For call centers, offshoring is a double-edged sword
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How it all started
When most people think of call centers, they imagine football-field-sized rooms packed with customer service reps (CSRs) sitting side-by-side at computer/telephone workstations in the Philippines, India, or some other non-U.S. location.
There is a lot of truth to this stereotype, given the rise of these English-speaking countries as offshore contact-center hubs. But this is only one stage of a complex evolution that began decades ago.
The history of contact centers goes back to the 1920s and switchboard operators, who initially were employed by large financial services firms and insurance companies, according to Taylor.
"These operators tended to handle large volumes of local calls, as long distance was too expensive," he said. "The companies would open smaller branch offices in other markets where they operated, or would install 'tie' lines to connect to the major center office."
That was for inbound calls. For outbound calls, companies hired at-home workers spread across the U.S., to deal with people in their local calling areas.
"These people received lists of local numbers to call from their corporate employers, brought to them by messengers," Taylor said. "They would sit at their kitchen tables and work the phones, filling out forms by hand. These forms would then be picked up by the messengers, who would drop off more names, and return the completed forms to headquarters."
This wasn't a great system. Moving information back and forth was extremely time-consuming, inefficient and costly. In addition, supervising home workers in the pre-Internet Age was a nightmare for managers. Still, it was the best contact system that was possible at the time, and corporations made do.
When long-distance telephone rates began declining in the 1970s, it became economical for corporations to bring their contact centers in-house. By doing so, managers were able to speed up their customer-response times, improve employee management and cut costs.
At about the same time, consolidated contact centers became popular with companies that spent a lot of time interacting with their customers. Then and now, this includes sectors such as financial services, insurance, consumer electronics, health care, and travel and hospitality, according to Belfiore.
By the 1980s, information technology began to make its way into the business world. Specialized applications designed for contact centers began to appear that let enterprises further reduce costs while boosting productivity. Eventually, this technology would lead to the introduction of automated voice-answering systems, which forced callers to interact with computers rather than people. Again, the emphasis was on saving money, rather than improving service.
As the 20th century came to its close, contact centers had become an expensive part of American corporate life — one that many CEOs and CFOs perceived as eating away at the bottom line.
Fortunately for these executives, the IT and IP eras had arrived. With very inexpensive long-distance rates and sophisticated contact-center technology — now integrated digitally with companies' enterprise management systems — it now became possible to move costly contact centers to cheaper facilities in the suburbs. The next logical step was to move the centers to even cheaper locations in small-town America — and then out of the country entirely.