Can anyone give me a hi-level overview of the pros/cons of setting up a call center operation (100 to 200 people) in Panama?

A client is looking for the 'right shore' to begin operations and wants to understand the economics (infrastructure, labor rates, work force size, competition, etc.) in Panama specifically.

Any insight would be most appreciated!
MG

Can anyone give me a hi-level overview of the pros/cons of setting up a call center operation (100 to 200 people) in Panama?

A client is looking for the 'right shore' to begin operations and wants to understand the economics (infrastructure, labor rates, work force size, competition, etc.) in Panama specifically.

Any insight would be most appreciated!
MG

Tom,

Great polling question.

Many of the call center executives we've been talking to are focused on maximizing their current assets and automating as much as they can to improve their labor productivity. 

Many are also letting attrition 'work for them' in the short term and simply not back-filling lost Agent and Manager positions.  Without some way to help redefine the goals or provide better tools and techniques to those still serving customers, their customer relationships (life force) would be jeopardized.  Thus the focus on automating more, providing scripting for Agents, letting biz intelligence and experience lead them to more focused initiatives and metrics.

I think there is a good opportunity for Outsource partners in the BPO/ Call Center space to proactively bring some productivity innovation to the table for their clients in this environment.

Thanks, MG

Check the people out behind the companies.  We spend vast amounts of money doing background checks on our employees, talking to references and interviewing them personally.  We should invest at least as much to ensure the leadership at a partner company has a track record of honesty, fairness and innovation before job one gets performed and invoice one gets mailed.   

Having a 'try before you buy' model - even if it has to carry some cost for a pilot outsourcing job/function/assignment - helps clients establish credible price/value/risk models for larger project decisions.  Iterative value creation, or stair stepping client investment as closely to lock step with benefit realization is a winning model today.    You make many small bets and double down on the ones that are proving themselves in the market. 

As a buyer, having a very specific definition of what 'business outcome' you are trying to achieve through sourcing is more critical today than ever.  Price and Risk are always relative to the value you define.  The definition of value changes and the entire price and risk equation goes out the window.  Ask anyone who outsourced customer interaction based on the lowest cost per call or hour what happened to their core business - customer loyalty - and you'll get a much more balanced cost/price/value decision going forward.  I think of Sprint  - which continues to lose millions of customers each quarter based on price-only guided sourcing the past 5 to 7 years.

A great question.

My 2 cents...

I think awareness is the 1st step toward new business - and many of the channels you mention help build awareness.  The web, email campaigns, webinars, newsletters, event sponsorships and speaking engagements are all good 'awareness creators'. 

The trick is to spend the least amount of resources getting from awareness to purchase - and in between the two stages, a company in the services space typically has to spend the majority of its dollars and time in face to face, on site, relationship building activities.   It is the nature of those channels to propel a service provider forward through preference to intention to sale. 

In my past, I became interested in many providers through mass channels.  In the end, however, I selected and remained a partner to those few that built relationships with my company and me over time.

It all comes back to the old  Market Share Potential formula:

Market Share Potential (or MSP) =  PAa  x  PP  x  PI  x  PAv x  PR

where...

PAa   =      Product Awareness
PP   =   Product Preference
PI   =    Purchase Intention
PAv   =      Product Availability
PR   =   Purchase Rate

Happy hunting!
MG

Good intel on your site - thanks James!

Hey Randy - sorry for the delay:

Excellent question and definitely a challenge to all Professional Services organizations, ‘how do you price a project that get’s the customer to buy’.  This question is especially important if you are not one of the Big 4 that can price on reputation alone.  I believe there are two dynamics occurring in the market that are shifting the purchase paradigm as it relates to technology services. 

Let’s face it, Technology used to be very complex and confusing, even downright scary to non-technology experts, which in turn, put the responsibility of making technology purchases squarely on the shoulders of the IT Department.  As a society, we are all becoming more technology savvy, and certainly in Business, non-technology experts are becoming technologically astute.  Subsequently, the shift in the purchase paradigm is that control of the What, Who and How for technology purchasing decisions is moving from IT to the Business. 

