Reference no: EM131847583

With multiple communication channels available and so many CRM failures, many companies are concluding that the best method for providing customer service is good old-fashioned customer service provided by a real live person. At the same time that companies consider outsourcing their customer service departments to other countries in order to save money, many worry about foreign accents as well as time-zone issues related to offshore outsourcing.

Canada has become one of the primary targets for outsourcing customer service centers by U.S. companies. Not only are accent and time-zone issues nonexistent, but companies also receive a favorable exchange rate. The Bank of Canada estimates that over the past five years, the currency exchange rate between the United States and Canada favors Americans by 44 percent.

For every dollar an American business spends in Canada, it receives over a dollar and a half in goods and services. Additional factors that make Canada even more attractive include a high Canadian unemployment rate estimated at 7.5 percent in 2003, while the U.S. unemployment rate was 5.9 percent. Canadians also have high education rates with 63 percent of Canadians over the age of 15 being high school graduates. The country's predominantly rural population and strong work ethic along with a declining industrial base have made call center outsourcing an attractive solution for Canada, too.

Canada has been a leader in the call center industry for over a decade. Since the early 1990s, "the Canadian call center industry has grown at an annual rate of 20 percent," according to Steve Demmings, president of Site Selection Canada of Winnipeg, Manitoba. Site Selection Canada promotes and assists site selection for American and Canadian firms.

Demmings estimated there are 14,000 call centers in Canada with six or more agents employing 500,000 people, contributing about $36 billion (Canadian) in annual salaries. In 1994, two Canadian provinces-Manitoba and New Brunswick-made a concerted effort to develop a local call center industry, recognizing the area's high unemployment with little native industry, Demmings said. The other provinces soon followed. Then the call center industry "made a big move" to bring educational institutions on board. "Many colleges have set up call center training programs," Demmings reported.

The result has been an established industry with an excellent skilled labor pool. "American companies come up here to go shopping and we need to have the tableware on the table," Demmings said. What is important to outsourcing buyers is that many Canadian call center customer service representatives have made it their career. Consequently, there is a much lower turnover rate for call centers than in the United States.

Demmings reported the CSR turnover rate in the Province of Ontario was 18.3 percent last year. Compare that to the United States, where call center staffing can be a problem. Christopher Fletcher, vice president and research director of CRM for the Aberdeen Group, stated, "It is tough to find people to staff a call center. Turnover ranges from 25 percent to 50 percent annually or above. The skill sets of the people you have available are often equivalent to McDonald's

Questions

1. What are the two different types of CRM and how can they be used to help an organization gain a competitive advantage?

2. Explain how a contact center (or call center) can help an organization achieve its CRM goals.

3. Describe three ways an organization can perform CRM functions over the Internet.

4. How will outsourcing contact centers (call centers) to Canada change as future CRM technologies replace current CRM technologies?