The offshore boom

The idea behind the outsourcing of call centers is simple. Because customers already are accustomed to dealing with CSRs in a remote location, why not move those representatives to places where personnel and facilities are inexpensive?

Granted, those offshore workers have to be able to speak English, and their countries must have the necessary communications and IT infrastructure to support the servicing of callers from other countries. But if they do, CEOs and CFOs reasoned, then there is no reason to not move contact centers offshore.

So, many of them did.

"Outsourcing was driven by two market conditions," McDonagh said. "The first was the need to reduce contact-center and customer-service cost structure. The second was the corporate sentiment that contact-center work was non-strategic and not core to business growth."

The move to offshore outsourcing began in earnest in 2000, "when countries such as India, Vietnam, the Philippines and others experienced tech booms and acquired both the communications infrastructure and middle management talent to offer outsourcing services," he said.

However, it was Canada that initially became home to many U.S. call centers, according to Beverly McIntosh, president of McIntosh & Associates, a contact-center consulting firm in Lewis, Texas.

"That was when the Canadian dollar was only 67 cents against the American dollar, making Canada a logical site to move to," McIntosh said. "But, as the Canadian dollar began to rise and cheaper offshore alternatives became available in India and the Philippines, U.S firms elected to migrate significant workload from Canada to overseas locations."

By moving contact centers offshore, companies dramatically reduced their costs per call, lowered headcounts, reduced physical-plant expenses, and gained the ability to scale their contact centers quickly.

Of course, this sometimes came with a price. Companies that use offshore contact centers operated by third parties often have trouble ensuring a consistent branded customer experience; they encounter difficulties in managing and training agents who often are located on the other side of the planet; and often are unable to provide service that is reflective of company culture, McDonagh said.

Nevertheless, with advocates of offshore contact centers promising savings up to 50% compared to U.S.-based facilities, many CEOs and CFOs were willing to risk their companies' reputations to save a boatload of cash — especially executives leading publicly traded companies with profit-minded shareholders.