What this shift means is that purchasing criteria are evolving from a technology value system to a business perspective.  The best way to look at it is that purchase decisions are being made on “what business result will I get” versus “what technology will I have”.   

So the first shift in the technology purchasing paradigm is that the purchase decision has increased influence for business results, which in turn requires buy-in from the business.  Business can no longer use the “technology did not work” defense and IT needs to allow Business to have a key stake in the technology purchase decision.  Ultimately, this changes who you are selling to, which means you have to change how you sell.

The second dynamic in the technology purchase paradigm that is shifting, is the “look before you leap” approach.   Basically, the business wants IT to prove they can solve the business problem before a large purchase of technology and services is made.  This shift is also supported by the shift in business involvement in making technology purchases.  The look before you leap approach is more comfortable for Business because it gives them a chance to try something for a smaller cost than purchasing in the old paradigm.   

Agile, as a methodology, aligns very well with these shifts in the purchase paradigm.  The business get’s the opportunity to make decisions on smaller pieces of the solution with real visibility to how the deployments will affect the desired business result.  Remember that the old methodology required the business to wait until the end of an extended project to see if the developed product was on track or not. 

Agile does not absolve you from having a master plan, but it certainly changes how you create and use a master plan.   The traditional master plan was generally the primary reason that projects went off track.  Development groups were able to “disappear” for long periods of time because….after all, we have the master plan. 

The emerging and pervasive thought in planning is that the plan must leverage what we know today.  Historically, plans generally represented what we knew yesterday when the plan was created.  Additionally, I believe there is an increasing acceptance that most of the usable functionality of a system is developed after the initial deployment of that system.  What I mean by this is that most IT Departments spend more money on adding incremental functionality for applications than they do on the initial deployment of the application. 

Of course this reflects the cost over the life of the application but that is the exact point I am trying to make.  Despite our best planning efforts, we have come to realize that we are never “done” with an application.  We find ourselves in a perpetual development cycle, continuously adding feature and functionality to our applications. 

Agile allows you to identify the most current, relevant business issues and focus your immediate effort at solving them.  Keeping yourself committed to fixed time intervals allows you to continuously and frequently identify the “then current” business issues to solve next.     

When it comes to pricing, all of the same drivers affect the price with Agile as with standard SDLC.  In other words, a custom development project that would take 9 months to complete with a team of 6 resources using traditional SDLC will probably take the same 9 months and 6 resources to complete with Agile. 

You’re probably saying, “if it takes the same amount of time and resources to complete a project, what does Agile really do for you?”.   Remember the goal is to be better, cheaper and faster are the gravy.  Agile allows you to deliver applications that are more aligned with the needs of the business in shorter periods of time.  This will translate into the business getting exactly what it wants more frequently, which in turn should reduce re-work, failed projects and costly adds/repairs. 

The real benefit of Agile is that your delivery will be BETTER and this will translate into lower costs.
 
In sum:
Yes, you do get the same clarity of cost/timelines as with traditional SDLC methods – and you do have a master plan or spec – but by interval management, you actually increase the likelihood of delivering effective, tied to real business value, functionality – and thus, over time, less money is inevitably spent on rework/redesign and issue correction.

So you have a more effective mode with Agile – which is the horse before the efficiency cart – so to speak.

Mike Garner and Ken Brande

Randy - here is a reply from our VP of Product Development, Ken Brande.  I hope it helps.

I’d say the governing principle driving application development staffing models is the breadth and rigidity of your software development life cycle (SDLC) strategy.  The more process, checks-and-balances, and oversight to a software development effort, the more staff and higher mix of Project Management, business analysts, etc. you will need.
In our software development strategies we employ the Agile Methodology.  Agile separates from traditional SDLC in three primary areas: 1) development iterations, 2) face-to-face communication, and 3) functioning software as the primary measurement.

