Oregon, Minnesota, Kansas, Florida - these have always been mutual fund companies' middle-America domains when it comes to cost-effective call centers.

But with the overall cost of a service center representative easily topping $45,000 a year, call volumes way down amid a depressed market, margins thinning, layoffs putting many call centers at half capacity and investors asking tough questions - some fund companies are joining other leading American corporations in some truly out-of-the-box thinking. They're moving their back offices and call centers overseas.

And they're not only finding that call center employees in Manila, Johannesburg or New Delhi can cost as little as $4,000 a year in salary and operations costs can fall by 40% or more. They're also discovering that these are dedicated, motivated, smart workers who take their work so seriously that they view it as an executive career.

In fact, earlier this month Fidelity U.K. confirmed that it is transporting 1,000 back-office positions in account administration, computer systems and support from Tonbridge and Lower Kingswood, England to New Delhi, India.

As for Sony's decision to move to the Far East, "the people in Manila are very customer-focused, very polite," said Maureen Read, vice president, operations and customer information services for Sony Electronics. Read oversees Sony's 600-seat call center in Fort Meyers, Fla., and outsourced an additional 100-seats in the Philippines a year ago. The experiment, where a multitude of product-related questions are handled, has been going so well that Sony is in the process of setting up a 20-position e-mail service center in Bangalor and a 50-position call center in Janai, both in India. Although Sony is testing the overseas waters with only a few seats at first - new positions that are not replacing existing jobs in the U.S., Read is quick to add - it is quite possible that Sony might expand further overseas.

JVC National Customer Relations Manager Mike Colicchio, who also runs a 25-seat call center in Manila, says these are "truly customer-centered" employees who "continually show a willingness to do just what we need."

As to whether setting up shop on the other side of the world was a hard decision for Sony, Read responds: "As long as you understand business and the challenges of the ways the world, you can make these leaps."

Dramatically lower telecommunications costs and the availability of a well-educated work force is what has made all of this possible, said Robert S. Brennan, senior vice president with Georgeson Shareholder of New York. For example, the cost of a T1 line from the U.S. to Manila has fallen from $20,000 a month to below $8,000, said Brennan, whose subsidiary firm, Source One Communications, is the contact center provider for both Sony's and JVC's Philippine call centers. For customers dialing into Sony or JVC's 800-number phone lines, the fact that the call is being answered half a world away is never apparent, Brennan said. The Philippines invested heavily in a self-healing, fiber-optic network that provides superior voice/data quality vs. older, more inconsistent satellite-relay methods.

But voice quality and cost controls are not a company's only concerns when making the decision to turn overseas. Fund companies regard this point of contact as critical for retaining customers, Brennan said.

Not Just a Cost,But a Profit Center

As Phyllis J. Berman, senior managing director with Georgeson responsible for hiring, training and NASD licensing these overseas call center reps puts it: "Call centers can also be a point of product differentiation. The mutual fund industry is a mature industry trying to maintain clients and build bigger market share."

"Every one of the major banking, insurance and credit-card companies has an initiative in place to take advantage of India," said Susheel Kuriean, president, U.S. operations for ICICI OneSource, a financial services outsourcing firm headquartered in New York. "In the asset management space, there are some early questions being asked."

For its clients, Georgeson has a workforce comprised of 100% college-educated phone representatives who perceive the opportunity to work for a major, international corporation based in the United States as a fantastic career move, Berman said. "The quality of people impacts all parts of the business." Turnover, for example, has cost implications and is particularly problematic with nearly 50% to 70% average annual turnover at call centers in the United States.

Special IT Zones'

Despite concerns about political unrest or cultural differences, Brennan said there are foreign destinations that can serve U.S. companies well. Manila is shaping up to be a good match for the U.S., and Johannesburg, where a myriad of languages are spoken, serves Europe well. And the governments of developing nations are giving their backing, too. With unemployment and underemployment in the Philippines topping 25%, the government has established "special IT zones" where foreign corporations can enjoy tax breaks. All told, between the motivation and lower cost labor base, surprisingly robust infrastructure in third-world locales and the backing of local governments, the ramp-up time for bringing on new clients in the call center can be as quick as 10 to 14 weeks, according to Georgeson. The company also relieves the risk of moving overseas by charging on a per-minute or a per-hour basis, so that companies are not paying for idle time, and will also start with a "proof-of-concept" period over six months before asking for a multi-year commitment.

As to the bigger question about what farming out mid- to low-level U.S. jobs overseas will do to the mutual fund workforce, Georgeson, ICICI and the other companies doing this maintain that improving customer service will only strengthen industries and provide more job security for the people working in them.

Copyright 2003 Thomson Media Inc. All Rights Reserved.

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