Nice call: Why utilities are outsourcing customer contact functions

By Betsy Loeff, contributing writer

When industry researchers at UtiliPoint International queried more than 300 utilities in 2005, some 78 percent of survey respondents said they had outsourced at least one customer-care function or planned to outsource one within two years. Less than 30 percent of utilities surveyed made the same claims in 2002.

Utility outsourcing is on the rise, and there are plenty of reasons why this is so. Consider the issues involved in call-center operations.

Big bucks and ‘Whack-A-Mole’
Utilities have a challenge in balancing costs with top-tier customer service, says Keith Mueller, managing director of business services for utilities at Accenture.

He likens this balancing act to the Whack-A-Mole game, where players have a hammer to bop animatronic moles as they jump out of their holes, but as soon as one is hit, another appears. “That’s the issue call-center managers have,” Mueller says. “They have to manage costs, but when you manage costs, usually your customer service goes down.”

The infrastructure they require — CIS, billing systems, interactive voice response technology, people-scheduling systems — is expensive, he adds. What’s more, utilities need quite a lot of these customer-care systems. According to Mueller, AT&T, a company with 62 million wireless phone customers and 12.9 million broadband lines, has almost the same infrastructure that Xcel Energy has for 3.3 million customers.

Muller says many utilities choose outsourcing to avoid investing in such infrastructure themselves. After all, he notes, a really good IVR system can raise customer satisfaction and lower costs by increasing automated call handling. But, utilities grapple with spending conflicts. “Do you want to put $10 million into a grade-A IVR system, or do you want to put $10 into putting pipes in the ground?” he asks.

Such spending dilemmas certainly are an issue for smaller utilities. “A rural electric utility may have to build 10 miles of line to serve one customer,” says Jeff Brown, communications and information technology supervisor for Morgan County Rural Electric Association in Fort Morgan, Colorado. “Our costs are heavily weighted to our system, because we only have 2.9 consumers per mile of line. We spend so much on our infrastructure, we have to save in other areas.”

Service upgrade
Along with allowing utilities to save dollars, outsourcing empowers them to upgrade the customer care they provide. In fact, today’s web-based business world makes outsourcing all the more attractive, says Dan Otteson, marketing director for Cooperative Response Center, an outsourcing organization that serves more than 150 electric utilities — mostly co-ops — in the U.S.

“Software systems integration now allows call centers to tie into a utility’s customer information system, outage management system, automatic meter reading data and mapping,” he notes. Among other things, that means such call centers can “provide seamless dispatching from thousands of miles away.”

Not only do such capabilities serve in outage events, they also allow the smaller utility to provide service via the outsourcing agency during hours when people are free to call, such as evenings and weekends. Jim Crowell, member services director for Central Electric Cooperative in Oregon, uses CRC’s call center, and he likes the way his outsourcing agent can “bring up customer information and talk to customers about their accounts. It’s a huge benefit to us because of the way people live now.”

Otteson also points out that even in smaller utilities, the push for premier services is on. “Smaller utilities are moving with an industry trend to become more accountable and improve consumer communication by reducing or eliminating busy signals and providing more information to consumers when service is affected,” he says. “Call centers can dramatically increase the call volume capability of a utility during an outage event.

Morgan County’s Brown would likely agree. All the people moving to rural communities are “expecting the same kind of service they got from big utilities,” he notes. “Outsourcing your call center can provide it.”

It also helps utilities deal with ebbs and flows in call volume, which is a big problem for many utilities. For instance, because utilities in cold-weather areas often are restricted from service disconnection during frigid winter months, call-center volume drops as slow-pay customers take a break from the threat of service shut-offs. But, when people are getting ready for cold months ahead, calls to such utilities jump. “Instead of hiring 10 extra call-center representatives for the one month out of the year when it’s furnace light-up season, utilities are managing overflow with some kind of outsourcing arrangement,” Accenture’s Mueller says.

He sums up the growth in call-center outsourcing with three short words: “Cost, cost, cost.” However, he also cautions that cost shouldn’t be the only consideration when entrusting customer calls to another service provider. “This game is a constant balance between costs and service quality,” he adds.


Betsy Loeff has been freelancing for the past 14 years from her home in Golden, Colo. She has been covering utilities for almost four years as a contributor to AMRA News, the monthly publication of the Automatic Meter Reading Association.

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