Moving away from FTE Models

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    We were chatting with the Chief of Outsourcing of one of the largest IT vendors in the world. He is responsible for tens of thousands of employees delivering Business Process Outsourcing services, especially in the call center space.


    One of the things he hears persistently from Fortune 100 companies that use their services is the need to move away from FTE (Full Time Equivalent) models of billing the customer. FTE models are the Time and Materials model of billing that most BPO vendors use. Customers apparently hate this, especially when it comes to Call Centers.


    I can understand why!


    There is absolutely no incentive to reduce the number of calls you get from customers or to make
    efficient use of the call center agents if you are getting paid by each hour each agent spends on the phone!


    Customer satisfaction may be the victim in this mode of operation. I am not sure which is better – saving money or losing customers!


    The goals of an Inbound or Outbound Call Center may be selling stuff or collections or support over the phone.


    In all cases, the FTE model skews everything towards the vendor and does minimal good to the buyer of such services.


    The best collections call center is measured and paid by their effectiveness or how much they end up collecting.


    The best inbound or outbound telemarketing call center is best measured by how much they end up selling, not how many people spent how long on the phone.


    It appears that many Fortune 100 customers want to move to better models of billing and compensation for their outsourced call centers and that means measuring things that are more relevant to the business process at hand.


    In fact, the best Help Desk and support call centers receive NO calls whatsoever! Help fix problems so that customers get their answers 24/7/365 on a  web site! Only in the rarest cases do they call in.


    The best sales and marketing call centers get paid by the results they produce.


    Of course, compensation models may not get tied to results ONLY totally anytime soon. There will be a base amount and a bonus component that is based on achievement of results and metrics. Just like successful Sales Compensation models.


    That may be the first step towards getting compensated based on other new esoteric models like
    "total number of people supported" or "potential number of prospects". 


    The whole idea is to change the compensation model in such a way that customers feel that they are getting full value for their money.


    If outsourcing vendors pay attention to this, they can even avoid the risk of these business processes moving to lower cost countries. After all, if the service is already highly efficient and effective, any move for lower costs will end up costing the buyer of such services only more!


    If you are only doing what you are getting paid for, and doing it no better than the average employee, then your pay is most likely right where it should be.
    — Bo Bennett