Gary Pudles, president of AnswerNet, a Witherspoon Street-based call
center firm, has more than 1,925 employees in 54 call centers in the
United States and 75 in Canada. But if a potential client wants
rock-bottom prices, he partners with a friend who owns a 1,000-person
call center in the Philippines.
So Pudles is not opposed to outsourcing to another country. “Our
system is built on the philosophy that the company that can provide
goods and services at the level desired at the lowest possible price
is going to get the business,” says Pudles. “There has always been a
lower cost place in the world to provide services. But my dad taught
me you get what you pay for.”
Outsourcing was less controversial when jobs went from New York City
to Iowa, but when jobs went from Iowa to Ireland, and then to
Bangalore, Americans got uncomfortable. “It’s not so much that jobs
are leaving the U.S. but that, more and more, jobs are not being
created here,” says Pudles.
As globalization author Tom Friedman told Wired magazine, what once
was “Finish your dinner, people in China and India are starving,” has
become, “Finish your homework – people in China and India want your
job.”
During the dot.com boom, Friedman explains, investors poured money
into companies that were trying to “wire the world” by laying
thousands of miles of fiber optic cables under the oceans. In a rush
to solve the Y2K problem, some companies sought out cheap software
workers to recode their programs, and the IT capital Bangalore was
born.
Then the dot.com crash ushered in a greater need for companies to be
able to cut spending – and outsourcing for cheaper labor abroad
increased. It was in this climate that, seven years ago, Pudles bought
a 75-person call center in Toronto.
Pudles grew up in north Jersey, where his father worked for Exxon in
Linden and his late mother was a bookkeeper who worked in real estate.
He went to Syracuse, Class of 1984 and to law school at American
University. After a stint at a traditional law firm, he headed
projects at Muzak and Sprint buying into the answering service
business and leading its expansion. Now AnswerNet has 55 contact
centers for outsourced calls and fulfillment services.
Canadian labor is not as cheap as Indian labor, but when Pudles bought
the Toronto site, the Canadian dollar was worth just 73 cents. “We got
into real price wars and I had an alternative that was much lower cost
– it was 25 percent less,” says Pudles. “This allowed me to compete on
price a little more, which I don’t like to do, but sometimes you don’t
have a choice.”
It is significant that Pudles chose Canada. People are ethnocentric by
nature, he insists, and Canadian agents are the most like American
ones, which is part of the reason that, until two years ago, Canada
was the fastest growing country for call centers. AnswerNet’s clients
included Staples Canada (Business Depot), Motorola, and H&R Block.
Also from Toronto, AnswerNet provided French and Chinese language
services for American companies.
Language and culture can indeed be a deterrent for outsourcing
contracts for call centers, which need to reflect the personality of
the company. “For some functions, such as technical support, accents
and cultural differences may not matter,” says Pudles. “It does matter
when the call center agent must interface with a customer on a more
sensitive subject, such as medical issues.”
Pudles tells an anecdote from a colleague who owns a call center in
India. Its young agents were raised to be respectful to their elders.
“When they first started taking calls for a medical company, they had
a problem. Senior citizens were insisting that they wanted their
medical problems fixed `right now’ and the agents were going off
script to try to obey.” The agents had to be retrained.
What with the training needed for lower level agents and for middle
management, outsourcing does not offer a dollar for dollar savings.
“India is not very strong at middle management/operating levels,” says
Pudles, “and this affects the ability to communicate with clients.”
But it certainly is cheaper. According to the Princeton-based Boyd
Company, call center operation costs in India are 75 percent less than
in the United States, compared to 25 percent less in Canada.
“For companies with small projects, the savings isn’t worth the extra
hassle,” says Pudles, recounting the inevitable clock issues. “Because
they are serving the American market, there is a night-time economy
that never existed before. Their body clocks get upset.” Also, because
of the 12-hour time difference in India, American owners may need to
stay up overnight to talk with the call center managers.
“In some cases outsourcing works very well and in some cases it works
terribly,” says Pudles, noting that Dell brought its help-desk support
back from India because of many complaints.
American firms use the threat of outsourcing as a labor management
tool, he suggests. “Last year in Newtown, Pennsylvania, ICT employees
sued for not being paid correctly. One day the company announced that,
because of a court ruling, it had to increase its reserve. And the
next day it said it would take 55 or 60 percent of its business
offshore,” says Pudles. He does not believe this sequence of events
was a coincidence.
Severance benefits are also used as incentives for outsourcing
strategies. Last month the Bank of America outsourced 100 IT jobs to
India and the downsized personnel were required to train their
replacements to qualify for the severance.
Pudles points out that he outsources in reverse: He has clients in
India who bring their business development contracts to AnswerNet in
Princeton. One of his favorite mantras: “Although the world outsources
to India, India outsources to AnswerNet.”
AnswerNet Network, 345 Witherspoon Street, Princeton 08542;
800-411-5777; fax, 609-688-8709. Gary A. Pudles, CEO, president
