Function: Indirect Procurement
Goal: To Outsource Or Not To Outsource
How we helped a global Telco determine the feasibility of outsourcing a regional frontline and back office customer management service and what we did to help them achieve operational readiness.
The Heart of the Business
Our client, the regional subsidiary of a large international telco, deployed an internal contact centre to provide marketing support, customer service and technical support to its largely premium customer base spread over a dispersed geographical area. The centre was working 24/7/365 to handle frontline Emergency Services calls whilst multiskilled and specialist daytime teams handled a wide range of inbound and outbound telephone, email and web based front and back office transactions associated with fixed line, mobile, broadband and TV solutions. Activities included customer acquisition, service provisioning, fault management, complaints, customer satisfaction surveys, retention programmes and back office support for the telco’s retail outlets.
Conflicting Business Demands
The telco was experiencing rapid growth due to new product and service launches and service demand was climbing. Competition from new market entrants was putting pressure on the client’s business to maintain customer loyalty and retention. At the same time, operations managers were dealing with a number of internal structural and performance challenges, rising staff turnover and an increasing level of customer dissatisfaction with the centre. Tasked with reducing the cost base prior to an enterprise re-structuring and divestment programme, the Board was considering outsourcing the contact centre operation but had limited knowledge and experience of outsourcing.
Informing the Business Case
Envisago Consulting was asked to assess the feasibility of outsourcing the contact centre and recommended that a Business Case be developed to assess the benefits and risks of the outsourcing option to ensure that the business took the right decision, particularly as the senior management team was concerned that outsourcing would potentially present significant risk at this critical stage in the development of the business.
We began by conducting a detailed assessment of the operation in order to define the client’s outsourcing requirements, enable market testing to inform the business case and determine the state of outsourcing readiness of the centre.
Interviewing managers and agents, observing work in progress, reviewing core management processes such as training, workforce management and quality monitoring and reviewing and analysing performance data and reports, we were able to gain a detailed knowledge of the client’s operational requirements, together with a clear understanding of the performance management gaps and opportunities within the operation.
In tandem with the operational assessment, Envisago conducted high level market testing, qualifying a number of vendors with appropriate experience and capabilities and securing indicative pricing for provision of similar services to those required by our client.
Confirming the Priorities
Having conducted the assessment, Envisago was able to confirm that the risks of outsourcing for the client with the contact centre operation in its current state were very high: core management processes were poorly defined, knowledge was held by long serving agents and managers, historical performance data was limited and the centre was unable to handle current demand effectively.
Whilst market testing had confirmed at a high level that outsourcing had the potential to deliver cost savings, the potential risks associated with the significant gaps identified by the operational assessment confirmed that the risks were too great. Our client would be outsourcing a problem that would be certain to incur additional future costs and impact customer experience. Our advice to delay the decision to outsource and instead focus on closing the gaps in the current operational framework was accepted and the Client embarked on an internal operational improvement programme.
An Operation Fit for Purpose
Envisago Consulting was invited to support and mentor the client’s management team to address the gaps identified in the operational assessment. The improvement programme was conducted over a 12 month period with a combination of on-site meetings and remote support conference calls to review plans, provide feedback, assess results at each key stage and advise on corrective actions as needed. Following the improvement programme, client (marketing) satisfaction and customer satisfaction scores climbed and running costs were stabilised as the centre handled increasing demand without adding heads.
The centre had achieved ‘operational readiness’ and our client, still keen to proceed to procurement, invited Envisago to manage the end to end procurement process, which we conducted with the shortlist of Vendors already qualified through previous market testing. As the process progressed, it became clear that outsourcing would be the less attractive option for our client due to internal operational developments that largely offset the impacts of migrating the operation. The decision was made to retain the operation in-house and the internal contact centre, by now very well-placed for repositioning within a new NOC (Network Operations Centre) strategy, continues to function efficiently for the business and effectively for its customers.