We initially thought that 2020 was “the” year for change and seismic shifts in the BPO industry — and it was. However, we didn’t know that 2021 would bring even bigger changes and reverberations to the BPO landscape. 

We work with hundreds of BPOs and brands that utilize outsourced contact center services. We lean in and obtain feedback constantly, and we’ll do our best to cover at least some of the major trends and catalysts in 2021, as well as what to look out for in 2022.

In August, we discussed the surge in outsourcing demand in 2021, so I won’t spend too much time on it here. Let’s just say that brands are continuing to struggle with supply chain issues, contact center volumes are holding steady or rising in most sectors while dropping in others, self-service options are helping to alleviate simpler service issues, interest in global outsourcing is increasing, and we are still dealing with the effects of 2020. 

Let’s delve right in…

Long Term Effects of the Work-at-Home (WAH) Shuffle

We all know that the COVID-19 pandemic forced the BPO industry into unchartered territory. For many BPOs, the shift to WAH was seamless, for others not so much. Many still struggle to find their footing even in a hybrid in-center/WAH staffing environment. 

As we shifted to WAH for call centers, our industry played up the “coolness” of a virtual workforce to attract talent. And, of course, many advantages come with dispersed, on-demand call center teams who can work from “anywhere.” Some of these include:  

• Scheduling flexibility for agents, improved work-life balance
• Better contingency planning and business continuity
• Access to an expanded national talent pool 
• No commuting, reduced carbon footprint
• Increased employee engagement and retention

I think it is reasonable to ask — how many of these (and other) advantages have played out as predicted? In several of our industry sectors, brands and BPOs are thriving together with a successful WAH program and have committed to maintaining the status quo. 

At the same time, we hear from many brands and BPOs where, in 2021, WAH fatigue really kicked in. Here are some of the pain points shared with us:

• WAH vs. in-center performance remains an area of concern  
• WAH agent turnover and retention are no better than in-center
• Negligible cost differences between WAH and in-center BPO services
• Workspace, connectivity, latency, and other “home-based” challenges continue
• Applicants not taking the job seriously — don’t fully understand the training, commitment, and complexity involved in a call center job
• “Agent isolation”— feeling detached from the company and peers, missing the social interaction of in-center environments

As we look to 2022 and beyond, brands and BPOs must find the right formula based on “real-world” expectations, not perceptions. COVID-19 is here to stay, WAH is here to stay, but so is the brick-and-mortar call center. In some sectors, trend lines are pointing to an uptick in demand for a return to in-center in 2022, but we shall see.

Skyrocketing Costs

In 2021, we witnessed the most dramatic price increases in the U.S. (onshore) BPO sector than I have personally seen in my 30+ years in the call center industry. Because labor costs comprise more than two-thirds of BPO operating expenses, the biggest impact was felt by brands that rely on third-party BPO services. 

Keep in mind that pre-COVID the unemployment rate in the U.S. dropped to 3.4%, which made recruiting at competitive wages challenging for BPOs. As a result, we began to see an uptick in outsourcing costs and higher productive hourly rates in 2019. In 2021, a new set of problems beset upon us, including staffing shortages and intense competition for quality labor.

In 2021, every single one of our BPO partners in the U.S. raised prices and wages by an average of 20-30% or more. For BPOs and most company-owned or in-house operations, the all-in productive hourly rate is usually 2 – 2.5x the agent’s wage rate. In simpler terms, here is how productive hourly rates (for outsourced call center services) in the U.S. increased in the past five years based on our data:

• 2017-2018: $27.00 - $28.00
• 2019: $29.00 - $30.00
• 2020: $29.00 – $32.00
• 2021: $34.50 - $39.00

The above price ranges are for mid-level to complex BPO services (inbound, outbound, omnichannel, 2-4 weeks of agent training and nesting).

Only a few years ago, BPOs were recruiting agents at $10 - $12 hourly wages (slightly higher in major market centers like Dallas, Phoenix, etc.). According to ZipRecruiter, today's average agent wage is $16.00 or $32,625 per year. Today, BPOs are offering $15 - $17 hourly wages at minimum, just to be competitive with other BPOs and companies like Amazon, which offers starting wages of $18 plus sign-on bonuses. 

In 2021, 2022, and possibly beyond, brands that use onshore U.S. BPO services should expect to pay a productive hourly rate in the mid-to-high $30s if the brand wants high-quality services. In addition to higher productive rates, expect the following to start popping up in BPO contracts in 2022 and beyond:

• Staffed hourly rate bids (payroll hour) vs. productive hourly rates (payroll hour minus breaks)
• Fees for supervisors and other support staff
• Higher cost of living increases (COLA allowances)
• Attrition and backfill training fees
• Variable compensation models
• A wage premium for in-center agent staffing

And it needs to be pointed out that there will always be a sector of BPOs that intentionally offer unsustainable below-market pricing to “buy” a brand’s business — but is this worth the risk to your reputation?  

Hiring and Attrition Challenges — Here to Stay?

Inexorably connected to rising cost is the monumental problem of hiring and staffing WAH and in-center. In May of 2021, we wrote an article discussing the U.S. staffing shortages. Most of us expected staffing to be a short-term problem impacting our industry. After all, aren’t we “the” staffing experts? 

Even with the rise in global outsourcing, the U.S. is a $25 billion call center industry employing nearly 500,000 workers. In fact, 2021 proved to us that we have a long way to go before we see an improvement in hiring, and it is entirely possible that staffing problems will continue throughout 2022 and beyond. 

I think it is worth asking — isn’t WAH supposed to be the solution for hiring, retention, and turnover challenges? As it turns out, no. In fact, many brands and BPOs have reported to us that the idea of working from home may be contributing to the decline in applicant quality. Why? 

