White Paper No Boundaries, Better Results. Generating Better Results with Crowdsourcing Leverage a Network of High-Quality Professionals for Customer Service By Stephen Bengtson, Vice President and General Manager, Clients Results, Arise Virtual Solutions Inc. Overview: A paradigm shift is taking place in the outsourcing industry. Behind this disruption are new solutions, like Crowdsourcing, that enable organizations to leverage networks of high-quality professionals to achieve and maintain the highest levels of quality and performance in key enterprise functions. Learn how independent professionals and small businesses acting on-demand, through crowdsourcing challenge the traditional way corporations leverage outsourcing.
Introduction A paradigm shift is taking place in the outsourcing industry. Behind this disruption are new solutions that enable organizations to leverage networks of high-quality professionals to achieve and maintain the highest levels of performance in key enterprise functions. Fueling this disruption is crowdsourcing, which facilitates the capability for outsourcing organizations to tap into a virtual, on-demand workforce, and reduce overhead costs associated with vertical integration and traditional outsourcing. The following analysis explores how a pool of independent professionals and small businesses acting on-demand, through crowdsourcing challenge the traditional way corporations leverage outsourcing. This challenge focuses on the benefits of outsourcing specific business functions to qualified, domestic, home-based, independent professionals and small businesses versus the shortcomings associated with traditional off-shoring (moving brick-and-mortar operations overseas) and near-shoring (moving brick-and-mortar operations to nations sharing domestic borders or within similar time zones). The IDC estimates that U.S. spending on customer care Business Process Outsourcing (BPO) using home-based delivery was $1.6 billion in 2011 and will increase at a CAGR of 25.1% to $6.1 billion in 2017. Traditional Outsourcing May Offer Inconsistent Quality and High Costs Business executives are often frustrated with traditional outsourcing. Lower than anticipated customer satisfaction scores, anemic Net Promoter Scores (NPS), and a decrease in First Call Resolution rates can be symptoms of traditional off-shoring. Operational costs that fail to meet expectations, customer disintermediation, and increased competition overseas further reduce the incentive for operating abroad. At the same time, costs associated with maintaining a brick-andmortar center continue to increase. A conservative range of the costs associated with building and maintaining a standard 100- seat call center is between $750,000 to $2 million USD. These capital expenditure figures lack staffing costs, which often equates to roughly 80% of the yearly cost to maintain the center. These estimates omit the attrition rates common in call centers, which averages 50% but in some cases can be well over 100% annually. Turnover costs range from $3,000 to $10,000 USD for every one employee lost due to attrition. Elements that factor into that cost include training of new employees, testing, recruiting, vetting, performing background checks, working with sourcing agencies and marketing efforts required to develop a candidate pipeline. A 2011 study by Customer Interaction Solutions shows that the average cost of training a call center agent in the U.S. is about $5,000. Combine this with an average industry turnover rate of 33% and a 100-seat center realizes a loss of $165,000 per year due to trained agents walking out the door. 2
The Challenges of Offshore Outsourcing According to many industry experts and strategists, the major issues around offshore outsourcing include misunderstood requirements, cost overruns, inadequate quality, cultural and language issues, and problems selecting appropriate and quality-centric vendors. While cost remains a major driver in decisions about where to outsource, the quality of the labor pool is gaining importance due to: 1. Problems with Quality Talent - Organizations are dependent on their service providers to attract, develop, manage and retain personnel to service their accounts and customers. If the service provider is located in another country with a different culture and political system, organizations often lose control of the quality of personnel and their ability to connect with the end customer. Linguistic and cultural barriers aside, the rush to offshore operations has resulted in U.S. firms competing with each other in markets with limited top-performing, skilled candidates, further escalating attrition risks and costs. 2. Poor Customer Experiences - Given the state of the economy of the last five years or so, companies have an acute understanding of the importance of customer retention, the cost to acquire a new customer, and how a customer interaction is an opportunity versus a cost. As such, the brand and image of the company has become more important. Often times, customers are frustrated with an off shore experience due to lack of understanding or lack of first call resolution. The consequence is that the company is exposed to losing a customer and impacting their brand and reputation. 3. Negative Brand & Public Image - Offshore outsourcing has a negative connotation to many it means firing American workers and shipping jobs to less-developed countries where wages are low and labor laws are lax. Global multi-national corporations are increasingly under pressure to repatriate profits and jobs to field an engaged labor force who can service in the local markets and geographic locations of their customer base. In addition to these challenges, research has been known to show that offshore outsourcing does not guarantee cost savings. Typically, it is a short-term measure, and many companies end up bringing the calls back on-shore after the original business case falls short of expectations. 3
