Call Centers Find Savings Begin at Home

November 18, 2005
For years, Tim Whipple managed in-house call centers at Victoria’s Secret. And despite the company’s reputation for style and glamour, it was far from fun.

    "I would have to take whoever walked in the door and make them a call center rep," he says. That inevitably meant costly training, substantial motivational challenges and high turnover.

    Life changed for Whipple in April when he joined LiveOps, a Palo-Alto, California, outsourced call center that uses home-based agents exclusively. Companies that use call centers might find the switch to home-based agents just as refreshing.

    Relying on home-based workers has huge advantages, Whipple says. Home-based workers tend to be self-starters. Because an increasing number of workers want to work from home, companies like LiveOps and WillowCSN, a Mirimar, Florida, outsourcer with 3,000 home-based agents, are able to bring on more educated and experienced agents than one would find in a brick-and-mortar call center.

    "When you pay $7 to $9 an hour, it’s hard to find quality people," says Basil Bennett, president and CEO of WillowCSN. Eighty-five percent of Willow’s agents are college-educated, and more than 50 percent have worked as supervisors before.

    The client’s experience also is better with home-based agents--there is always an agent available. A caller never has to leave a message or wait on hold, Bennett says.

    There are an estimated 100,000 home-based phone representatives in the United States. The Gartner Group predicts that by next year, 10 percent of all call centers will be using home-based agents in some capacity. Costs are driving the trend. The typical cost, including training and overhead, for an in-house call center rep is about $31 an hour, while a home-based agent costs around $21 an hour.

    While it may still be cheaper for companies to move their call centers offshore, this is often not an option for companies that are selling products and need agents who understand the culture of their clients.

    Outsourcing to companies with home-based agents is particularly beneficial to companies that need scalable workforces. For example, McKesson Health Solutions, which provides disease management services to employers, needed to be able to ramp up the number of agents it had during peak times without having to lay people off when things slow down, says Mike Modes, vice president of operations. Whenever McKesson signs on a new employer as a client, for example, its agents have to call all of the client’s employees to offer disease management assistance, so peak times occur when several clients come on board. McKesson has saved tens of thousands of dollars a year by using home-based agents through Working Solutions, an outsourcer in Plano, Texas.

    The home-based model is often cheaper because agents are only paid for the time they are on the phone. LiveOps pays agents up to $1 per minute they are on a call, which means workers can make as much as $20 an hour if they are high performers. Since most of LiveOps’ clients are selling a product, agents work off of a script, meaning that they don’t require extensive training. Typical calls last three to 10 minutes. This compensation model also addresses the motivational challenges, because agents who do not perform well do not get calls routed to them, Whipple says.

    With 6,000 agents throughout the country, Whipple doesn’t have to worry about turnover. He says there are no recruiting issues either. "We only bring in 5 percent of the people that apply," he says.

    One challenge in managing a home-based staff is making sure that the workers are reliable. To address this, WillowCSN requires applicants to pay for their own background checks, take a PC proficiency test, undergo a psychological evaluation and take part in a live role-playing exercise that tests their abilities to both sell to customers and provide service to them.

    If they pass, workers are then required to take a 20-hour training course. "We want to give our agents a little skin in the game," Bennett says. "We figure that if they go through this whole process, they are more likely to stick around."

Workforce Management, November 21, 2005, p. 14 -- Subscribe Now!