Denis Creighton, European Chief Executive Officer of Conduit, one of Europe’s largest outsourcing contact centre business, explains why outsourcing certain functions such as customer service can be a fail-safe method by which to meet increases in demand, enabling growth and recovery without financial commitments, which have caused so much pain over the past two years.

The latest CBI report “The Shape of Business, the Next Ten Years”, suggest that business behaviors following the recession will change significantly. Preventative measures will be put in place and a stop will be put to the money hemorrhage that blighted the economy. It predicts the landscape will be defined by smaller in house teams and more flexible working arrangements made feasible by technological advancements. The report claims that firms will have a smaller ‘sore’ workforce and a larger ‘flexi force’, which may not necessarily be a permanent fixture on the payroll but will play an integral role in the business during the periods of significantly increased demand – which is expected now the recession is over.

As firms start to tentatively experience the first signs of economic recovery, facilities managers and chief executive officers face decisions about how to increase productivity, while keeping long-term financial commitments to a minimum. In light of the CBI’s comments, many may be considering flexible working arrangements, remote working or outsourcing as a solution.

The global recession had a major impact on most business sectors across the UK, and resulted in drastic downsizing and even complete collapse fir many firms which simply did not have the financial resources or flexible support systems to weather the economic storm. Many chief executive officers, chief financial officers and facilities managers have had to face the tough decisions to further cut back on resources including buildings, personnel and capital equipment.

A recent Warwick Business School study has suggested that senior decision makers should spend more time considering and evaluating the impact that outsourcing has on their business as they do not currently allocate sufficient time to this facility. Their research also identified that in addition to short-term cost cutting, the qualitative value of the relationships built within these outsourced functions is largely ignored. Outsourcing can play a central role in ramping up and ramping down activity while at the same time keeping control of resource allocation and managing risk, and I a strong, communicative relationship is built with the outsourcer, this also adds significant flexibility and stakeholder value.

Internal contact centre functions have been hit particularly hard by cuts due to the recession as they are very resource heavy, require a skilled staff base, space and resource provision including IT and training. Outsourcing these functions can significantly reduce these resource requirements, cutting out a whole range of expensive and time-consuming procurement for necessities including property, rates, recruitment and training. In other words – complete flexibility in managing your business.

Businesses in recovery or looking to recover from a financial hit will understandably require accurate analysis and evidence before making long term financial commitments.

To outsource or not to outsource?

Outsourcing on a project by project basis would allow facilities managers the flexibility to test the services and returns from their chosen provider on a short-term basis. This approach offers them the opportunity to make a strategic evaluation of both the quantitative and qualitative business impact, and communicate this to the financial decision makers of the firm.

In a climate of financial cautiousness, where all expenditures are examined in minute details, proposing a solution that not only reduces direct costs but also has the ability to improve business efficiency and performance can only be greeted with enthusiasm. The initial short-term nature of outsourced contracts acts as an impetus to performance, allowing clients to demand exceptional results and higher call turnover.

Ironically, for many businesses the contact centre is the only point of direct contact with clients and customers, and reluctantly, its effectiveness can make or break these crucial and extremely valuable relationships. Relationships which have become even more precious at a time when many businesses have lost clients due to financial constraints. Therefore before outsourcing any business function, it is imperative to find a partner that understands your company’s ethos. Ensuring that the procured outsourcer has the correct cultural fit with the products and services they are handling, as well as a proven track record in the sector, is a must if the relationship is to be any more successful.

An outsourced provider with good credentials will be able to provide strong references and testimonials from a number of sector-relevant clients, as well as direct access and introduction to the team that will be handling the account and your customers. The flexibility provided by these outsourced functions will also help provide financial peace of mind, as the procured contracts can be monitored for cost-effectiveness and assessed for their added value internally at regular intervals, using qualitative feedback provided by the outsourced company relating to service levels, percentage of calls answered, sales performance, customer satisfaction scores and first call resolution figures.

In my experience of managing major contracts for household names, the proof of the pudding really is in the eating. Clients will always and quite rightly focus on results and fit with outsourcing their contact centre functions or element of contact needs. The right teak and culture can result in performance uplift for the client, something that is naturally central to any spending decision.

For example, recent work Conduit has undertaken for Vodafone and SKY saw performance targets repeatedly beaten, and the account grow from costs centre for them to a profit centre. Bearing in mind the irreparable nature of the performance relationship with a client, choosing the right outsourcer to handle this is vital. The wrong outsourcer could potentially cost you two resources no business can afford to waste: time and money.

Effective Mobilization

The right outsourcer will not only bring efficiency and skill to the operation but will also be flexible and reactive. Should the need arise to ramp up or down activity due to fluctuating demands of the business, change can be implemented quickly and without the dilemma of having to let staff off the books or close down buildings. Likewise mobilizations of the operation will happen quickly and effectively, and the right team will be knowledgeable, well versed and suitably experienced.

Outsourcing functions can also help drive up business performance through competition. Vodafone, for example, has implemented a system know as ‘Champion Challenger’, which involves outsourcing customer contact centre’s to several suppliers and pitching them against each other to constantly improve the performance benchmark. Jack Welch, high profile business expert and chief executive officer of General Electric for over 20 years, also heavily endorsed this approach. The outsourcer that performs at the highest standard acquires a larger share of contracted work and repeat contracts.

As the recession drives the standards of surviving businesses up, procurement using competitive systems such as this affirms that it is a buyer’s market, much to the disdain of the firms trying to protect their bottom line.

It is also impossible to underestimate the positive impact of outsourcing business functions to specialists who focus entirely on that discipline. Their specialist knowledge and experience will drive up customer service levels as will they competitive nature of the outsourcing industry, which will lead them to strive constantly to improve performance and service levels in order to surpass their competitors. It is simply a case of survival of the fittest.

Clients who run fast-paced, change oriented, technology-led, customer centric businesses including many of our clients such as Vodafone and SKY understand the added value that the flexibility, expertise, responsiveness and shared culture provided by a quality outsourcer can have on their operation.

Building flexibility into your cost base through outsourcing means that if the bad times hit again, then ramping down by scaling down contracts is more favorable than the impact to the business of redundancies, closed facilities and left over capital equipment.

And if business remains strong, then an experienced team can become part of your business overnight, which in turn will increase customer satisfaction and drive up profits, which can be passed onto the customer’s respectively. Now that’s a business strategy that should please the shareholders and the board.