Buy, build or partner? Globalizing your customer service
This article originally appeared on MyCustomerUK
Written by Jeff Puritt, President & CEO, TELUS International
An overwhelming majority of contact centre owners are planning to grow, transform, and globalise their operations over the next two years. According to the 2015 Deloitte Global Contact Centre Survey, 96% of leaders expect their contact centres to grow, and 72% are planning contact centre transformation with a heavy emphasis on consolidation, outsourcing, and/or establishing new contact centres.
With increasing pressure to expand, whether it’s to support global customers, new product launches, or to add new language capability, there are essentially three ways to expand customer service operations: buy (acquire), build (invest) or partner (outsource). The challenge is selecting the right model to achieve your objectives and avoiding any potential negative impact to your brand and your customer experience.
Plan for success
Step 1 – Strategic rationale (the “why”): Before pursuing any expansion strategy, you must first identify your strategic rationale. Regardless of the specific approach to buy, build or partner, the desire and plan to expand must be driven by a business need. It’s imperative to understand exactly why you are considering expansion – and it’s that “why” that is your strategic rationale.
Today, the “why” underscoring most customer service globalisation efforts usually originates from the need to serve more customers, in more languages, with more support hours, and maybe even via more support channels. There may also be a desire, or the need, for cost savings or cost avoidance in order to remain competitive. Or perhaps the business is growing so fast that you can’t take the time to build or expand your own support ecosystem without sacrificing focus on what’s fueling current success – product development, for example. Regardless of the exact impetus, identifying the strategic rationale is step one, and the foundation underpinning the expansion strategy.
Before moving on to step two, it’s equally important to consider the alternative – doing nothing. If you don’t expand, what are the risks? Will customer service suffer? Will competitors win out? Are you at risk of missing future revenue projections? If these are risks you cannot accept or manage, then doing nothing is not an option.
Step 2 – Commercial efficacy (the “rigor”): Having identified the strategic rationale, the next step, commercial efficacy, speaks to the analysis rigor around the buy, build or partner decision. This means identifying a comprehensive and strict set of criteria upon which to assess and filter the three options.
For example, when TELUS International looked to expand its global customer service BPO operations in search of, among other things, incremental language capabilities, particularly French, we started with a list of more than 200 countries. We examined four key areas during our process of elimination: demographics (e.g. literacy rate, labour pool), economics and regulatory risk (e.g. country stability, tax environment), business requirements (e.g. competitive landscape, technology infrastructure) and strategic alignment to our business needs.
Step 3 – Economics (the “value”): Economic criteria for any company considering the buy, build or partner decision should be tied back to the strategic rationale. This is the time to analyse the benefits and risks associated with each option using relevant data while also evaluating anticipated cost and revenue synergies. At this stage, it’s important to develop an ideal target profile to determine what the ideal operation would look like.
Step 4 – Post-integration (the “how”): Integration is essential yet continues to be a major pitfall for many organisations. According to HBR, 70 percent of M&A transactions fail to deliver, or actually destroy, shareholder value most often because integration was not part of the planning process.
Whether it’s an acquisition or outsourcing partnership, a robust plan must be in place to integrate and align leadership, people, operations and technology. It’s also the time to establish rules of engagement around communications, ensuring that decisions are made with customer experience being top of mind. Furthermore, a comprehensive integration plan regarding community investment and government relations is helpful to strengthen business relationships, even recruitment, in the local community.
The importance of corporate culture – avoiding pitfalls
Inextricably linked to post-integration planning and implementation, is the role of corporate culture. Whether you buy, build, or partner to expand global operations, the importance of ensuring alignment of corporate cultures and associated values can make or break an expansion strategy. When acquiring or partnering, it’s critical to assess the degree of cultural change required in a potential partner. Planning for cultural onboarding – that is, educating and motivating people to embrace and to internalise the culture over time – vs. immediately on day one – is one of the most important factors for long-term success.
Selecting the best strategy
With an expansion methodology and, importantly, strategic rationale in hand, you can now evaluate the best options for growth. Naturally, with such an important investment decision, the list of considerations is extensive. Here are a few to get started:
Buy (acquire): If you’re looking to serve a more global customer base in multiple languages, acquisition can make a lot of sense. Acquiring a customer service operation means immediate access to an existing pool of agents that already speak the language and understand the cultural nuances of the customer base. This gets your customer support needs met fast. You get instant infrastructure, including building assets, technology networks and people. You also potentially reduce the learning curve associated with the geopolitical risk profile of the market you’ve entered. The drawback, however, is possibly inheriting a culture, infrastructure, systems and people that may not soon, or ever, align to or meet your expectations.
Build (invest): When growing customer service operations, some companies need to move at their own pace, operate in locations without viable buy or outsource options, and/or feel the need to vigorously guard their corporate culture by retaining only captive operations. The build process gives you complete control over infrastructure, branding and hiring right from the start.
The drawback – the build approach takes time, a luxury many companies with growing customer bases and aggressive competitors don’t always have. Furthermore, finding the right location can be challenging, given that operations may not currently exist in that area. This means paying extra close attention to local labor pools, skill sets, competitor saturation, real estate terms and local economic incentives, among other considerations.
Partner (outsource): With the third-party global BPO industry now valued at US$150 billion, outsourcing is a common practice for extending customer service capabilities. Once largely a cost optimisation play focused on non-core business processes, outsourcing has evolved to address the entire business value chain.
The benefits include almost instant access to new markets, multilingual skill sets, expanded customer contact channels, and the latest technology. Outsourcing can also be a wellspring of innovation: service providers are able to share best practices gleaned from serving other accounts. The drawback – just like any relationship, effective outsourcing partnerships need time, energy and commitment when it comes to finding the right partner, and then nurturing that partnership over time.
Customer as key to expansion success
As you consider your expansion options, remember, the success of your current business is based on meeting customer needs; therefore, any growth strategy must inoculate that success, not put it at risk. Let a clearly defined strategic rationale be your guide and a robust post-integration plan be your blueprint for long-term success.