Global Crossing Is One of the Biggest Beneficiaries of the Shift and Trend?
Eager workforce, lower costs shift tech help overseas
BY KRISTI HEIM
Mercury News
Published Sunday, Jan. 6, 2002, in the San Jose Mercury News
www0.mercurycenter.com
SHANGHAI, China -- When an executive in Georgia hits a snag in his PowerPoint program, Rod Chen is there to take the call.
What the executive does not know is that Chen, a 25-year-old Microsoft customer-service representative, is sitting on the other side of the world in Shanghai.
Taking advantage of the English proficiency, technical savvy and lower wages of workers like Chen, Microsoft is shifting more of its technical support overseas to China.
And other companies eager to cut costs are doing the same. America Online relies on workers in the Philippines to answer customers' e-mail queries. Amazon.com, RealNetworks and Palm are part of a growing number of companies that outsource customer support to India. The volume of service handled overseas is rising as the cost of long-distance network communications falls. Like the manufacturing industry before it, the service industry is becoming increasingly globalized, and skilled workers abroad are playing a larger role.
Five thousand miles from Redmond, Wash., Microsoft's new global-support center occupies four floors of a Shanghai high-rise. Inside are the familiar refrigerators stocked with free soft drinks, employees in jeans and T-shirts working in quiet cubicles 12 hours a day and the company's famous competitive zeal.
Every day, employees are ranked based on their customer-service satisfaction rates, and their scores are posted on an office bulletin board. Chen's score was at the top of his group at 81 percent.
``Yes, there's a lot of pressure, but it's fun,'' said Chen, a recent graduate in computer science from Shanghai Jiao Tong University, one of the city's 40-some universities.
Microsoft in Shanghai
For Microsoft, local Chinese employees in Shanghai are now taking on technical-support work that was done a few years ago in the United States, Britain or Australia. The software giant's Global Support Center, christened by Microsoft Chairman Bill Gates during his visit to Shanghai in October, employs 400 people and handles an average of 1,500 customer-service requests each day, mostly by e-mail. That is about 10 percent of Microsoft's total customer-service requests. About 150 of the Shanghai employees, including Chen, are dedicated to handling requests from the United States.
In Shanghai, Microsoft can operate customer-support services for less than one-third of what it would cost in the United States, said Jun Tang, the center's general manager who was sent from Redmond to set up Microsoft's China office four years ago. The biggest expense is labor. An average IT worker with two years' experience earns about $700 a month in Shanghai. In the United States, the same person could earn at least five times that amount.
What's more, some U.S. managers argue that their overseas employees are more loyal and better educated.
``In the U.S., these jobs typically have low pay and high turnover. You're lucky if you get someone with a high school education,'' said Mike McClure, vice president of Talisma, a Kirkland, Wash.-based company that operates a center in India to manage customer support for U.S. companies like RealNetworks.
Besides cheaper labor, there's another financial incentive: The cost of using long-haul communications networks for transmitting voice and data is dropping.
This trend is encouraging more companies to outsource customer service to places like Asia, said Gary Morgenthaler, general partner of Morgenthaler Ventures in Menlo Park, a leading investor in the telecommunications industry.
``This is what we call the death of distance,'' he said. ``The dropping cost of telecom for service-related business enables countries around the world to compete with lower labor costs for those same services.''
Loss of U.S. jobs
But critics point to other costs, such as the erosion of jobs in the United States.
``It's a race to the bottom to find where can we get the lowest-paid workforce,'' said Gretchen Wilson, an organizer at Seattle-based Washington Alliance of Technology Workers, a union under the umbrella of the Communications Workers of America. ``We need to ask where the savings comes from, under what conditions, and is that really the kind of responsible business practice we expect from our companies.''
Some companies remain hush-hush about the practice, she said, to avoid being criticized for exporting jobs or doing business in places with a poor record on labor conditions.
``China is well-known for questionable labor practices,'' she said. ``There's a growing awareness among U.S. consumers about labor conditions and how they are sub-par to the U.S., with few mechanisms to monitor them.''
But anyone expecting to find a sweatshop would be in for a big surprise at Microsoft's support center in Shanghai. For university graduates, who flood the company with applications every year, Microsoft ranks at the top of the list of places to work. Unlike the generation before that idolized Chairman Mao, China's Internet generation is more likely to worship Chairman Bill. Framed portraits of Gates on various magazine covers adorn the Shanghai offices.
Dozens of bright yellow banners hang from the ceiling. On them is a picture of a leaping runner and the words: ``I own, so I feel proud.''
Tang, the center's general manager, said he designed the message to encourage a sense of personal responsibility among employees, who receive Microsoft stock options as part of their compensation package.
Yet operating in China is not without controversy. At Microsoft's annual shareholders meeting in November, an investment group with more than 55,000 Microsoft shares said it was concerned about labor rights and human rights in China and the sale of technology that may help the Chinese government suppress dissent.
At Amazon.com, efforts to move customer-service support overseas have been met with vociferous protests by some employees and unions seeking to help organize the online retailer's workforce.
Blurred borders
But to the average customer, it is becoming harder to tell whether the service comes from Boston or Bangalore.
George Drysdale, a former Silicon Valley venture capitalist, opened a call center in Manila in the Philippines last year, where local employees handle everything from credit-card calls to magazine phone sales.
``Sometimes when you're on the phone you might say, `What did you think of that football game or that new movie?' and the people over there will actually have seen it,'' he said. ``There's tremendous affinity with America and familiarity with American speech and slang.''
Because of the time difference between the United States and China, a Microsoft customer in California might receive an e-mail reply in the middle of the night, but otherwise they probably would not notice any difference, Tang said.
``Customers can't tell whether it's from China or from U.S. headquarters in Redmond,'' he said.
About a third of the Chinese employees in Shanghai speak English well enough to take phone queries, and nearly all of them read and write English fluently, he said. Most have university degrees in computer science.
Rather than responding to questions in their own words, they choose from pre-written templates that address various problems.
The customer in Georgia having trouble installing a program, for example, received a message from Rod Chen with a standard list of instructions.
``I hope you were delighted with the service provided to you,'' Chen's message continues, with an e-mail address of his manager where the customer can send feedback.
Customer service is not the only thing Tang is trying to replicate in Shanghai.
``One of my missions to lead the operation is to perfectly copy Microsoft culture,'' he said.
Tang, who has a doctorate in electrical engineering, started the Shanghai center with 27 employees in 1997, and quickly expanded it to take on customer support for all of Asia.
Now Microsoft plans to rely even more on Shanghai for customer service around the world.
It will increase the volume of service requests by about 20 percent and add about 200 employees in the next couple of years.
Tang is ready for the challenge. ``Customer care is more about quality,'' he said, ``not where it comes from.''
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Contact Kristi Heim at kheim@sjmercury.com or (206) 632-8160. |
