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. www.answernet.com

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