The Solution: Crowdsourcing Crowdsourcing is the next generation of outsourcing, with the potential to reshape established business processes, redraw organizational boundaries and profoundly change how service operations function. This alternative model of outsourcing decentralizes operations like contact center services, and migrates those functions to a network of domestic, at-home independent professionals and small businesses contracted to perform the services. According to the IDC, the home agent market is projected to experience significant growth over the next 3-4 years. Arise Virtual Solutions pioneers this model by acting as a conduit between companies looking to outsource services (Arise Clients) and companies looking to provide these services (Independent Businesses). These efforts include certifying the small business workforce, pricing services, Master Service Agreements, Service Level Agreements (SLAs), invoicing, quality assurance and support between the small businesses and the multiple companies and clients that choose this form of outsourcing to off-load business processes. According to a recent study by Frost & Sullivan, home-shoring in the United States has increased by 700% from 2002 through 2011. Frost & Sullivan also states that: 10% of Fortune 150 companies use virtual outsourcing 30% of large US retailers use virtual outsourcing In 2011, over 80 million customers were serviced by an agent working from home Advantages of an Independent, On-Demand Workforce Leveraging a massive network of tens of thousands of independent professionals and small businesses from a broad geographic spectrum, adds the following benefits: 1. Capacity smoothing, scalability, unforeseeable need for service capacity caused by unavoidable business continuity emergencies. 4
Because of a geographically dispersed service presence, the Arise workforce of small businesses is able to provide unparalleled flex capacity when unplanned client events occur. Recently, Arise was able to mobilize this expansive network to deal with a client crisis that resulted in a sudden and steep influx of calls by customers and their family members to the client s call center within the Arise travel and leisure portfolio. 2. Higher customer and agent satisfaction, better results and lower operating costs Access to local resources with language skills, similar accents and culture greatly assist client communications so that issues are clearly understood the first time and resolved faster. Independent professionals and small businesses have a vested and direct financial interest in providing the best service possible. The Arise crowdsourcing model also enables these providers to select the clients they service, choose and tailor their service schedules, and provide an intrinsic motive to provide exceptional service. A common mantra with the Arise network is Customers Serving Customers. The independent professionals and small businesses that service customers are often consumers of the same products and goods. This creates brand affinity and an intimate knowledge of products, services and capabilities. A recent study by Stanford University titled, Does Working from Home Work? found a 12% performance increase from call center agents working from home. Workers also reported substantially higher work satisfaction and psychological attitude scores with job attrition rates that fell by 50%. Unlike the traditional call center employee model, using independent professionals, via crowdsourcing, provides the flexibility to schedule around the client s call volume patterns as well as unpredictable spikes. In other words, traditional call centers will schedule in 4 to 8 hour shifts. With crowdsourcing, the shifts can be scheduled for a shorter period of time and can be scheduled in almost real time. Why Smart Business Executives use Crowdsourcing The breadth of experience within the crowdsourced network extends across multiple sectors, and includes training in a wide variety of advanced customer service techniques including crossselling, up-selling and technical support. In a recent internal study, 10% of the Arise Network had extensive cross-selling and up-selling experience in telecom, high-tech, retail and television media services. An internal Arise Virtual Solutions study shows that of the tens of thousands of service providers within the network: 57% have an undergraduate, Associates Degree or are currently enrolled in college. 15% of that number has a post-graduate degree such as a Master s in Business, PHD, Medical Degree or JDS. Copyright 2013 Arise Virtual Solutions Inc. Inc. All All Rights Reserved. www.arise.com 5 5
Table 1: Background of a typical Arise Independent Business Owner The demographics of high-performers are also: On average women between 35-45 years of age Own their own home and a car Have a sound financial situation Highly motivated to provide excellent service Arise attributes the main drivers for sourcing such skilled professionals to the attractive nature of starting their own business, flexible work schedule, client selection options, and the ability to work from home. The low barriers to entry relative to other contractor or franchise models and the need for many professionals to supplement income and develop greater professional and personal flexibility in their schedules, add to the allure of starting an Independent Business and partnering with Arise. According to a Frost and Sullivan study, the Homeshoring Phenomenom, 35% of first-year costs of a brick & mortar contact center employee are spent in knowledge transfer, training and development, which is usually one of a customer service provider s most substantial costs. In the crowdsourcing world, agents are generally better educated, possess prior professional experience and tend to attrite less, which significantly lowers costs while boosting performance. Through its Crowdsourcing model, Arise is able to tap into talent that is often off-limits to brickand-mortar contact centers: graduate students, teachers, stay-at-home-parents, semi-retired professionals, military veterans, and other highly capable people with a professional background. In an effort to attract high-performers and maintain a consistently high level of quality, Arise has developed programs tailored to sourcing specific segments and sectors. For example, the Military Sourcing Program at Arise offers incentives for veterans, active members of the U.S. Armed Forces and military spouses to provide contact center services from home. 6
