July 31, 2001, 12:00 AM

Outsourcing basic CRM functions offshore can save significant costs

High-volume customer contact centers could trim budgets by 30% in labor costs, report finds.

Companies generating a high volume of traffic at their customer service centers should consider outsourcing basic customer support functions, including those that are web-enabled, to offshore centers to reduce labor costs, says a new report by Jupiter Media Metrix. Companies supporting large contact centers (200 seats or more) could save as much as $4 million annually by outsourcing to customer contact centers in India, Canada, Ireland or Northern Europe, estimates Jupiter analyst David Daniels, trimming perhaps 30% off the cost of handling all CRM contacts in-house, principally due to lower labor costs. Labor costs have been estimated elsewhere as representing about two-thirds of the cost of running a customer contact center.

“Labor costs account for most of a customer service contact center`s budget and high staff turnover rates are causing typical companies to spend over $500,000 a year hiring and training employees,” says Daniels. However, he warns, only basic phone, chat and e-mail CRM functions should be outsourced abroad initially while ex-U.S. providers gain more experience. Outsource providers also need to be accountable for their performance by attaining agreed-on metrics. Jupiter suggests that for outsourced providers, phone and chat abandonment rates should be no more than 3% to 5%; e-mail response times should be no longer than 6 hours and 80% of all calls should be answered within 20 seconds.

“Outsourcing will be highly advantageous for businesses that handle large volumes of customer service inquiries,” says Daniels. “However, companies must also retain valuable and difficult customer inquiries for in-house subject matter experts.”


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