Beyond Labor Arbitrage
Building a Nearshore BPO Partnership That Could Scale, Perform, and Protect the Customer Experience.
THE CHALLENGE
The decision to pursue a nearshore operating model had been made.
Now we had to make it work.
The existing Customer Service operation had reached a point where available workforce capacity could no longer reliably support customer demand. Service levels had fallen dramatically, abandonment had exceeded 60% during severe periods, and customers were increasingly turning to other channels—and sometimes directly to utility clients—when they could not reach the contact center.
Case Study 001 examined the analysis that led to the decision to redesign the workforce model.
This phase presented a different leadership challenge:
How do you move critical customer operations to an external partner without simply transferring the existing problems to a lower-cost location?
The objective was not outsourcing.
The objective was to build a scalable service-delivery model capable of improving performance, protecting client relationships, and supporting significant fluctuations in customer demand.
THE PARTNER SELECTION
Following C-suite approval to pursue a nearshore operating model in the Dominican Republic, the work shifted from strategy to disciplined provider selection.
Beginning in August 2022, six potential providers were evaluated with support from an external advisory resource.
Cost mattered.
But cost alone could not determine the decision.
The evaluation considered operational capability, leadership accessibility, scalability, workforce quality, cultural alignment, technology, training capability, performance management, and the provider's willingness to operate as an extension of the internal organization rather than simply as a supplier of labor.
Ecco Outsourcing Group was ultimately selected as the nearshore partner.
Working with Legal and Compliance, I developed the operating agreement and contractual framework, which was finalized in October 2022.
The agreement established clear expectations around staffing, performance, governance, and accountability, including service-level and abandonment objectives aligned with the customer experience the organization needed to restore.
THE PLANNING
Implementation planning began immediately after contracting.
Between November 2022 and January 2023, I made three onsite visits to the Dominican Republic.
Those visits were important because this could not be treated as a traditional vendor handoff.
The work required alignment around:
Leadership • Workforce Planning • Recruiting • Training • Processes • Technology • Quality • Performance Expectations • Escalation • Governance
The objective was to establish the operating model before transferring significant customer demand into it.
That meant understanding not only what agents needed to know, but how the organizations would work together when forecasts changed, performance deteriorated, customer issues emerged, or operational decisions had to be made quickly.
Rather than transferring the entire operation at once, the transition was deliberately structured in phases.
That reduced implementation risk and allowed the model to be tested, adjusted, and stabilized as capacity expanded.
THE IMPLEMENTATION
The first phase launched in March 2023, followed by the second major phase in May 2023.
The nearshore operation began with approximately 16 agents and expanded rapidly as additional Customer Service volume transitioned.
Over time, the organization scaled to more than 70 agents, bringing workforce capacity substantially closer to actual customer demand.
A smaller data-processing function was transitioned during a later third phase, extending the partnership beyond the primary contact-center operation.
But adding people was only part of the transformation.
The larger challenge was creating the management discipline necessary to make those people successful.
BEYOND LABOR ARBITRAGE
The economic advantage of nearshore delivery made the transformation financially possible.
It did not make the operation successful.
That required treating the BPO as part of the operating model rather than as an external labor pool.
Performance expectations had to be explicit.
Forecasts had to translate into staffing requirements.
Quality standards had to remain consistent across organizational boundaries.
Training had to prepare agents for complex utility programs rather than simply basic call handling.
Operational problems had to be surfaced quickly.
And accountability had to exist on both sides of the relationship.
The partnership therefore required an operating rhythm built around performance visibility, workforce planning, quality, training, escalation, and continuous improvement.
The question was never simply:
Is the vendor meeting the SLA?
It was:
Are we collectively creating the capacity, quality, and customer experience the business requires?
That distinction changed the relationship.
The BPO was not managed as a separate organization that happened to answer EFI's calls.
It was expected to operate as an extension of the Customer Service organization.
And that required internal leadership to remain accountable for the outcome.
Outsourcing the work did not mean outsourcing ownership.
THE RESULTS
As trained capacity came online and the operating model stabilized, performance changed dramatically.
62%+ → <3%
Call Abandonment
Reduced to target levels within approximately 60 days
~2% → 80–86%
Service Level
Recovered substantially as trained capacity aligned more closely with demand
12 → 70+
Workforce Capacity
Scaled to support the operating requirements of the business
~40%
Operating Cost Reduction
Seven-Figure
Annual Savings
The financial result is particularly important.
The original business case showed the potential for substantially greater seat-level savings based on the difference between domestic fully loaded cost and nearshore vendor economics.
The realized operating-cost reduction was approximately 40%.
That distinction matters.
A sourcing model should not be judged by theoretical labor arbitrage.
It should be judged by the economics and performance the organization actually realizes after transition, governance, retained responsibilities, and operating requirements are considered.
THE OPERATIONAL IMPACT
The transformation did more than lower cost.
It changed what the Customer Service organization was capable of doing.
Capacity became substantially more aligned with demand.
Customers were more consistently able to reach the organization.
Abandonment returned to acceptable levels.
Service performance recovered.
The organization gained a workforce model capable of expanding beyond what the previous domestic structure could economically support.
And the business reduced the operational exposure created when inadequate Customer Service capacity began affecting utility-client relationships.
The improvement was not the result of a single technology implementation or isolated process change.
It came from connecting workforce economics, capacity planning, provider selection, implementation discipline, governance, and operational accountability into one service-delivery model.
THE LEADERSHIP INSIGHT
Outsourcing is often discussed as a financial strategy.
That framing is incomplete.
Labor arbitrage can create the economic space to redesign an operation.
It cannot create a high-performing operation by itself.
The savings matter.
But so do governance, training, workforce planning, quality, leadership alignment, accountability, and the ability to adapt as business conditions change.
A poorly designed operating model does not become a good one simply because it moves to another country.
It becomes a less expensive version of the same problem.
The strategic value of BPO emerges when different workforce economics are used to build capabilities the previous operating model could not sustainably provide.
In this case, the nearshore strategy created access to substantially greater capacity at a lower overall operating cost.
But the transformation came from what was built around that capacity.
The labor market created the opportunity.
The operating model created the result.
— Steven Waltz
About the Author
Steven Waltz is a Customer Operations and Customer Experience executive focused on service transformation, operational excellence, global delivery, BPO strategy, AI-enabled operations, and enterprise customer experience strategy.
