pros and cons of call center outsourcing

Is It Time to Break Up with Your Contact Center?


Everything you wanted to know but were afraid to ask about how to end a call center contract, BPO SLAs, breach of contract, termination and more

The contact center has become a vital organ for many organizations.

Having control over customer experience means that what happens there impacts everything—Net Promoter Scores / reviews, sales, revenues, even the very ability of the company to compete! But not every contact center is up to the task.

Did you know that between 40-to-50 percent of customers say they stopped doing business with a company because of poor customer service? And that more than 25 percent say their biggest frustration was lack of effectiveness from the customer service rep that was helping them?

Call center outsourcing agreement, BPO SLAs, breach of contract, termination and more

Gut check time.  You need to ask yourself just how good your BPO and/or contact center really is. And, you need to figure out your numbers and see if they are actually helping or hurting your sales (and your business).  

We explain everything you wanted to know but were afraid to ask about how to end a call center outsourcing agreement, BPO SLAs, breach of contract, termination and more.

What is the meaning of SLA in BPO or a call center?

When you signed your call center contract with your current provider, you likely had specific parameters around performance (usually called Service Level Agreements or SLAs). Those parameters and expectations might not have been met, or might have changed as the industry is changing. Many SLAs in BPO call center contracts focus on productivity performance rather than qualitative performance—response times versus customer satisfaction. But since customer experience is the most important measure of success, productivity metrics don’t suffice. Your net promoter score is more important than keeping call times down.

If your contact center is simply underperforming according to your agreed-upon metrics, you probably have a solution built into the contract. For example, one study of a large outsource vendor serving Fortune 500 companies showed financial incentives and penalties that could be used as control levers. If the company is not performing as expected, pay drops. The idea is to incentivize performance. But if such incentives fail, getting a price cut on customer service won’t help protect your relationships or your revenues.

Note that the first line of response is always to see if there’s a way to remedy the problems. If so, great. But since the problems might be systemic to the contact center vendor—language barriers, employee turnover, lagging technology—this might not prove sufficient.

Most companies have built in parameters for terminating the contract. A contract between Priceline and its call center, for example, stated that “PRICELINE may terminate this Agreement without penalty if CALLTECH fails to meet any of its performance obligations hereunder or otherwise commits a breach of any term or provision of this Agreement and fails to cure the same within thirty (30) days after written notice from PRICELINE.”

Terminating the contract, breaking up with the contact center before the end of your agreement, is an extreme measure and may incur penalties. These are likely spelled out in your contract.

Is your contact center keeping up with their call center agent agreement?

Some offshore contact centers are rockstars. They uphold their SLA and use the latest technology and implement great staffing policies. But what if yours isn’t? Here are some issues to consider when thinking about breaking up with your contact center.

1) You don’t hear from them on a consistent basis

Whether this is because of the time difference, different expectations about how much communication is enough, or any other issue, the contact center and/or call center is the line of communication between you and your customers. It needs to be accessible and clear, when you need it to be.

2) There are too many escalations of calls and emails

There are a lot of reasons for call escalation. One is that the contact center doesn’t empower employees to take care of issues when they come in. That might mean not allowing them to give refunds, change orders, or solve other customer problems. Another is simply poor training of agents who don’t have the knowledge, or the knowledge repositories (your company’s FAQs etc.) to solve problems.

In either case, it means more work for your team.

But there are more insidious reasons. A study in Harvard Business Review showed that some companies force escalations for things like cash refunds because of the increased level of hassle for the customer, resulting in a reduced number of cash refunds being sought. That’s good for short-term cash outlays, bad for customer relationships. Even worse, the study pointed out an institutional bias against women, African Americans and Latinos that led to people in these groups needing to escalate.

Calls, chats, and emails must escalate sometimes, but if it’s too much, it’s bad for business.

3) Response times don’t match expectations

When you signed a contract/SLA with your outsource provider, you probably had specific metrics for response times. Are they being met? This is key to your customer success. Nearly 40 percent of customers said they would wait an hour or less after not getting a response from one channel before trying another. Another 40 percent said they’d wait a day.

People’s attitude toward response times seems to be connected to the channel they’re using. People don’t seem to mind waiting half a day for responses to email and online forms but they expect an answer to a social media query within two hours and only a few seconds for chat and messaging.

4) Language barriers present problems

This is a common problem with offshore customer service outsourcing. Customers can’t make themselves understood and must adapt to the agent rather than the agent adapting to the customer. In certain industries this is clearly unacceptable, such as for niche/speciality retailers or companies that promote their domestic workforce or if their products are “made in the US.”

5) Not keeping up with technology

Your call center needs to be addressing the growth of omnichannel, using new technologies that map the customer journey, and help its agents connect with your customers wherever they are. If they’re not, your business will suffer.

Breaking Your Contact Center SLA

There are three reasons for breaking a contract with a business process outsourcer:

  1. Expiration or non-renewal
  2. Termination for convenience including early and partial termination
  3. Termination for cause

Expiration or non-renewal

Obviously the first reason is easy. If your contract has expired, you can find a new vendor.

Termination for convenience

Termination for convenience can be claimed for several reasons:

•   Changes in business strategy including mergers, acquisitions and divestitures

•   Changes in executive leadership

•   The desire to rebid BPO services to obtain more favorable pricing

•   Desire to rebid BPO services to change the BPO environment itself such as moving from labor arbitrage—which many offshore BPO contracts represent—to business transformation

But some experts say termination for convenience is the least solid ground for exiting a business relationship and the most likely to incur fees. The fees for breaking an agreement with your customer service vendor are likely outlined in your contract.

Termination for cause

Failure to perform to established standards and/or breach of contract is the cause, but the organization has to have been given the chance to fix the problem.

Another issue is, if you have signed an agreement with an offshore company, their local laws may supersede your rights.

A fourth option

If breaking your contract with your contact center vendor is going to be more trouble than it’s worth, the interim step might be to bring in reinforcements.

Getting another outsourcer to handle a chunk of the volume (while still using the original contact center) can help ease an eventual transition. The move between outsourcers will need to be quick and seamless. By having a second option already in place, that process is infinitely easier.

Obviously the focus is to find a solution that solves most of your existing problems with your provider, without adding a huge layer of cost.

A solution like Simplr offers  24/7, US-based human support powered by cutting-edge AI and machine learning at less than half the price of an in-house solution.

“Our customers like being able to chat with a human on the other end. I feel like there’s no difference between our Simplr Specialists and our in-house agents. It’s still acting as another person who works for us on the other end of the email or chat. We haven’t had any customer reaction to the change that we made. It was a pretty seamless change for us.” – 5 / 5 stars! – Laura Cantor, Eleven Commerce (Reviewed November 26, 2018)

See what our customers are saying about Simplr here.

as seen on forbes simplr-1