Why Australian call centres are going offshore

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Why Australian call centres are going offshore

With the recent outcry of Insurance Australia Group’s decision to send their call centre jobs offshore with brands such as NRMA, CGU and RACV impacted,  you don’t have to search hard to find a a growing frustration amongst Australian’s having to deal with offshore call centres.

One of the IAG’s NRMA call centre agents who’s job was impacted was so angry started a petition on Change.org that has attracted over 19,700 signatures (as at August 2017), and by reading some of the comments it clearly shows the level of frustrations a large section of our community are having when dealing with someone on the phone who isn’t from Australia.

Is it a racist thing? I firmly believe its not. Whilst there can (and are) numerous reasons for the frustrations (e.g. offshore agents not having the same access to systems, cultural differences, forced to follow scripts etc.) the #1 frustration typically stems from not being able to understand the agent and that applies to whether they are from the Philippines, India, South Africa or even New Zealand.

So if customers don’t like it, why do companies keep sending call centre jobs overseas?

According to Justin Tippett, Managing Director of CX Central, the simple answer why Australian call centres are going offshore is cost. Salaries account for approximately 80% of the running costs for a contact centre so anywhere you can find cheaper labour is going to have a big overall impact on your costs.

The minimum annual award salary for a full time contact centre agent (working 38 hours) in Australia with no penalty rates is $39,9265 (August 2017) and that’s assuming you can find someone willing to work for it with starting contact centre salaries often in excess of $50,000 compared to the average $5,573 AUD  a customer service agent working in the Phillipines would receive.

Just based on a 30 seat contact centre paying award wages that’s an annual saving of over $1 Million for every year of operation.

So for call centres with hundreds of seats its not hard to see why businesses are attracted to the proposition of sending call centre jobs offshore.   So while it might make business owners happy, not all customers share the same excitement. By law all mid to large size contact centres in the Philippines must have a doctor or nurse on site, in part due to the acoustic shock injuries caused by angry and screaming customers hurling abuse the Philippines agents (guys seriously as frustrating as it might be, please don’t take your anger out on the call centre worker who is just trying to help you as best they can..).

Offshore options for Australian businesses also now extend beyond the Phillipines with other English speaking countries making a play for the lucrative call centre industry market. South Africa, Malaysia and Fiji are all investing significantly in attracting international businesses looking to offer the world another cheap alternative for contact centre labour. Just yesterday Congo was in the news promoting their call centre capabilities. With the monthly salary for a call centre agent a reported $400 AUD, perhaps it won’t be long before your calls could be answered by the Congolese.

Why competition is good

In an age where the world seems to get smaller by the minute and products can be sourced from all over the world, progressive organisations are starting to realise however that perhaps the customer experience, not the product, is their key differentiator in the marketplace.

Take the telecommunications sector as a current example. Over the past few years Telstra has moved thousands of their call centre roles to the Phillipines and based on my own personal experience, its an experience that is largely not enjoyable. But if you want the best network, what choice have you got? With Vodafone investing millions in upgrading their network recently however, the customer landscape is beginning to change…

According to the latest 2016 Telecommunications Industry Ombudsman report, when compared to the previous year:

  • Vodafone (with Australian based call centres) new complaints decreased by 59.5%
  • iiNet, recently acquired by TPG, with a mix of Australian, New Zealand and South African call centres new complaints increased 48.2%
  • TPG with a Philippines call centre new complaints increased 7.4%
  • Optus with call centres in Australia and the Philippines increased 18.2%
  • Telstra (mostly Philippines based for consumers except for the ‘recovery teams’ who happen to be Australian based) overall new complaints decreased 3.2%

Vodafone’s General Manager for Customer Care Matt Paterson said in August 2014 “Australian-based customer service sets us apart from our competitors. We’re putting service ahead of profits – that’s what our customers want. They want to be able to speak to an Australian, and they want to help create jobs in Australia. That’s important to us too”.

So if the network quality was equal, and you had a choice of providers would you still be with Telstra? Studies have shown that 86% of consumers will pay up to 25% more for a better customer experience so if Vodafone just matched pricing (let alone beat it) it would suggest they are in for a significant shift in market share. Maybe then Telstra might look at bringing some call centre jobs back home?

Can businesses afford to keep their call centres in Australia?

The big challenge for Australian businesses is to determine if they can afford to give customers what that want – a local customer experience or a cheaper product. For those investing in the customer experience, there is some subtle advertising starting to permeate through where organisations are proudly advertising their Australian call centre as a point of difference. Bankwest as an example promote their “Australian based contact centre” as a point of difference to their competitors.

bankwest contact us page

Bankwest Contact Us page proudly highlighting their Australian based call centre.

Personally to the brands that have Australian based call centres I say don’t be subtle – if you are investing in a the higher cost of running an Australian call centre and research suggests that customers clearly prefer taking to locals, shout it from the bloody rooftop! From the hundreds of thousands of call centre agents in Australia we’d love to hear your support.

If some of our local contact centre agents had a dollar for every time they heard “oh thank god you’re in Australia” they could probably afford to retire!

Its starting to change..

In December 2017 it looks like the message is finally getting through! Commonwealth Bank are now actively promoting their Australian based call centres. In fact with a nation-wide advertising campaign with television, radio, print media, billboard and of course online you’d be hard pressed to miss it!

According to the Commonwealth Bank’s research, nine in ten Australians prefer local call centres so the decision to keep their call centres here is clearly a strategic decision designed to improve customer satisfaction.

Commbank call centres are here in Australia

The Commonwealth Bank advertising campaign for their Australian based called centres Source: Commonwealth Bank Facebook page

Is there a trend emerging?

For the Australian local call centre community its an interesting time. In the past 12 months two large call centre outsourcers permanently closed their doors (and with it hundreds of jobs were lost) however this has been offset somewhat by two global call centre outsourcers entering the local market and claiming business is booming.

And in addition to the threat of jobs moving offshore, Chatbots, self-service and voice biometrics technology all pose a threat to the traditional call centre job as the requirements to speak to a live agent diminish. This leaves the calls that do require a human touch to be far more complex, and thats changing the skills and requirements of the traditional contact centre agent.

With the contact centre increasingly becoming the front door (or only door!) for a number of businesses the contact centre agent is often the sole representative of your business, the only point in which a human connection is made. And that connection is often at the most critical point of the customer relationship when something isn’t quite going to plan.

I’m no rocket scientist, but you’d probably want to make sure that experience is a good one right?

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Justin Tippett
I've been working in the contact centre/CX industry for close to 30 years and I unashamedly still love it.

I'm the founder of CX Group Australia, a group of businesses that provide a range of products and services to those working in the CX industry, and for businesses looking for resources, support and services to improve their Customer Experience.

You can also catch me on my CX Hustle Podcast on iTunes where I cover CX & Contact Centres for businesses and CX professionals.