********The following article appeared in a sponsored supplement to Strategy.*******

More and more companies are choosing call centres as their strategic business solution to achieve improvements in customer service, sales, productivity and inherently, profitability. As they strive for competitive advantage, choosing the right means, either establishing a call centre on their premises or hiring a service bureau, becomes critical to the success of the program.

‘Although on the surface the service bureau route may seem more appealing than setting up an in-house call centre, there are several key factors to be considered before making that decision,’ saidGary Rosaasen, associate director of Phone Power, the alliance of Canada’s telephone companies’ business consulting division. ‘Certainly, if you’re implementing a seasonal program, or need to be out in market fast to take advantage of a window of opportunity, hiring a service bureau will most likely be the right choice.’

But evidently making the right choice is not as simple as one might think. Each option seems to yield its own set of pros and cons.

The service bureau alternative

Because it requires less capital outlay, hiring a service bureau is often considered a lower risk alternative. The initial overhead costs of establishing an in-house call centre can be quite prohibitive, especially for companies considering telemarketing for the first time. ‘Such an investment would be more sensible after testing a program with a service bureau to make sure it works,’ said Rosaasen. ‘If a program doesn’t work, it’s easier to discontinue if you don’t have to lay off personnel, rearrange the office space and dispense with equipment.’

A service bureau can also provide 24-hour service. So if, for example, you undertake a TV promotion that airs commercials at off-hours, someone will have to be available to receive the calls day or night. Unless yours is a long-term program, you may not want to deal with the logistics of offering round-the-clock service.

One of the concerns with service bureaus however, is that their representatives can’t know or understand a company’s policies, products and services, as well as they should, and this may reflect unfavorably on an organization’s image. ‘No one does, or should do, a better job representing an organization than the people who work there. When your company’s reputation is at stake, you want the telephone sales representatives to at least feel like they own a part of your business,’ said Rosaasen.

Some bureaus have been known to hire staff at low wages in their quest to improve their profit margin. They’re then faced with high staff turnover, low morale, lack of loyalty and an unmotivated sales team. However, Rosaasen says there are some excellent service bureaus out there, and a real proof of competency is when customers are unaware that they’re not connected to your company.

The in-house call centre alternative

Establishing an in-house call centre may exact a considerable financial commitment from your company, although call centres have become increasingly economical. Improved technology has lowered equipment costs from a high of $10,000 per Automatic Call Distributor position ten years ago, to an everage of $2,500. today.

Still, it requires freeing up or adding office space, hiring and training staff, investing in specialized equipment and furniture and supervising a new department. You will also incur expenses for computer hardware and software support staff, training and constant upgrades.

On the positive side, your personnel’s primary interest will be with your company. ‘They will develop better relationships with your customers, know and better represent your products and services, and because they don’t have a roster of clients, they’ll be dedicated to selling for you.’ said Rosaasen.

According to an in-depth study of the Canadian call centre industry commissioned by Phone Power in 1994, what prompts companies to set up a call centre is first, improving customer service, and second, increasing sales. ‘Many programs are best handled by an in-house centre. Making the right choice calls for a thorough analysis of your program. But as a basic rule of thumb, if your firm is committed to a year-round call centre program and needs a customized approach to sales or customer service, an in-house centre may be the right choice.’

If the service bureau is the best alternative, Phone Power recommends to their customers that they select one very carefully to ensure that the bureau has the technology, experience and a human resource track record that will minimize the risk of outsourcing. Some of the services bureaus are now expected to provide are database marketing capabilities, fax-on-demand, voice mail and fax mail, scripting assistance, marketing consultation and statistical analyses. Depending on the program being implemented, some or all of these services must be available in the selected service bureau.

According to Rosaasen, choosing a service bureau can be quite a challenge. ‘A word to the wise: do your homework before you hire the bureau that will best represent you. Seeking recommendations from trade associations is a good place to start. Then narrow your selection, get quotations, visit the bureaus, do an in-depth check of all references provided and look at their client lists and call some of them. This six-step process helps our customers make the right decision.’