Again, because applicants view the call center job as a short-term way to pay bills or transition to something better. The misperception is that a call center job enables the applicant to sit at home in pajamas “answering calls” like a receptionist or call answering service, and it is “no big deal.” 

Applicants are simply not taking the job seriously — so whose fault is that?

I have been saying for years that as an industry, we are failing at educating the applicant and the business world in general on the vital role that a call center agent plays in our economy. We’re not talking about the short-term and longer-term benefits of working for a top echelon call center firm. 

What happened to the days when we attracted call center workers by offering career path advancement in addition to competitive pay and other benefits? We have become so focused on moving the masses and filling seats that we seem to have strayed way off message when it comes to hiring, developing, mentoring, and retaining top-level talent.

Agent Turnover — Why Are They Quitting?

We’re seeing the stats constantly for the U.S. labor market in 2021 — people are quitting their jobs in record numbers. This only compounds the “business-as-usual” turnover problems that the BPO industry has been dealing with since its inception. 

There used to be a time when call center agents would quit a job to go work for another BPO offering higher pay or a more suitable environment. Now, agents are quitting “just because.” I do not want to get into a philosophical debate about appreciation for the job, but an element of this has reared its ugly head in 2021.

HR and ‘People’ Investments in 2022

In 2022, expect BPOs and internal call center operations in the U.S. to invest heavily in HR if they are not doing so already. Intelligent recruiting and retention practices, including digital and social recruiting, will be essential. Corporate Social Responsibility (CSR) recruiting is equally important for those operations focused on purpose-driven business practices. 

The best BPOs and internal operations concentrate on the root of the aforementioned problems around hiring and mitigating voluntary quits or separations. These operations are investing heavily in “A BEST-PLACE-TO-WORK CULTURE.” 

They are people-centric, not just in their sales pitches to clients and social media proclamations, but in practice, daily, constantly, and obsessively. They do not view hiring and retention only in quantifiable measurements or, simply, as a two-way turnstile. 

Successful operations strive for the best “people performance” because they keep the “human” element front and center, above all else. And this applies to leaders as well, because your operation is only as good as your agents and the leaders who lead them. Turnover and burn-out impacts front-line leaders as much as it does agents. 

Rising Demand for Nearshore and Offshore

Let’s be honest, here in the U.S., in many sectors, a call center job is still viewed as a last resort. Whereas in nearshore and offshore countries, in general, a call center job is considered to be a way forward, a career, and an aspiration. In 2021, we saw a significant increase in demand for outsourcing outside of the U.S., and this trend will continue into 2022 and beyond.

Nearshore 

The nearshore market is experiencing a tremendous uptick in demand due to U.S. labor market challenges, offshore fatigue, shorter travel times, cultural affinity, competitive rates, superior English comprehension, geographic proximity to the U.S., and less saturation. Nearshore was already on a significant upswing pre-COVID, and the region continues to thrive as a destination both for BPO vendors and captive/in-house call center operations. The number of expatriates choosing to work in nearshore call centers is increasing, which only adds to the region's attractiveness.

A message to nearshore BPOs: The spotlight shines bright on the region, and expectations are high. However, a demand spike can put stress on the region, and labor markets could start to experience saturation. A lower price plus English-speaking agents is not a solution. Those BPOs touting lower costs and English agents as their key selling points are only commodity and transactional BPO operations.

U.S. brands and buyers of outsourcing services are attracted to nearshore for much more than baseline expectations. They are seeking complex solutions, a dedication to customer experience, scalability, English levels that are equal to or better than the U.S., advanced technology and tools, stability, tenure, innovation in process and training, airtight compliance and data security, and the top echelons in quality, leadership, and service delivery.

Offshore

Traditional offshore markets like the Philippines remain the largest de facto outsourcing destination for scalable English. However, over the past few years, we have seen a decline in demand for Philippines outsourcing for several reasons, including intense competition, market saturation, staffing challenges, and, more recently, COVID-19 related issues.

Emerging markets in Sub-Saharan Africa, including Kenya, Ghana, and South Africa, will continue to grow in 2022 and beyond. North African geos, such as Egypt, are stalwart BPO markets for U.S. and European brands. And the Asia Pacific sector expects to see geos like Malaysia, Vietnam, and others making their mark.  

The pricing delta between mature and newer offshore markets is rapidly closing, enabling new entrants to grab market share right now and in the years to come. Emerging destinations offer relatively unsaturated and untapped labor resources and well-educated, talented customer service professionals combined with maturing BPO industries.

So Where Do We Go from Here?

As an industry, we are fortunate that demand is at an all-time high for our services, and it is incumbent upon us not to let our brand partners down. Many brands are looking to outsource for the first time, and they need our expertise to guide them along a successful outsourcing journey. Larger and savvier outsourcing service buyers know what they want from BPOs, and we have to be equally savvy in our service delivery.  

In 2021, we witnessed the evolution of brands utilizing discerning due diligence practices to find and select their BPO partners. We applaud you for this. Selectivity in choosing your BPO partners can and should lead to more successful outcomes for the brand and BPO alike. Most brands or “clients” that we work with are seeking proactive, agile, flexible, stable, consistent, and value-added partnerships, not just “people in chairs” or commodity BPOs.

We overcame a lot since the difficult days of 2020, did some great work in 2021, and expect 2022 to bring forth new challenges. We are a resilient industry, and the future is bright, so let’s continue to strive for world-class!

Here’s to wishing you, your families, co-workers, and service teams happy holidays and a safe, productive 2022!