Contact centre outsourcing to offer a new generation of cost savings

New white paper outlines new contracting models that reduce fixed asset costs and link price to performance
 
A new white paper published by specialist customer lifecycle management business Transcom urges buyers of outsourced customer management services to link remuneration to performance in outsourcing contracts and recommends newly emerging ‘leveraged deals’ with the potential to deliver a new generation of cost savings.
 
In ‘Winning on Two Fronts:  How outsourcing can build value and reduce costs’ Transcom claims that leveraged deals, in which the outsourcing service provider (OSP) takes over the client’s fixed assets and people then operates them on their behalf, are now gaining ground.  They are particularly attractive, the company says, for organisations that, in this slow period of post recession recovery, seek to reduce their fixed asset cost burden. 
 
Transcom, which has completed several such deals in the past three years in North America, continental Europe and the UK, says it has been able, not only to alleviate fixed asset costs for their clients, but to provide them with a much needed cash injection by buying their contact centre infrastructures from them at the going market rate.  These savings have been added to those more traditionally expected from outsourcing, which are achieved through ongoing operational efficiency improvements.
 
In one such deal Transcom  says it was able to deliver a saving of 50% within the first eight months of the contract with the expectation of a further 15% saving over the next two years.  The company took over three of its client’s existing contact centre operations and TUPE’d almost 800 of its staff to its own employment.
 
“In leveraged deals the OSP takes over, not just customer management operations undertaken in-house, but the staff responsible for them, the premises in which they’re housed and the infrastructure on which they depend,” says Martin Kochman, Global Strategy Director for Transcom. 

“The first benefit comes in terms of the fair market value paid for the fixed assets.  The second from the alleviation of long term asset management cost and the third from the OSP’s commitment not just to ‘take over’ but to ‘transform’ the adopted operation, delivering a long term programme of operating cost reduction.” he adds
 
Peter Ryan, Lead Analyst for BPO and contact centre outsourcing with the international research firm, Ovum, confirms Transcom’s view:    “Leveraged deals offer real business benefits to clients as well as growth opportunities to the OSPs that offer them.  They can also win the support of employees because they offer reasonable chances for ongoing employment.” 

However, Ryan cautions that, though leveraged deals can be extremely advantageous, they remain rare, since they depend on a client and OSP finding sufficient mutual motivation in terms of shared objectives and complementary business strategies.  “Clients have to be able to identify outsourcers that have an appetite for risk, a mature approach to contacting and a willingness to take on buildings and people that they can use as a foundation stone for their own growth.” 
 
Transcom’s white paper also urges buyers of OSP services to reconsider the standard metrics on which traditional outsourcing contracts are based.  “Standard productivity criteria, such as ‘calls per hour’ or ‘schedule adherence’, ignore the issues that matter most; the quality of contact centre interactions and the business outcomes they generate in terms of increased sales, improved customer satisfaction and enhanced revenues,” says Kochman.  “Productivity measures must be balanced by customer outcome measures and OSP remuneration linked to their achievement.”