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

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