Fernandez-Combarro, who joined the company 12 years ago as a part-time customer service provider while he was studying law. Today, Fernandez-Combarro is senior vice president of HR for the company’s operations in Spain, Portugal and Latin America.
“Javier’s success is something we want to duplicate over and over,” says Brenn. Sitel is now developing an initiative to create a pool of top-performing customer service agents to promote into higher-level jobs as they become available.
(For more information on HR issues, see “HR Factors”.)
Future Offshore Business Models
Over time, country locations will change in desirability, and political issues are never static. HR must be prepared to adapt to the changes that come with an overseas operation.
India and other countries could see demand for call center workers outstrip their supply, and they will have to rethink the current employee profile.
The typical Indian call center worker today is a college graduate in his or her early 20s, “very smart, very hip. They just see it as a transient point in their own life and career. They think it’s all good fun,” says Pratik Kumar, vice president of corporate HR at Bangalor-based Wipro Ltd., which owns call center and BPO operator Wipro Spectramind.
“Their friends come together there, they get good pocket money, they still live with their parents, and many of them are not in need of money either. They work for the sheer fun of it. There’s a certain amount of glamour attached to it. I guess it’s just the sheer sense of independence.”
The HR question Kumar asks is “What should we be doing differently?”
He sees several options. The first is to expand into India’s smaller cities to enlarge the pool of available labor.
The second is to rethink the existing profile. “You may have to look at a little more senior set of people—more stable, seeking a career” to earn a living instead of pocket money.
A third option will require the industry to evaluate its technological requirements. Kumar continues: “We’ll have to look at India’s very smart women, who, for some reason, are not able to continue their professional career. So they are at home, right? How can we tap that pool of people? Can we provide connectivity? Can we actually create a model of where they can be sitting in their homes, work for about four hours, five hours, and tap into that pool of people? We will have to focus much more on our internal training capability and transform these people for these jobs. I clearly see that happening.”
Workforce profiles may change, the appeal of some locations is likely to ebb and flow, and the call center/BPO industries themselves will continue to develop in new and unexpected ways, thanks to technology, customer demand and cost.
But two things are certain: Workstations can be set up anywhere in the world, and HR issues of offshore outsourcing are here to stay.
But two things are certain: Workstations can be set up anywhere in the world, and HR issues of offshore outsourcing are here to stay.
DeeDee Doke is a freelance business writer based in Cambridge, England, and is a former editor of Global HR magazine.
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