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September 1, 1999
When the Phones Won’t Stop Ringing
By James R. Dukart
Ironically, one of the worst things that can happen to a small or medium-sized
competitive carrier is that its phones start ringing off the hook.
Ringing off the hook, that is, because a flood of new clients needs a variety of
services a growing carrier may not be ready to handle–services such as nationwide
directory assistance, new service activation, existing service adjustment, credit
verification, billing inquiries or multilingual operator assistance. Answering these calls
or providing these services takes precious time away from building a new network, finding
new capital or expanding services to existing clients. This same carrier, swamped with
incoming calls, also probably has little time or ability to launch new services or attract
new clients, and in the hotly competitive telecom industry, that can spell doom.
Enter the besieged carrier’s white knight–outsourced customer call centers. As more
and more competitive carriers start to dot the landscape, many are finding that it pays to
outsource many of their call center functions to other firms.
Telecommunications, in fact, ranks as the No. 1 "outsourcer" of call center
services, according to a recent study by International Data Corp. (IDC), Framingham, Mass.
IDC says that telecom firms bought 32 percent of $23 billion in worldwide call center
services in 1998, a market IDC expects to grow to nearly $60 billion by 2003. Katrina
Menzigian, senior analyst for call center services at IDC, says small and medium-sized
telecom firms are among those most interested in outsourcing call center functions.
Smaller firms, Menzigian says, are looking at outsourcing as a way of saving money
through economies of scale, of reallocating resources to core competencies and of gaining
access to specialized technology and personnel, all of which may be far less expensive to
purchase than to develop and provide in-house.
"It’s all tied to the increased importance put on customer care and service as a
competitive differentiator," Menzigian says. "Often-times a small provider is
also trying to break into a large market, so it becomes a time-to-market issue. You don’t
want to spend six to eight months minimum to put up a call center."
Helping New Carriers
Ellie Ward is teleservices manager for Lightbridge Inc., a Burlington, Mass., call
center firm that specializes in services for the telecom industry. Ward says the small and
medium-sized carrier market is one of Lightbridge’s fastest growing markets, particularly
services to new wireless firms and newly competitive local exchange carriers (CLECs).
Carriers must ask themselves, "Are we going to build the infrastructure and take a
capital hit, or are we going to focus on our core competencies?" Ward explains. More
often than not, she says, the answer is that it makes more sense for the company to focus
on network buildout and core services than to attempt to provide its own call center
"We have a small LEC in Louisiana that is doing fine," Ward says, "but
now they are going into personal communications services (PCS), and that is not their core
The call volume for PCS services, Ward notes, can be sporadic, and one of the biggest
drains on new carriers is the time and effort involved in credit authorization and
activation services. "The PCS market is growing and growing and growing," Ward
says. "It used to be rather complicated to take on 100 calls a day, to say nothing of
1,000 calls a day like you have today."
Ward sees a growing comfort level with call center outsourcing on the part of carriers,
and says some of that comes from the wide range of services a good call center services
company can offer. In addition to answering large volumes of incoming calls, she
emphasizes, call center companies can help carriers analyze customer data and suggest new
service or marketing strategies, provide disaster recovery services and network
redundancy, and help companies in areas such as prepaid phone card services and fraud
"Fraud detection is a huge issue, particularly in the wireless area," Ward
says, "and it’s not easy to do well. You need fairly sophisticated technology and the
ability to analyze a lot of data quickly, and it’s something that will definitely affect
the carrier’s bottom line."
Doug LoPresti, director of business development for SNET Call Center Services,
Bridgeport, Conn., says call center companies provide carriers a precious resource in
today’s tight labor market–they are specialists in customer service and customer care.
Call centers are a "very highly people-oriented industry," LoPresti says, and
the key to good service comes in recruiting, training and retaining the best agents to
handle calls. Carriers who want to outsource call center functions, he says, should
carefully screen the companies they will be doing business with, and should insist on
transparency–that is, customers who call into the call center should feel as if they are
speaking directly to the carrier, rather than to a call center company employee. In
addition, he says, carriers would be wise to focus on companies that specialize in telecom
services and insist on agents who are both technically trained in telecom and continually
updated on carriers’ new products and service offerings.
"When carriers turn their customers over to someone else, they are turning over
the future of their business, and that is where the rubber really hits the road,"
LoPresti says. "No matter what kind of technology you have, and no matter what you
have behind the technology, the people you have are the most important."
Finding the right people may be even harder in special situations, points out Vicki
Pearson, executive vice president of teleservices company Teltrust Inc., Salt Lake City.
Teltrust runs a call center with approximately 1,200 agents, and Pearson says one of the
company’s most sought-after services is third-party verification when consumers have
switched carriers. That, she says, is a service carriers are forced by law to outsource,
but equally attractive are such features as nationwide directory assistance and prepaid
calling card services.
Pearson believes another growing area of service is multilingual operator services.
Some smaller regional carriers, she says, are developing specific ethnic markets, and have
a need for operators fluent in Spanish, Korean, Chinese or other languages. Teltrust, she
says, has a particular advantage here, since the company can draw on a large base of local
employees who know languages other than English. "The University of Utah and Brigham
Young University (BYU) focus a lot on language," Pearson says, adding that the
company employs many BYU students who recently have returned from religious missions
Special services or not, carriers have good reason to outsource most of their call
center functions, according to Dan Evanoff, president and CEO of teleservices company
Excell Global Services, Phoenix. For things such as national directory assistance and
operator services, he says, companies need to handle millions of calls to get the cost per
call low enough to make it worthwhile. Another growing area, he says, may be in providing
web-enabled services to e-commerce companies. One of the first steps, Evanoff predicts, is
that companies will want to offer one-click access from a web page to a live operator,
with that operator immediately able to view the same web page the customer is
"calling" from. Call centers can do this, he says, and even will be able to put
cameras on the operators to transmit back to the user’s computer screen.
Vendors are reluctant to talk about prices for teleservices, most claiming that prices
vary according to the level or range of services a company purchases, the call volume or
specific metrics such as new-customer signups, fraud cases detected or successful new
service activations. IDC’s Menzigian says, traditionally, prices were based solely on
number of calls handled, but carriers today have greater pricing options and should shop
around for a teleservices company that will "share in the risk and the reward of an
"We are seeing more value-based contracting," Menzigian says, "for
instance, tying in the compensation with whether the provider has impacted the churn rate,
or whether measures of customer satisfaction have improved. Companies should be looking at
call centers to help them nurture strong customer relationships."
SNET Call Center Services’ LoPresti says this advice is particularly fitting for small
and medium-sized carriers that want to beef up their business, but may not have time and
resources to do so immediately after the launch of a new service. "The call center
should be considered more and more a customer contact point rather than just a phone
call," LoPresti advises. "The biggest revelation is that once you are in contact
with a customer, you can learn a lot. You learn the demographics and how to acquire new
customers, [and] what people like and don’t like about your offerings."
A good call center company, LoPresti says, should be able to help a carrier collect,
analyze and use that type of information to build its business.
Ward of Lightbridge puts it another way: What a call center company can do for small
and medium-sized carriers, she says, is help address any "sore spots" the
company may have in service offerings, so the carrier can go about the business it knows
best. "We’ve lived and breathed their pain," Ward says of Lightbridge’s carrier
clients. "What many are saying is, ‘Please take this from us and do it right so we
can concentrate on selling our product.’"
James R. Dukart is a freelance writer based in Minneapolis. He can be reached at [email protected]
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