Avoiding the Death
Spiral While Reducing Operating Costs - Part 6
(Perform Elements of Work With Lower Cost Labor)
By
Lauren Weiss
This is the 6th
article in the series “Avoiding the Death Spiral While Reducing
Operating Costs” covering approaches to reduce operating costs
while maintaining customer confidence and increasing customer
satisfaction. Topics in this series include:
- Cease activities that provide
no value-add
- Implement efficient and
repeatable processes
- Focus on existing product
quality instead of new features and functions
- Enabling customers to
self-serve
- Perform elements of the work
with lower cost labor
- Segment the customer base and
provide “appropriate” levels of support for each
- Make informed, not random,
cuts
- Cease big, expensive projects
with long-term ROI
- Renegotiate vendor contracts
In this edition
we will cover: Perform Elements of Work With Lower Cost Labor.
For most
companies the largest expense item is labor. Thus, when it comes
time to cut costs, labor is often a major consideration. One way
that you can deliver the same (or better) service to your
customers, at a lower cost, is by performing elements of the work
with lower cost labor. For the purpose of this discussion, we will
focus on call center activities, although other functions present
similar opportunities.
The 4
considerations we will review include:
- Outsourcing
specialized tasks
- Leveraging
resources in lower-cost markets within the US
- Outsourcing
the work to offshore labor pools
- Increasing the
skills of your Level 1 staff
Outsourcing
specialized tasks
Often companies
have service offerings that depend on the effective use and
performance of an end-user’s desktop workstation. When the
end-user encounters a problem using the service, he or she
calls/emails your customer service function to get help. It is
often determined that the issue is somewhere “between the seat and
the keyboard” or the workstation is not properly configured.
Having your team of highly paid technical experts working on
desktop issues can be an inefficient use of your most valuable
resources. It can also be demoralizing for a staff that would
rather focus on the more challenging opportunities inherent in the
support of your core product.
Solution:
Consider engaging a firm that offers desktop support, thereby
allowing your technical support team to focus on your core product
/ service offerings.
Leveraging
resources in lower-cost labor markets within the US
A downsizing
situation that I was involved in required our review of the
relative cost of labor across our operations throughout the US.
One observation we made was that personnel performing a specific
function in the Boston-area were being paid 30% more than
personnel in the mid-west performing similar work. It was not a
hard decision to determine where we would cut first.
Solution:
Identify a specific skill-set, create a defined job description
(if you don’t have one already) and determine if you can hire to
that role in a lower-cost labor market within the US.
Outsourcing
the work to offshore labor pools
There has been
quite a bit of publicity on this approach to lowering the cost of
labor. Like other options, there are benefits and drawbacks. What
I will share are specific considerations, for you to include in
your evaluation of this option.
Accent –
Offshore outsourcing providers promise accent smoothing. You
should ask to perform test calls to their call center and speak
with their agents. You be the judge…
Inflation
– Use care to consider the economics of the country you are
outsourcing to. What may be an effective cost structure today
could turn unattractive if the country has a high rate of
inflation.
Logistics
– You should consider any outsourcer as an extension of your
staff. You must be able to coordinate activities, work issues and
have overall open communications on an ongoing basis. Time-zone
and distance should NOT become a challenge for you upon making the
decision to go offshore.
High-volume /
low-tech – Most successful offshore outsourcing situations
involve high-volume/ low-tech transactions. If the service
function that you are considering outsourcing is moderate to
high-tech (specific to YOUR service offerings) carefully consider
how these resources will be brought up to speed and remain current
and effective. Synergy – You need to determine how your offshore
service provider will effectively perform as an extension of your
organization, such that customers experience the same business
philosophy and “culture” as your company’s Sales and Marketing
efforts.
A final thought
regarding outsourcing…When making the decision to outsource
consider the value of your call center personnel. These are often
entry-level individuals, which become highly skilled in your
company’s products and services. After 1-2 years in the call
center, these personnel can be some of the most insightful members
of your company when they are placed in the position of
influencing key decisions related to your product and service
offerings. They have been on the “front-line” with your customers,
products and services and probably know these better than MOST in
your company. It can be difficult to place a dollar value on this;
never-the-less, the value is extremely high.
Increase the
skills of your Level 1 staff
You can reduce the number of Level 2 and Level 3 staff, to whom
issues are escalated and who have higher salaries, by training
Level 1 staff more thoroughly and by giving them more
responsibility. The morale of Level 1 staff will soar as they gain
valuable skills and are seen as more valued by the company.
Customers benefit as well because fewer problems will be
escalated, so their questions will be answered more quickly by
more knowledgeable staff.
If you would like
to discuss further any details related to the above opportunities,
feel free to give us a call. We have the “scars of experience” to
know what works, and what doesn’t…
Upcoming
newsletter editions will cover additional items on the topic of
“Avoiding the Death Spiral While Reducing Operating Costs”.
Previous articles in this series:
Part 1
Part 2
Part 3
Part 4
Part 5
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