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The Economics of Nearshore vs Offshore Contact Centers

Nothing worthwhile comes cheap. If you’ve ever purchased no-name appliances or cheap, mass-produced electronics, you’ve probably learned that lesson firsthand. The same rule applies to your contact center partner.

Hosting an in-house contact center compared to an outsourced contact center represents a strategic investment. There is no denying that outsourcing makes great economic sense in many (if not most) situations, but you don’t want to be caught in the neon glow of a low price point only to have it zap you.

We know that offshore solutions often offer lower transactional costs. The question to be asked is: what are you sacrificing to get that price point? Which then begs the question: Is that sacrifice going to be good for your business in the long run? The recent increase in reshoring suggests that many companies are finding the answer to that follow-up question is no.

The Return of North American Contact Centers

In recent years, there have been several high profile instances of contact centers moving back to North American shores after a stint overseas. General Motors, Delta Airlines, and CitiBank are only a few name brand examples. Plenty of other companies have reconsidered their customer service exodus from the North American continent in the 80s and 90s. And the reason why comes as no surprise.

The disconnect between the service expectations of North American customers and the reality of most low cost, offshore solutions can lead to negative customer service evaluation scores and the degradation of lifetime customer loyalty. That reality has influenced the return to nearshore solutions for companies where the customer experience is a core differentiator in their competitive space.

Even those that aren’t making the full-blown shift see the value of a nearshore solution for mission critical business clients. If your business has Microsoft as a key customer, you do not want a bad service experience to cloud your long-term relationship. You do want your highest touch, highest quality, kid glove clients to be handled by your A team.

The cost of cultural compatibility is now being built into many offshore offerings. It’s not unusual to see questions about “cultural training” costs in call center RFPs. This question is basically assessing what budget line will cover the expense of training offshore agents to be able to converse easily with North American customers.

In other words, there is a budget line dedicated to training agents to be able to talk about North American pop culture, weather, and sports. That’s an expensive process and it’s a line item that doesn’t exist for nearshore providers. That’s why for big enterprise solutions, we expect to see even more conversions over to US and Canadian Call Centers.

The Economic Value of a Canadian Call Center

Right now, your dollar will go further with a Canadian Call Center than one within the United States. As of this posting, one Canadian dollar is equal to about 80 cents American. Though that rate is bound to fluctuate, forecasts predict that the US will enjoy a financial advantage for the foreseeable future.

The monthly US jobs report, which is often a strong indicator of market trends and economic topography, just came back with another strong report. Over 280,000 jobs were added in the US in May, bringing the annual total thus far to over 1 million payroll positions. Only one month this year has added fewer than 220 jobs. There’s some serious momentum building up. This last month, Statistics Canada also reported a strong month, which at least contributed to the current exchange rate remaining level. Our economies are closely linked, so it’s not uncommon for the US and Canada to prosper together.

As of right now, the forecast for the next few quarters is pretty static. Predictions through Q3 of 2016 suggest that the Canadian dollar will remain between 0.78 to 0.81 U.S. dollars. Even then, barring a major earth shattering upswing, it would take the Canadian dollar at least two years to be on par with the US dollar.

The Canadian dollar has ridden below or at par with the US dollar for most of the 20 years. That means, you can expect your Canadian Call Center to be cost competitive for the long haul. But price alone isn’t what makes a Canadian Call Center a great extension of your business.

The Quality Component of a Canadian Call Center

A Canadian Call Center is more than just a cheap bill. It’s an investment in the quality of your customer service arm. In the past, we’ve focused on what makes nearshore Canadian Call Centers an easy win for your business. All of those facts are still true today.

Canadians are consistently at the top of OECD countries for college education. More than 55% of Canadians who are age 25 to 34 have a college education. Canadian call centers on the whole enjoy lower attrition rates than those in India or the Philippines too, and the cultural gap… Well, what cultural gap? You can count on a Canadian call center agent to be able to fill any potential dead air with chat about the playoffs or the demise of American Idol without any cultural training whatsoever.

If you want to learn more about the economics of nearshore vs offshore contact centers or the other advantages of working with a Canadian call center like Blue Ocean, don’t wait to contact us today.

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