12 Navigating the Offshore Landscape O ffshore outsourcing is a hot topic for contact centers because--if done right--it can reduce operating expenses by 50 to 60 percent. It's an option that most enterprises should explore when the service and support function does not need to be co-located with other company ac- tivities. But, while the economic benefits are great for companies that exe- cute well, the risks are also significant. Countries like India, with more than 270 offshore sites (as of February 2004), are confronting many of the same challenges that U.S. contact cen- ters have been facing for years, including high agent attrition rates (up to 60 percent), the need to attract and retain valuable employees, increasing salaries, and the unending cycle of hiring and training. However, even with the increasing salaries that contact centers in India, for example, are pay- ing to retain agents, their rates are still 50 to 80 percent below those paid in the United States. Although the economic benefits are compelling, they must be weighed against the challenges in outsourcing contact center ac- tivities in general, which are exacerbated when there are geographical and cultural differences. The Offshore Outsourcing Economics Argument It is hard to argue against the numbers. On average, contact center staffing costs USD$30 to $60 per hour per agent in the United States but only USD$13 to $18 per hour per agent in India and the Philippines. (See Fig- ure 12.1.) Contact centers in India and the Philippines are certainly cost competitive, although rates in India, for example, should increase during the next few years due to competition for good agents. The cost per agent varies based on the complexity and volume of trans- actions (calls and e-mails). Calls for collections are the least complex and 171