October 25, 2014

Homeshoring and Its Impact on Small Businesses

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You have heard of offshoring — the practice of companies establishing part of their operations outside the country, i.e., offshore.

Well now one research firm, IDC, points out the growing trend of homeshoring.

Homeshoring is the use of home-based workers, such as customer service agents. Through the use of technology, home-based workers can log onto company systems seamlessly to do their work. They just need a broadband Internet connection, a phone line and a computer. The person at the other end of the telephone or computer, or otherwise receiving the service, has no idea that the person is really working from home.

IDC calls them “homeshored” but the term I found used most often in the search engines is “virtual agent” or “at home” agent.

According to IDC:

“Over time, offshore outsourcing of customer care will be associated more and more with its neglected sibling, homeshoring,” said Stephen Loynd, senior analyst for IDC’s CRM and Customer Care BPO service. “Ironically, outsourcing will therefore be associated not only with the offshoring of U.S. jobs, but also with the expansion of employment opportunities in the United States. Offshoring’s underestimated sibling, homeshoring, is about to hit a growth spurt.”

Today, there are an estimated 112,000 home-based phone representatives in the United States. By 2010, IDC predicts that number could reach over 300,000 as companies increasingly develop and invest in home-based agents, either with their own employees or by hiring outsourcers.

I spoke with IDC’s Stephen Loynd by phone, and he noted that companies of all different sizes are involved in homeshoring — from small and midsize to large multinationals.

From a quick surf through the search engines it appears that a three-tier system frequently applies. Three companies of different sizes end up feeding off the same piece of business, and the impact on small businesses and the self-employed is evident:

    1. Large companies, such as the Fortune 1000, outsource their customer service needs to virtual agent call-center firms, which are often small or midsize businesses.
    2. The virtual agent call centers in turn hire home-based workers. Or more likely they contract with the home-based workers as independent contractors.
    3. The home-based workers may operate under their own self-employed businesses, either small corporations or LLCs.

Willow CSN, Alpine Access and Liveops are three of the small/midsize firms that provide virtual agent services for larger customers. West is another such firm providing customer support services.

Hat Tip to IT Facts (an incredibly handy site) for the link to the IDC study.

9 Comments ▼

Anita Campbell - CEO


Anita Campbell Anita Campbell is the Founder and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses, and also serves as CEO of TweakYourBiz.com.

9 Reactions

  1. True. This would be a trend for the coming years. I think that this is one of the things that digital technology (especially in communication) has brought upon us.

  2. Yes, it is true that people are really working from their homes when you call companies for service. Yes, there are real jobs such as this. But don’t get to worked up about it. The key poitn in this story is, they hire you a an independent contractor. Majority of all the companies listed in this article don’t pay you an hourly rate. It’s normally on a per minute of talk time. So you can find yourself sitting there for hour or more and talk for only 5 minutes, and you will only be paid $0.20 per minute.

    The problem with these working from home is, these companies want their cake and to eat it too. They hire you on as a independent contractor, yet they treat you like an employee. Companies that offer home-based employment are cashing in on the big bucks, because they don’t pay for the computers, networking/internet, phone cost, utilites, benifits, etc.

    These companies treat workers like trash, for instance Willow requires anyone that works with them to become incorporated, pay so much out of the pocket expence I personally paid $800 just to work with them. I figured since they charged so much money that I would finally find a real work from home job, that paid me for what I was worth. I sadly found that Willow is no different from any other work from home company that allows you to work for them for free. Most of the companies mentioned in this article have all of the same clients (i.e. Office Depot, 800 Flowers, Staples) yet Willow is the only companuy that charges those outragous fees. Also a consequence for working with Willow is, by them require that you become incorporated you are doubled taxed business/personal, when you barely making $10 per hour. After you finish sitting money aside for taxes, your averaging more along the lines of $8 per hour. But wait, it doesn’t stop there. Willow also requires their contractors to pay a monthly fee of $40. So now were looking at internet bill, phone bills, utilities, Willows $40, hiring an accounting or payroll company. It’s all just a big crock.

    LiveOps for instance the job is so morally wrong that no one would want to do it. A customer calls in wanting to purchase something they saw on TV or a magazine and you find yourself trying to sell them on 15 other things, which the cost of shipping is inflated. It’s just ridiculous. These people have not moral or values, the way they see it is “it isn’t me having to do it, so who cares.” Even if a customer tells you “I don’t want anything but what I called in for” they still require that you continue to read this to the customers. The sad thing about it is, they lose more customers and money that way, because the customer gets so agitated that they just hang up.

    I’m so sick of places writing articles and interviewing people that work from home, painting a piture as though it’s the best thing thats every happen since tax laws were created, when it’s just simply not true. Companies need to start looking at the cause and effect of business.

    You out-source to abroad, you lose customers. You under pay workers and not offer any benefits you lose workes. The reason I even found this article is, because I’m constantly searching for a real job that can be done from home. Companies act as though their doing people a favor by allowing them to work from home, when the reality is just the opposite.

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