Develop iterations are fixed time frames where deployed application functionality is fixed by time as opposed to systems requirements.  Traditional SDLC requires full requirements gathering prior to develop activities beginning where Agile allows for iterations of development and ongoing requirements gathering.  Benefits are: 1) faster time to market for development iterations, 2) flexible requirements gathering, 3) an end product that meets the current needs as opposed to the needs from 12+ months ago.

Agile allows for face-to-face communication and written documentation versus 100% dependency on written documentation.    Agile development teams are often co-located with end users who interact on a daily basis to design, develop, demonstrate, test and release software iterations. 

Agile development efforts are measured in functioning software versus the project task status updates of traditional SDLC.  Basically, did the prescribed functionality get developed and deployed in the fixed time of an iteration.

We have used the Agile Methodology for the past 3 years and have had great success.  Our application development staffing models generally follows this model:

Program Manager – 25%
Business Analyst – 50%
Developer (between 1-3 developers per team) – 100%
End Users (4) – 25%

By leveraging iterative development, we have found that our development teams are more aligned with the needs of the business.  Business priorities are constantly shifting and development teams can be assigned to the most relevant need as iterations are completed.

In our experience the ongoing support and maintenance of a deployed application can requires .5 to 2 FTE per application.  In situations for extensive functionality needs to be added or a re-write is necessary and development team, using the staffing model above, will be assigned.

When selecting contractors it is important to ensure that the resources have a successful track record of developing with an Agile Methodology.  The face to face communications are essential to Agile and for this reason we have not leveraged offshore resources.

Attached is an informative link on Agile Methodology and the advantages that are available: http://www.martinfowler.com/articles/newMethodology.html


Ken Brande
VP, Product Management
c. 309-824-4623
 

How do you see the WAHA (Work at home Agent) trend impacting your industry's customer interaction future?  Do you think your firm will begin using work at home agents in great numbers?  Do you think there are only certain types of interactions (web chats, phone calls, etc) that a WAHA should handle?  What are the big pros and cons of the WAHA alternative to call center structures and how are you making sense of the trade offs?

So far I see direct response TV and travel agent related activities growing the fastest in the WAHA space.  It just seems the expanded, well-educated workforce that firms can tap into with a WAHA model should be driving more and more industries and interaction types to this space.

Thanks!
MG

Where do you plan to spend the most money, time and talent to improve your key business results in 2007/2008 and why?

1) Coaching
2) Training - Design and Delivery
3) Work Force Management
4) Desktop Simplification
5) VRU/Speech Rec or
6) Hiring

Any specific tools or approaches you are considering employing?
Any specific metrics you are watching?

Thanks!
MG

pricing I see is usually 1 penny per AHT second - if a call lasts 300 seconds on average, the pricing usually looks to be $3.00. 

if you have decent utilzation (or billable hours to paid hours) - say 80% or higher - then the total cost per clock hour can come in anywhere from $26 to $32 per hour - all depending on utilzation and AHT management.

I think we're in the same ballpark

best shore v cheapest shore.

It all comes down to the best place on the map for a particular program.

good advice mikect
MG

Benchmarking question - what do you see as the range in the cost per handled second (of AHT) in the USA today?  I see COSTS (not necessarily prices) in the 1 penny to 2 penny per handled second range.

Anyone else see anything different for modeling purposes?
Thanks,
MG

The rates do look quite attractive - up to 40% cheaper than India for call center work.  There is one company - Rising Data Solutions www.risingdata.com - that has a presence in Washington D.C. and is run by Ghanaian management.  They might be a good source for information. 

A friend of mine, originally from Ghana, suggests the following questions be asked of an African service provider - followed up by a site visit to ensure all claims are valid:

Questions:

1.  Given the unreliable supply of electricity, water, telephone service, etc, what infrastructural investments has your firm made?
2.  Some customers may be sharing sensitive personal data with call operators.  How does your firm maintain client confidentiality and guard against fraudulent activity?
3.  US customers are not comfortable with "foreign" accents (with some exceptions).  Can your firm guarantee that all operators, now and in the future, will be clearly understandable and acceptable to US customers?
4.  How secure are the physical location(s) and computer systems?

Regards,
MG