A new study by London-based research firm Datamonitor suggests U.S. corporations that aggressively invest in speech-enabled self-service technology have the opportunity to reduce long-term dependency on offshore call center operations.However, one insurance call center executive contacted for this article questions the validity of this notion in its entirety, stating that there isn't necessarily a direct correlation between speech-enabled technology investments and offshore call center scale-backs.

Datamonitor's report makes a compelling case for how speech-enabled self-service technology can dramatically change how basic customer inquiries are handled at a contact center.

The report, "Voice Business in Regional Perspective: The Americas," determines that spending on speech-enabled self-service technology in North America is expected to more than double from $480 million in 2004 to $1.2 billion by 2008.

The need to improve customer service, reduce costs and increase top-line revenues has, to this point, spurred investment in offshore call centers, Datamonitor notes. But those offshore investments, according to the study, could be scaled back and replaced by a more cost-effective approach: speech-enabled self-service technology hosted at domestic contact centers.

Low-level transactions

In identifying a more cost-effective way to process low-level inquiries, enterprises have "sharpened their focus" by automating phone-based transactions through speech recognition technology, states Datamonitor.

"If you look at companies across many vertical markets and see where they route calls, the low-level calls often get routed offshore while complex inquiries are routed to domestic call centers," says Daniel Hong, voice business analyst for Datamonitor.

Making the argument for speech-enabled technology more compelling, Hong says that the "popular offshore call center markets, such as India and the Philippines, are rapidly maturing, resulting in increasing wages and higher turnover rates. This is likely to nullify labor arbitrage benefits and thus decrease the value proposition for businesses to open an offshore call center."

For example, turnover at India-based contact centers is currently about 25%, but it's expected to increase to 65% over the next four years-this despite the fact that wages will be on the rise, Hong says.

As a result, companies that have offshore call center operations can further reduce costs with speech technology, but companies that are looking to expand offshore "may find more overall value by staying onshore and implementing a speech self-service solution," Hong states.

Hold the phone

However, a call center executive for one insurance company with an ambitious stake in speech-enabled technology-Los Angeles-based Farmers Insurance Group-doesn't believe that these investments will signal the demise of the offshore call center.

Vince D'Onofrio, assistant vice president, claims support services, for Farmers Insurance, states that while speech-enabled self-service technology plays a vital role at Farmers' two contact centers, "speech-enabled self-service is not the be-all and end-all. You can't just plug it in-it has to be the right application for the right situation.

"The right situations for us are the in-bound calls that are more basic. We have a very high-touch dynamic at our centers. For most calls that come in, it's a case of a customer having to engage a live voice to fulfill their inquiry."

In his experience, D'Onofrio maintains that even basic inquiries that seemingly would not require a live CSR end up requiring one anyway. A customer often will activate speech-driven technology to start out the process, he explains, but ultimately want to engage live support to complete the inquiry.

As a result, this tendency paints a less-than-rosy picture for insurers reducing offshore call centers, as the Datamonitor report suggests.

Farmers, which does not use offshore call center services, operates two domestic facilities, in Overland Park, Kan., and Oklahoma City, Okla. Combined, the two centers handle 17,000 customer inquiries a day and have a total of 550 seats.

D'Onofrio does agree that speech-enabled self-service technology will continue to play a major role in fostering customer service.

Farmers presently relies on a phonetic directory that gives a customer the option to "say" what their inquiry is related to, or respond by pressing their phone keypad when prompted. In the near future, Farmers plans to invest in speech-enabled self-service technology that will leverage phonetics to enable customers to inquire about a claim reimbursement check or to locate a claims adjuster.

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