Outsourced call centers still receiving mixed results from industry


Expedia Corporate Travel recently revealed plans to bring some of its call center functions back to the U.S. from Manila, Philippines, where they had been handled by PeopleSoft. That decision closely followed a move by US Airways Group to hire about 400 reservations agents for positions in North Carolina, Arizona and Nevada to perform work that had been outsourced to call centers in Mexico, Central America and the Philippines.

While these developments seem to reverse the recent trend toward outsourcing call centers in the travel industry, Peter Ryan, who heads outsourcing and off-shoring for industry research company Datamonitor, said talk of retrenchment is premature. Though he admits there have been problems with outsourced call centers -- both politically and in terms of quality control -- Ryan said, For every agent position pulled back, you dont hear about the two or three still going over.

At present, Datamonitor estimates that 4% to 5% of the outsourced call center positions in India and 6% in the rest of Asia are for travel and tourism. That figure climbs to an estimated 11% in Latin America, thanks to a high demand for bilingual agents to accommodate Spanish-speaking U.S. customers, he said.

To deal with service concerns, some companies have outsourced to locations where they believe the centers will be staffed with multilingual, educated and travel-savvy workers who can relate to customers, Ryan said.

U.S. airlines are demonstrating an ambivalent attitude toward off-shore outsourcing.

United, for example, outsourced some of its call center work to India early last year, after already having funneled a small amount to Nova Scotia in March 2004. The outsourced call centers handle general reservations calls and some customer-service inquiries, said United spokesman Jeff Green.

But there are some signs, even at United, that airlines are discovering limits to the usefulness of outsourcing.

Though United has closed five U.S. call centers with 800 employees since 2003, it still uses about 2,500 of its own employees at call centers in five U.S. cities for general sales, high-level frequent flyers and other specialty calls.

US Airways is bringing many of its calls back in-house because it found that the outsourced centers often couldnt handle calls that didnt follow a script, said Scott Kirby, the airlines executive vice president for sales and marketing. A customer, for example, might ask for alternative destinations if fares for the one they first asked about are too high. Or they might ask about nuances in airline policy.

The airline industry, Kirby said, tends to go off script.

That is why, contrary to Ryans view of outsourcing across all industries, the US Airways shift may reflect a growing reassessment of the outsourcing trend in the travel sector.

With its new hires, US Airways will increase the percentage of calls handled in-house from 35% to 55%. Kirby said the airline is prepared to dump its other outsourced call centers if they dont prove they can do the job.

A Deloitte Consulting study based on interviews with 25 of the largest organizations across eight industry sectors, including at least one airline, found that 70% had a negative experience with outsourcing projects for all functions and were now exercising greater caution.

One in four brought functions back in-house after realizing they could be addressed more successfully, perhaps even at a lower cost, if done internally.

Adam Weissenberg, Deloittes partner in charge of hospitality and leisure, said he had not seen a major outsourcing pullback in the travel industry, but he had noticed that the rush to outsource work seems to have cooled off, with companies now focusing more on developing their online products.


One call center outsourcing alternative that is growing in popularity is home-sourcing, under which a company saves money by relying on home-based reservation agents in the U.S.

A new study by IDC, a technology research firm, forecasts that the number of home-based customer service agents hired or outsourced by U.S. companies will nearly triple by 2010 to more than 300,000.

Among U.S. airlines, that concept had until last year been confined to JetBlue, which has about 400 res agents in its Salt Lake City office but has used home-based reservations staff since its inception. It now employs about 1,200 of them in the Salt Lake City area.

The concept may be picking up steam. American, which tested and rejected the concept about six years ago, decided that new, more efficient and cost-effective technology such as DSL connections made the idea more feasible; it started hiring home-based reservations staff in May.

The first hires began taking calls in August, and American is now well on its way to hiring 300 of them. All will be located within 50 miles of Americans call centers in Fort Worth and Tucson, so they can go to those offices for periodic training and equipment repair.

JetBlue, similarly, keeps its home-based agents close to Salt Lake so they can come into the office for a monthly meeting with supervisors and gather periodically for team-building events such as quarterly picnics.

Several other U.S. and foreign airlines are considering home-based customer service agents and recently contacted American for advice, said Jackie Cutlip, Americans managing director of reservations.

American doesnt outsource its call centers, and, facing increasing call volume, it didnt want to pay to open any more facilities. The home-based solution saves not only on facility costs but on labor costs, because the at-home workers get less generous health plans, and their pay scale tops out at less than that of the airlines office-based workers.

American prefers home-basing to outsourcing because it offers the airline more control and helps avoid start-up problems, Cutlip said. As long as we can do this with competitive costs, that really is our desire, she said.

Cruise lines also have gotten into the home-based res agent business. Norwegian Cruise Line employs home-based agents in Broward County, Fla., near its Miami headquarters, and in the Phoenix area.

It gives us a productive work force, and were not leasing any office space, CEO Colin Veitch said last year.

Richard Feinberg, director of Purdue Universitys Center for Consumer Driven Quality, which studies call centers, said the airline industry is at the forefront of another alternative: a technology called natural speech, which enables callers to tell a computer, I want to make a reservation. The computer responds with a human voice.

Feinberg said airlines are increasingly using the technology for their low-level, easy contacts, such as booking or confirming a flight. Its a great alternative, he said, because the technology can handle a million people as easily as 10 people and is easily adaptable to other languages. He cited research indicating that about 70% of all customer issues can be handled by a computer.

Feinberg said companies using any kind of computer-driven call center system should let consumers know early in the procedure how to opt out of the technology and get a person on the phone. In addition to simply being more honest, Purdues research has shown that consumers are less likely to opt out when they are told early, he said.

