Posted On January 23rd, 2013
As the volume of call centre outsourcing companies has boomed, so has the proliferation of middlemen who provide business to these companies. Around the world, these people are called a variety of things including brokers, consultants and independent business development professionals. What I'm referring to are the people who bring work to outsourcing companies normally (but not always) in exchange for a commission. They are especially prevalent for offshore projects where the overseas vendor doesn't have a UK sales presence. There are a number of them who do exactly what is expected of them but there are also many others who do not. The relatively low barriers to entry have attracted a number of 'chancers' to the professional of call centre project brokering. This has tarnished the overall reputation of this group among clients and call centres alike even though many of them are highly professional. This article looks in a little more detail at what this group and I will use terms such as brokers and consultants interchangeably throughout this article to mean the same thing. This might cause offence to the higher value 'consultants' who don't wish to be tarred with the same brush as the many poor quality people and businesses who operate in this sector. I don't aim to cause offence. My aim is to help people to differentiate between the good, the bad and the ugly in what can be a minefield for those without the years of experience I am fortunate to have.
The different structures
The way these middle-men work varies but here are some of the standard processes:
- The broker places the project with the vendor. The vendor contracts directly with the end client and pays a referral fee to the middleman. This is either in the form of a one-off payment, on-going commission or a combination of the two.
- The broker contracts with the client and then sub-outsources the work to the vendor. The broker receives his commission and then pays the vendor minus his commission, the amount of which is often unknown to the vendor.
- The broker finds suitable vendors for a client. The client contracts directly with the vendor(s) and the broker receives a consultancy fee from the client. Sometimes, the middleman also receives a commission from the vendors.
- The broker is on a retained monthly payment and then receives additional commission for work brought in. The broker will then typically work either exclusively or semi-exclusively for the vendor. This example is fairly similar to employing an in-house business development manager but will usually work out cheaper. In this situation, the broker will offer his best opportunities to the vendor paying the retainer and then place the work they reject with other centres who pay them on a commission-only basis. How to differentiate between the good ones and the bad ones
I've heard of loads of different theories behind this so I will try to incorporate those which make the most sense in this section. It's best if you answer these questions.
- Do the standard things you would do if assessing any client especially when the broker is the one who will be paying you. How long have they been in business? Do they have any references? Can you find out anything about them on the internet? However, you should always be careful about what you read on the internet. I have seen many negative reports about the good brokers and it's normally from call centres which simply haven't delivered and are bitter.
- You should also assess whether you believe the project will make you money. The vast majority of performance based projects simply don't make any money. Can you check with existing vendors whether this is a viable project? If it is viable, why are they not expanding with it?
- How much due diligence has the broker done with you? A good broker is concerned about his or her reputation with both the vendors and the clients and will want to ensure that the operation can deliver.
- How credible is the information you are receiving from the broker? I've seen lots of postings on sites such as linkedin from brokers offering unrealistically high payouts for offshore call centres. I view these in the same way that I view emails I receive offering me millions of dollars from people claiming to be former Nigerian Oil Ministers. If a broker based in India is offering you UK customer service work when you've never done it before, it might appear tempting. However, you should ask yourself why a British company would choose to entrust the outsourcing of its inbound traffic (the lifeblood of its business) to a 3rd party in India who then seems to be very keen to give you the business without going through the processes you would typically expect. The moral of the story is that if something sounds too good to be true, then it probably is.
- Does the consultant add any value to the process? Sometimes, it might simply be enough for them to be a business development resource for you. Most brokers will often give advice and even training to make the project work as its success benefits all parties. Some brokers might expect to be paid for this in addition to the commission and in many cases, this is totally reasonable.
The different types of middle men
The types of individuals and indeed companies involved in 'brokering' varies. For some, a broker is just that, a broker. They find projects and place with them with whoever they deem to be the most appropriate vendor. They are effectively independent business development people. Some of them are good and some of them are not. Sometimes 'brokers' offer other types of support services such as consultancy, training or data. Some brokers are often call centres themselves. A number of small to medium sized UK vendors have sub-outsourced some of their work to offshore partners. However, the supply of these UK based outsourcers is far outweighed by the demand and the majority of these partnership arrangements will fail.
What they do wrong
Sometimes there are multiple brokers involved in a deal, each taking their own commission. A UK broker might have a client based in The UK. This broker then sub-outsources the work to another UK broker who in turn outsources it to an Indian based broker who then outsources it to The Philippines. The distance between the end-client and the delivery operation has a major impact on the quality of the work delivered. Invariably, the financial model does not work for the outsourced vendor as too many people have taken a cut. It's also worth noting that the more people who touch the money, the less likely you are to be paid. Low-quality brokers consistently deliver unprofitable projects. When I say consistently, I actually mean all the time. The worst of the brokers will find projects where the payment structure is based on some kind of rewards mechanism such as commissions on sales. The low-quality broker will then typically over-inflate the expected results often based on 'imaginary call centres'. In any industry, a good customer wants its supply chain to be profitable. It's the same with call centres and good broker swants the centres they work with to be profitable.
So What can the vendors do?
First of all, you should ask yourself which broker(s) have brought you the best business in the past. If the answer to the question is that no broker has ever brought you any good business, then you should question your strategy immediately to ensure you either find suitable ones or stop wasting your time with them. If you have worked with good brokers, then you should nurture that relationship. You should work with the broker to ensure that they are getting what they want out of the relationship. The demand for good brokers far outweighs the supply and it's important to remember this. It's also worth noting that good brokers have a relationship with their clients. If they have centres that they're comfortable with due to strong past performance, then they will undoubtedly choose to continue with them so it's often hard to break in to their vendor list. If you really want a broker to take you seriously (and indeed end-clients), then you need to be able to differentiate yourselves and offer the broker something they don't get from their other vendors. I can assure you that differentiation rarely means rock bottom prices. Any broker or end-client can get that from anywhere and it never means a quality service. Conclusion
Any type of outsourcing business which comes easily is often bad business. If you want to win good business, then you have to invest. This always means time and it often means cash. If you really want to secure the best brokers, then you may have to pay a retainer. If you choose to go down this route, you should set clear parameters as to what you would like to achieve. If you want inbound business, then choosing a retained resource is pretty much the only way to go. Once you have an arrangement with a broker in place, you should ensure that your operation delivers. The broker has entrusted you with their reputation. The broker can't be expected to babysit the delivery of the operation but they are ultimately responsible. You can rest assured that if you ruin the reputation of a broker with its clients, then they won't deal with you again and the good brokers know each other and poor reputations quickly spread. In short, the advice is to do the basics of business; think long-term, determine your marketing strategy and have an operation which performs as it should.
This article was written by Rob O'Malley, a leading expert in call centre outsourcing. His number is +44 77400 96598