Private investment firm Comvest Partners acquires the financially troubled e-retailer, which filed for Chapter 11 bankruptcy protection in March.
India was once renowned for the star sapphires it produced-a claim that gave a name to several ships, countless Indian restaurants, and some of the finest Bombay Gin ever to be mixed in a martini. But today, it’s another Indian export that’s creating buzz, at least in IT circles. As the increase in web shopping cranks up the demand for customer service, Indian call centers are pitching themselves to U.S.-based customer call centers looking to staff the overflow. In the U.S. web economy, a labor pool of English-speaking, technologically facile agents willing to work at perhaps 50% less than their U.S. counterparts is a resource as sought-after as any gemstone. And-aided by transoceanic data lines-web-enabled American call centers are beginning to scoop it up.
While it’s too early to call outsourcing to India a trend for the customer service vendors that support e-retailers, recent activity at e-care suppliers and outsourcing companies here and in India shows moves in that direction. And though India provides customer support mostly for technology-focused products so far, some industry watchers see writing on the wall for a fuller role in e-retail in the future. For when it’s midnight in New York, it’s 10:30 a.m. in New Delhi, and customer service providers can work the time difference to provide 24/7 support in a follow-the-sun strategy.
“If one customer contact center goes to sleep in New York, you can go overseas and keep people working on the problem all night,” says Cormac Foster, an analyst with Jupiter Communications. “Then you can contact the customer as soon as you solve it. That kind of thing, essential for tech support, is probably not as essential now for most customer service questions if you’re an e-retailer-but if that capacity already exists, there are a lot of people who would want to take advantage of it.”
XtraSource, an international supplier of customer service support, has been deluged during the past six months with solicitations from Indian customer service providers seeking partnerships and service contracts, says President Thomas C. Tyler. To test the waters, Tyler’s Kent, Ohio-based company in July subcontracted with an Indian company to handle email customer queries for an XtraSource client, a computer and software manufacturer that sells direct online to consumers and commercial users.
Canton, Mass.-based Stream International, another global supplier of customer care services to support IT and technology products, will this fall roll out a joint venture with a call center company in Mumbai (formerly Bombay), India. The joint venture, called Stream Tracmail, will provide email and live chat customer relationship management support for companies selling high-tech consumer products.
Contrary to earlier assumptions that web-based sales would create a self-service environment that would reduce the demand for call center services, they’re increasing it, asserts Brad Cleveland, president of the Incoming Calls Management Institute, an Annapolis, Md.-based call center consulting firm. “Some say that telephone traffic for customer service is flat, and web traffic is growing dramatically,” he says. “The fact is, both are growing. The Internet is creating a larger-than-ever need for customer interaction.”
Just like the real world
Retailers already know that customers don’t want to walk into an empty store and swipe a card when they leave; they want human help. It stands to reason, say consultants, that the same need exists for customer support on the Internet. And as opportunity grows with increasing demand, queries to Cleveland’s firm from India-based call center companies, entrepreneurs who want to start call centers in India, and venture capital firms that want to invest in them have grown threefold to fivefold in the past year.
Much of the web-based customer contact business outsourced by U.S. companies to India so far has supported online financial services and technology-focused goods such as computers. GE Capital, for example, employs 1,000 people in its call center in Gurgaon near New Delhi.
However, call center experts like Cleveland believe successful tactics in one industry sector soon spread to other sectors. In that scenario, more of e-retail becomes a candidate for offshore outsourcing of customer support, and Weehawken, N.J.-based multi-cataloger Hanover Direct has that day in its sights. The company has been working with a 100-seat New Delhi-area customer call center to support its home fashions brands since last year. Though so far limited to supporting 800-line phone calls for its catalogs, the catalog brands also have fast-growing web sites.
Customer contact center Senior Vice President Cathy Teixeira says Hanover Direct is negotiating with both its existing Indian partner and a second Indian call center company to expand coverage. The expanded relationship will likely include support for customer email and live chat; which the company hopes to roll out beyond its own brands as a third-party offering to e-retailers next year. Hanover Direct recently formed a joint venture, Desius, with RK Software of India to provide English-speaking tech support and the technology platform to support expanded customer service.
With several U.S.-based web-enabled customer support vendors offering a closer alternative, far-off India may seem an exotic choice at first glance for American companies seeking to outsource service for American customers. A closer look at what’s happening in web marketing, though, makes the economics clear. For as the volume of mass-market commercial email swells¯from 3 billion in 1999 to 268 billion in 2005, according to forecasts by Jupiter Communications¯ so does the need for individual responses to customer emails.
“Some companies I know are fielding 500 emails a day, but they’re incredibly complex and they’re having trouble handling the load,” says Foster. “Others are responding to as many as 4,000 a day.”
In addition to a rising tide of email, the growth of live chat and, eventually, voice transactions over the Internet are expected to further increase the need for e-customer support. The upshot is that customer service agents, especially those capable of handling complex customer interactions on the Internet, will be in increasing demand-and able to command higher fees.