The Value Proposition of the Arise Crowdsourcing Model Arise continues to improve the crowdsourcing model by increasing the reach and technology platform of an at-home,independent professional and small business. The online nature of the Arise infrastructure in combination with the strength of partnering with independent businesses that have a personal stake in this pay-for-performance relationship has produced a seemingly expanding network of college educated, secondary professionals. Advantages of the Arise Model to the Independent Business Owners Setting up your own business and partnering with Arise provides low-risk, low-cost work that moves with you. Since all independent providers work from home they save money on gas and overhead associated with office jobs. It also provides access to several areas hard hit by economic downturn as well as to people with strong work experiences and education that can t afford to relocate to find work. Lastly, Arise offers industry experience in multiple sectors. Advantages of the Arise Model to the Client Unlike geographically-tethered Business Process Outsourcing associated with typical contact centers, the Arise model attracts a unique and diverse contact center profile. Arise is not limited to a 20-mile geographic radius like brick and mortar centers. This allows for on-demand services in location specific regions. Arise s network of certified providers offers client support services in all 50 States in the USA, as well as in Canada, the United Kingdom and Ireland. The Arise model produces a vested interest and adds economies of scale that evenly distributes overhead costs and lowers risk. The result is a low-risk, low-cost, higher-talent acquisition that leads to performance and total satisfaction on the Client and end customer side. As illustrated by the graphic below: at-home business to business relationships produce not only the highest level of labor ability, but also score higher in six other categories. 7
Conclusion Despite the continued changes and improvements to the service delivery model, the drive to outsource decentralized, internal operations or services to scalable, home-based, independent professionals and small businesses is a trend that is here to stay. The IDC prognosticates that large customer care BPO organizations must have a home-based agent component in their portfolio of capabilities as a provider. Stakeholders will look to their customer care provider to: 1. Offer a balance of nearshore, offshore, and domestic delivery, with a growing emphasis on home-based agents. 2. To provide an ideal balanced shore delivery and best practices for home-based agent implementations. According to the IDC, this growing home-based agent model will provide the cost savings, ability to localize, access to talent, and environmental advantages not currently seen in a traditional BPO. These home-based, independent professionals and small businesses are becoming a major force in the contact center space, and Arise Virtual Solutions pioneers the most efficient and innovative form of crowdsourcing, providing: Enhanced agent quality Ability to match agent capabilities more closely to customers Reduced attrition More flexibility in delivering skills Leveraging a work-at-home crowdsourcing model is quickly becoming the most effective way for firms to more effectively manage operating costs, service broad markets, manage capacity levels, and satisfy customers with high-quality service delivery. 8
About Arise Virtual Solutions Inc. Arise Virtual Solutions is a work-at-home business process outsourcing company that uniquely blends crowdsourcing innovation, cloud-based technology and operational efficiencies to power its services and solutions. Recognized as a work-at-home call center pioneer, Arise has been delivering services in the cloud for over 15 years through its network of tens of thousands of independent work-at-home customer service, sales and technical support providers in the United States, Canada, the United Kingdom and Ireland. Founded in 1994 to provide work-at-home opportunities to disabled individuals, Arise was one of the first companies in the industry to offer 100% virtual call center services. Since then, Arise has been providing outstanding quality through its global professional network and today leads the market in multi-channel customer support and on-demand contact center services. Arise operates a diverse network of independent contractors to provide flexible, efficient, highquality contact center services in the cloud, including customer care, sales, technical support, ecommerce and social media support. However customers choose to connect - phone, email, live chat or text the Arise network of providers is there to help. These independent businesses contract with Arise to service the needs of our clients, including many Fortune 150 and 500 companies, in the travel & hospitality, technology, telecommunications, financial and retail industries. No Boundaries, Better Results. Arise Virtual Solutions Inc. 3450 Lakeside Drive Miramar, Florida 33027 US: 1.855.274.7301 UK: 44.0.795.780.3983 marketing@arise.com www.arise.com References IDC Market Analysis: U.S Home-Based Agent Customer Care BPO Services; 2012-2017 Forecast: Home Work is Working; Melissa O Brien http://www.managedserviceproviders.biz/2009/11/call-center-cost-comparison-virtual-vs-equipment-based-call-center-platforms/ http://www.tmcnet.com/call-center/features/articles/244330-it-pays-be-positive-cost-benefits-a-positive.htm http://www.managedserviceproviders.biz/2009/11/call-center-cost-comparison-virtual-vs-equipment-based-call-center-platforms/ http://www.boomerslife.org/social_security_early_retirement_benefits_decision.htm The Homeshoring Phenomena. Frost & Sullivan 9