The Call Centre Grows Up

Shortly after Alexander Graham Bell invented the telephone in 1876, he offered to sell his device to telegraph giant Western Union. Western Union declined and wrote in an internal memo that, "This telephone has too many shortcomings to be seriously considered as a means of communication".

Western Union was wrong, of course, and companies soon saw the new contraption as an excellent way to communicate with customers. As early as the 1920s, phones started appearing on the desks of those whose primary duty was to deal with customers, setting the stage for the advertising cliche: "Our operators are standing by". Phone agents didn't really take off, however, until 1967, when in the US AT&T developed the toll-free 800 service that reversed charges from customers to the companies they were calling. Soon after, the US Federal Communications Commission ruled that equipment made by businesses other than the Bell System could be connected to the public telephone system. The decision opened the door for competing companies to develop technologies such as the modern PBX, IVR systems and automatic call distribution systems, which made it easier for businesses to handle large call volumes at a more reasonable cost.

As telecommunications technologies advanced, call centres boomed. Datamonitor estimated that in 1998 there were 69,500 call centres throughout the US alone. (There are around 3700 call centres in Australia, according to James Organ, the director of callcentres.net.) By the late 1990s, however, major corporations sought to cut customer service costs and began to investigate how to save money by moving call centres offshore.

In one of the earliest high-profile announcements, Dell said in July 2000 that it would open a call centre in Bangalore, India, and signed on with outsourcer Tata Infotech. Other companies in the United States and abroad followed suit, and the Indian call centre industry took off, followed by similar developments in the Philippines, Latin America and beyond.

Customer Dissatisfaction

Customers have been less enthusiastic about offshoring. Many complained that it was hard to communicate with foreign operators due to their accents, and that scripted answers left them frustrated.

A political backlash against offshoring ensued, one reason Dell announced in 2003 that it would bring technical support calls for business customers back to the US. Dell did follow through on the move. But in March it announced plans to double its Indian workforce to 20,000 over the next three years, a figure that likely includes some call centre workers.

Technology hasn't been a cure-all for customer satisfaction, either. The widespread use of technologies such as voice recognition software and IVRs also left some callers alienated and unhappy. A 2005 study by Opinion Research found just 35 percent of those surveyed said call centres fully met their expectations.

Despite customer grumbling, companies are not giving up on automation. In fact, the call centre of the future will likely be highly automated and globally dispersed. The offshore call centre industry is growing and companies continue adopting voice recognition, IVRs and other technologies to help them answer basic questions for less money. It's easy to see why: Transactions that cost $2 to $10 when handled by a human agent cost only 2 cents to 20 cents when automated, according to McKinsey & Company. Locally, close to 60 percent of call centres use IVR technology. Today, 79 percent of North American enterprises and at least 50 percent of European companies have IVRs, according to Forrester Research.

Forrester's report also notes that replacing traditional touch-tone IVRs with some speech recognition technologies provides greater flexibility for companies trying to encourage customer self-service. To avoid caller frustration, however, companies must also make human help available as needed. And despite complaints, the automated agent, or IVR, is catching on as callers get acclimated to such services, analysts say. In fact, according to McKinsey, more than 60 percent of customers favour an automated option for simple interactions.

To ensure good customer service, however, companies must focus not just on how fast the call is answered, but on what happens after it is answered. "If you're outsourcing and putting in new technologies just to lower costs, you can run into problems," says Elizabeth Herrell, VP in the telecom and networks research group at Forrester. "It's not the automation or the outsourcing that's the problem - it's the lack of time spent on the details."

She stresses there is no one-size-fits-all solution to meeting customer demands while saving money in call centre operations. The call centre of the future, she notes, won't follow a uniform model - some agents will answer calls in large contact facilities, while at-home agents will be hired as needed during busy periods to provide flexibility. Companies need to try different technologies and tactics while improving agent and supervisor training and tracking customer satisfaction with real-time surveys. "Customers will be unhappy when they can't get information or when a system doesn't understand them," Herrell says.