Wanted: Knowledge workers

The issue of training -- and the proximity of outsourced res agents -- was a factor in Expedia Corporate Travels decision to phase out its use of PeopleSoft in Manila.

Mitch Robinson, an ECT spokesman, said the PeopleSoft facility handled 24-hour support and some overflow for U.S. operations, and ECTs use of it will end later this year.

Those functions will be handled in the U.S., he said, although ECT has not yet decided if they will be conducted by staff or outsourced.

Customers have not been pounding on the table [for the change], but we think it will benefit our customers, Robinson said.

The decision does not affect ECT Europe, which largely has call centers in local markets there, Robinson said.

Whether or not the workers are ECT employees, the agents in question handle ECT accounts only, Robinson said. He noted that it is harder to train call center agents when they work thousands of miles away, and this was one reason for the change.

In addition to the Manila operation, ECT uses a mix of employee-run and outsourced operations to support U.S.-based accounts.

ECT has a call center at Expedia headquarters in Bellevue, Wash., which handles top accounts and international rate desks. And ECT also has agents that share a facility with Hotels.com agents in Arlington, Texas.

Still other call center functions are outsourced to TRX, which operates facilities in Parkersburg, W. Va., and Milton, Fla.

Last month, TRX entered into an alliance with E2E SerWiz Solutions (SWS), a unit of the India-headquartered Tata Group, to transfer those call centers to SWS.

Ricardo Layun, TRXs vice president of customer care operations, said right-shoring is the trend he sees in companies call center decisions: Companies want the flexibility to use domestic facilities for high touch clients who may even want to visit the call centers, supplemented by off-shore contracts for a large client base that requires less of a touch point.

Sabre went to an off-shore solution for travel agency and airline customer support in 2004, but the call center in Montevideo, Uruguay, is staffed by Sabres own employees.

Janet Herman, vice president of corporate operations for The Travel Team in Buffalo, N.Y., accepted a Sabre invitation and visited the Montevideo facility last fall.

She described Sabres call center there as state-of-the-art and said Travel Team associates were satisfied with the service they received when contacting the center for support, usually over technical issues.

Still, Herman acknowledged that the conversations sometimes can be tricky because they involve Buffalo twang and English from non-native speakers.

Maybe there are some language difficulties in the beginning, but the people are extremely nice, [and we were told] to be patient, Herman said.

Sabre officials say they are happy with the call center. The company consolidated several others it was running and plans to increase staffing from 540 to between 700 and 800.

Kathryn Hayden, a Sabre spokeswoman, said that when the Uruguay facility was ramping up in late 2004, some callers had to wait several minutes to speak to a representative because the company had been reducing staff elsewhere to trim costs.

Since moving these operations to Montevideo, the response rate has significantly improved to almost all calls being answered by a representative in 40 seconds or less, Hayden said.

Fluency -- the center handles calls in 14 languages -- and industry knowledge remain issues.

Sabre addresses language/accent issues through courses, and the agents watch U.S. TV or French TV, for instance, to improve their linguistic abilities, she said.

Also, about 60 agents have signed up for a voluntary CTA/CTC program to further their travel industry knowledge.

Worldspan, too, decided late last year on an off-shore solution, but unlike Sabre, Worldspan opted for outsourcing. Tech Team of Southfield, Mich., handles first-level help desk support for Worldspan in facilities in Belgium and Romania.

One U.S.-based travel agent, who did not want to be identified, said she has called Worldspans international facilities for support and found that rudimentary questions were handled with ease, but she was less satisfied with answers to complex questions.

Tour operators keep it in-house

The complexity of a product or service can make it less than ideal for the overseas outsourcing of customer service -- a fact that has kept tour operator call centers close to home.

Most operators run their own call centers, which are designed to handle questions from and sell complex products to travel professionals. Operators contacted by Travel Weekly expressed little interest in outsourcing.

Our call center, with 150 people, is not a very large one, Ron Letterman, chairman of Expedia Inc.s Classic Vacations said of its San Jose, Calif., facility. Its not really a call center. Its more of a specialty shop.

Letterman added, Our people are highly trained travel planners. Its different from the kind of call center that can more easily export business. We have not considered outsourcing, and I dont envision us ever doing that.

Cyndi Zesk, vice president of marketing for Collette Vacations, was emphatic that Collette would not outsource its call center operations, currently handled at a facility in Providence, R.I.

We have no intention of outsourcing our call center, Zesk said. We place a high value on the people who take reservations for the travel agent community. We want them to be as educated and as well-trained as possible, not only on travel but on Collette products worldwide.

Collette has instituted an aggressive familiarization program for all employees.

Because it sells directly to consumers, Grand Circle Travels Boston call center is designed to take calls from the public, not from travel professionals.

That distinguishes it from most tour operators. But Grand Circle, too, avoids outsourcing.

Priscilla OReilly, a spokeswoman for Grand Circle, said, We believe its important to have our call center associates close to information that is timely and accurate, and having our 167 call center associates based in our headquarters gives them that opportunity.

If theres an issue that needs to be resolved, associates can head downstairs and check in, face to face, with an air associate or someone who works in product development or marketing, OReilly said. Additionally, we have a values-based culture that we want all of our associates to be part of -- including our call center associates.

To contact the reporters who wrote this article, send e-mail to Andrew Compart at [email protected] or Dennis Schaal at [email protected].

David Cogswell contributed to this report.

Get More!

For more details on this article, see 1-800-Flowers helps Choice solve a thorny dilemma.


From Our Partners

2020 Australia Webinar
Australia is open for business
Register Now
Australia Is Open for Business
Australia Is Open for Business
Read More
2020 Events 365
Discover Unforgettable Live Events with Events 365
Register Now

JDS Travel News JDS Viewpoints JDS Africa/MI