Call centre offshoring exaggerated, claims researcher

Local contact centre seats increasing by 8% over the last 12 months, says report

The media is exaggerating the extent of call centre outsourcing, claims one researcher after a new study showed New Zealand contact centre seats increasing by 8% over the last 12 months.

“Often, the level of outsourcing and offshoring is exaggerated by the media, as it tends to be an emotional and controversial topic,” says Dr Catriona Wallace, managing director of, which undertook the 2008 New Zealand Contact Centre Industry Benchmarking Report.

“Having said that, we see in New Zealand in 2008 that there has been an increase in both outsourcing activity and offshoring. When considering only in-house or captive contact centres, that is, not those who operate as outsourcers or third party providers of contact centre work, in 2007 about 18% or two in ten New Zealand-based contact centres outsourced some or all of their contact centre work. This has increased quite dramatically to 28% of centres outsourcing work in 2008.”

Further, in 2007, almost all outsourced work remained onshore, while in 2008 at least 15% of all outsourced work has been offshored, predominantly to the Philippines, Wallace says.

“Given there are about 27,000 contact centre seats in New Zealand and 28% of organisations are outsourcing some or all of their call work, lets say on average 30% of their call work, then we estimate that up to 2000 seats are outsourced from New Zealand,” she says.

Wallace says given the increased cost of operating contact centres in New Zealand (3% annually, according to the research) and an annual employee attrition rate of 35%, outsourcing and particularly offshoring is a sensible business strategy for some.

“I don’t think the public need to be concerned that New Zealand jobs are going offshore, as this type of work, the routine, mundane work, is not desirable work for many New Zealand contact centre employees,” she says. “We should see increased activity in offshoring as organisations move their high volume transactional work to destinations like the Philippines, India and Malaysia and keep the more complex, relationship based work onshore.

“This is a good thing for the industry.”

The report found that local contact centres are challenged not just by cost and employee turnover, but by technology as well.

Wallace says while phone is the preferred channel, New Zealand and Australia have been slow to adopt self-service channels such as web chat, SMS or speech recognition. But she expects that to change in the next two years.

“Already, we are seeing organisations invest in these channels, 18% of contact centres have an SMS application and 15% more will invest in the next 12 months; 11% have webchat and another 5% will invest in it in the next 12 months; 7% have speech recognition applications and another 9% will invest in it in the next 12 months,” she says.

Contact centres plan to spend an average of $267,500 purchasing new technology and $228,125 upgrading and replacing technology in the coming year. This amounts to an average spend of $495,625 per centre.

The study was conducted in July and August 2008 and based on a survey of 55 contact centre executives, representing 109 contact centres across New Zealand. It found that the local contact centre industry increased both its number of seats and contact centres. Total seats rose by 8%, or 2,114, while the number of centres rose from 325 in 2007 to 340. There are now an estimated 27,074 seats.

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