Industry Commentary

Reshoring Contact Center Services – Time for a Reality Check

By October 3, 2018July 25th, 2023No Comments

It is true that fads come and go with time.  Whether it be lava lamps or parachute pants, consumers fall prey to various flavors of the month in order to keep up with the Joneses.  Businesses are not immune to this impulse, either.  And in today’s front-office BPO environment, the pressure to reshore customer experience management from the offshore and nearshore, is intense.  However, the practicality of such an initiative is dubious, at best, and has the resilience of a pet rock.  Labor availability and cost pressures are among the concerns that providers will face with any large-scale reshoring program, and it can lead to an erosion of service quality. Navigating the current trend in popular opinion will not be straightforward, but combating the reshoring craze through realistic and balanced delivery platforms is an important start.

Today’s popular thought embraces the concept of moving contact center roles back into domestic confines from overseas locations.  Political climates have been infused with nativist feelings in the past, but it seems even more intense in 2018.  With pressure emanating from legislators at all levels, companies that operate their own contact centers, or that work with third-party providers, have been looking for ways to move work back from abroad.

This reshoring trend was quantified in the 2018 Ryan Strategic Advisory Front Office Omnibus Survey, in which three-in-five respondents across major demand markets that do work abroad indicated that they were planning to reshore at least some of their workstations.  This is the first time that a majority of enterprises surveyed indicated such a strong preference. This begs sober-minded discussion, and in some cases the preference is simply misguided.

The most obvious problem with reshoring is scalability.  Whether in North America, Western Europe or Australia, most major economies have record low levels of unemployment. Labor is scarce, especially that which is considered skilled.  This is causing significant pulls on the target agent profile, which is being lured by other verticals, including retail, travel & tourism and technology, among others.  The result is higher domestic wage requirements to attract and keep quality agents. For many in-house operations, especially those that are already facing squeezed customer experience budgets, this is just not viable.  Nor is it viable to work with an outsourcer that is suddenly faced with hiking its prices for clients because it has moved third-party work back onshore.  In cases where large scale reshoring occurs, both captive and outsourced contact centers will be forced to recruit domestic labor that accepts cheaper wages, but this approach may result in agents who are not experienced or motivated enough to ensure consumer loyalty in their voice and digital interactions.

The key in this discussion is realizing that in any contact center strategy there is room for some degree of work to be considered for domestic delivery, while also recognizing that some functions are better suited to being handled in the nearshore or offshore.  The right blend will depend greatly, but not exclusively, on the enterprise in question, the vertical in which it operates, and the channels which it uses to handle consumer interactions.  Having the option of servicing end-users from different locations beyond the onshore will provide greater flexibility in labor availability, and it will help control costs for enterprises and their BPO partners.  An onshore-or-bust strategy is unlikely to be viable over the long term.