By Peter Lyle DeHaan, PhD
Since you are reading this column, it is highly likely that in some way or manner, you are in the call center industry. However, the question, “Are you in or out?” does not query your connection to the industry, but rather your participation within it. Those who operate call centers, classify their activity in two ways. The first is if they handle inbound traffic or outbound traffic; the second is whether they are an in-house or outsource operation. Therefore, “Are you in or out?” is two questions, each with two answers, for four possible outcomes:
1) An in-house call center, doing inbound work
2) An in-house call center, doing outbound work
3) An outsource call center, doing inbound work
4) An outsource call center, doing outbound work
Inbound or Outbound? Inbound or outbound refers to the direction of calls. That is, whether the center makes calls (outbound) or receives calls (inbound). For an outsider – or even an uninformed insider – this would seem to be a small distinction. “What’s the big difference?” They ask. “Both involve agents, use phones, and are supported by technology. If you are doing one, the other should not be a problem.” Not so fast. The differences are as profound as night and day.
Inbound: Since inbound call centers answer calls, agents are in a reactive mode. That is, they wait for the phone to ring (or for the next call to drop from the cue) and then they react to it. Inbound call centers are equipped with ACDs (Automatic Call Distributors) to efficiently send calls to the “next available agent.” Inbound operations are staffed more hours of the day than their outbound counterparts, with most operating 24×7. Agents are scheduled to work in anticipation of projected call volume based on historical data and marketing initiatives.
Outbound: For the outbound call center, agents must be proactive; that is, they need to take initiative. The successful outbound agent has a different personality than the ideal inbound agent. Even if the nature of their outbound work is not specifically in sales, they still need a sales mentality. They need to engage the called party, lead them towards a stated objective, and deal well with rejection – some of which may be personally directed. Outbound call centers rely on predictive dialers to place calls. Outbound centers have reduced hours of operation, limited by law and the demands of specific campaigns. Here agents are scheduled as needed to complete a requisite number of calls within a certain window of time.
There has been much talk about the avalanche of recent legislation to regulate (that is, limit) outbound calling, historically called telemarketing. There is a wide degree of differing opinions on how this has affected the outbound call center industry. At one extreme, the doomsayers assert that the industry has been decimated, sending millions into unemployment and leaving outbound calling as an insignificant fraction of the overall call center industry. The opportunists proclaim that this legislation has forced marginal players out of the industry, or at least pushed them to inbound work, and made outbound calling easier. This is because the 70 million or so who signed up for the Do Not Call (DNC) list weren’t buying anyway. Those remaining, who can still be called, have a higher propensity to buy. Yes, jobs have been lost and centers closed, but much of that, they assert, would have happened regardless of this legislation.
Blended: Not to be overlooked, the concept of blended call centers (those doing both inbound and outbound work) has been pursued, although with varying degrees of success. Blending can occur at different levels. The first is within a call center, where some agents are answering calls while others are placing calls.
The second level of blending occurs with agents who are proficient at both calling disciplines; they can be scheduled for either activity as needed. Most agents cannot successfully make this transition from one day to the next, but for those who can, the variety is greatly appreciated.
The third level of blending occurs from call to call. If an unexpected rush of incoming calls occurs, the outbound reps are automatically removed from the agent pool of the predictive dialer and placed into the agent pool for the ACD. This continues until the rush is over, when the process reverses. Conversely, if it is a slow day for incoming calls, these agents can be automatically switched to the outbound campaign. While this type of efficiency excites upper management, it often works better on paper than in reality because reps who can successfully do this type of on-the-fly mental adjustment are rare.
In-house or Outsource? While the concepts of inbound and outbound are generally understood, the terms in-house and outsource elicit some confusion. An in-house call center is one where the work done is performed for the company itself – that is, internally – and is generally secondary to the main function of the company and the products or services they produce. Conversely, an outsource call center is in business to provide call center services to other companies. Phone work is all they do; it’s their business.
In-house: There are arguably 50 to 100,000 call centers in the United States. The range is so great, because the definition of a call center varies. Of these, roughly 90 percent are in-house call centers.
Outsource: Outsource call centers, though a minority, are increasing in number and importance. This trend is due to more and more companies looking to outsourcing as a way to increase service levels or options, return to their core competencies, save money, or all three.
At outsource call centers, processing calls is all they do. Therefore, they must do it well and cost-effectively if they are to remain viable. They also enjoy an economy-of-scale that is not feasible for the in-house operation. As such, their margins allow the client to save money and the outsource call center to make money.
Unarguably, the outsource call center industry can trace its beginnings to the post-World War I era, when enterprising telephone answering services begin popping up around the country. Even though the label would follow decades later, these entrepreneurs were, in fact, the first outsource call centers. The modern era of outsource call centers began in the 1980s, when the introduction of toll-free numbers made it cost-effectively realistic to centralize call centers. Still, it wasn’t until the last few years that the outsourcing label was applied.
Outsource call centers are very similar in design and function to their in-house counterparts. There are, however, a few important distinctions. First, while an in-house call center can be viewed as either a cost-center or a profit-center, the outsource call center must be a profit-center and is often the only source of revenue for the company. Second, the outsource call center must continually search for and find new clients to serve. Therefore, it has an external sales and marketing aspect that is not needed at in-house call centers. Lastly, in-house call centers service their company’s customers, whereas at the outsource call center it is generally their clients’ customers who are served. Therefore the agents at an outsource call center are working for their client’s, but work with their clients’ customers or prospects.
Outsource is Not Synonymous with Offshore: A recent trend has been moving call center activity to other countries which boast stable technological infrastructures and offer qualified workers who possess lower wage expectations. This is typically referred to as offshore outsourcing and is too often incorrectly shortened to outsourcing. This is incorrect shorthand, as the majority of U.S. call center outsourcing is, and will continue to be, to U.S.-based call centers. Offshore outsourcing, which is getting all the attention, is a small minority of the total call center outsource picture. Although offshore outsourcing will continue to occur and increase, it will be some time before it becomes the majority of all call center outsourcing.
Where Does Connections Magazine Fit In? At Connections, our focus is on outsource call centers. Our articles are written with outsource call centers in mind. That does not mean that we are not a great magazine for in-house call centers. In fact, more and more in-house call centers are receiving Connections then ever before; new subscriptions occur daily! As long as our in-house friends keep the caller/client distinction in mind, Connections’ articles apply as appropriately to them as they do to the outsourcing center.
Also, the content of most articles is applicable to both the inbound and the outbound operation, though occasionally content will specifically address one segment or the other.
The bottom line is, whether you are inbound or outbound, in-house or outsource, Connections Magazine is for you!
[From Connection Magazine – November 2004]
Peter Lyle DeHaan, PhD, is the publisher and editor-in-chief of Connections Magazine, covering the call center teleservices industry.