Outsourcing Time-Wasting

Once upon a time (2002) in a land far, far away (North Georgia) I had a job in which I literally wasted people's time. That wasn't my job description and it wasn't the only thing I did, but it qualifies as a description of one of programs I had to do. I worked at an inbound call center of a telemarketing company. Most of the programs were fairly basic, such as taking after hours and weekend catalog orders for companies that sold vitamins (collectibles, medicine, chocolate etc.) , and taking credit card applications for various large banks. In other words we were the voice on the end of a handful of 1-800 numbers.

During this time interest rates were steadily declining and the result was a refinancing boom. Thousands of homeowners all wanted to refinance their homes at the same time. There was a general sense among these homeowners (thanks in no small part to the marketing efforts of their banks) that if the refinancing didn't happen immediately interest rates were going to go back up, and they would miss their chance. Meanwhile there was a certain large national bank who had spent the past decade buying up mortgages from other smaller banks.

Many of these homeowners called up their bank to discuss refinancing only to discover that their bank no longer held their mortgage and were given an 800 number for this same much larger bank to call instead.

This is where my call center came in. If these customers navigated the phone menus for long enough they would eventually get to someone like me. My job was to find out what the person wanted. If they were interested in refinancing I had to attempt to connect them to a loan officer. For anything else we had to tell them to call another number, or in some cases to attempt to call back later.

Occassionally the loan officers we were trying to connect the customers to were local to them, but usually we had to try to connect them to another 800 number. If we got a busy signal or were put on hold at that number for more than a minute we had to tell the customer to call back the next day. Usually we got a busy signal. Sometimes we found ourselves navigating phone menus and listening to voice mail boxes of unavailable loan officers.

Every now and then the number I called got me to someone who repeated the same script to me that I had just read to the customer. Whether the person on the end of the line was in the same room as me or on the other side of the planet I do not know. But when I detailed the situation to the new phone center person I was always told to go ahead and transfer the customer.

On the really busy days all we got were busy signals. We were not allowed to give out the phone numbers we were calling to the customers so they could try calling it or transfer them to the line if we were on hold. We just had to tell them to call back. As expected usually the person had been trying for weeks, not to mention for hours that day.

Many of them just had simple questions about refinancing that they wanted answered, and would proceed to ask, mysteriously presuming that I actually worked for a bank and had some inkling of how a refinance might work. Others would ask about their equity, escrows, insurance, and even their bills. None of which did we have the slightest access to or knowledge of. I was one of the very few among my co-workers who actually knew what "refinancing" meant (in theory though not from experience).

Fast forward to now - one of my current co-workers was telling me the other day about his frustration with his bank (it happened to be the same aforementioned bank that I sort-of-kind-of -didn't work for). He had some kind of billing error that he was trying to get straightened out and kept having to talk to an Indian guy named "johnny" who couldn't actually help him. Strangely enough my co-worker was convinced that out-sourcing was the source of the problem and that if he were calling someone in the U.S. they'd be able to help him. He thus directed at least part of his frustration at the nationality of the guy on the end of the phone instead of at his bank.

It seems India just might have a comparative advantage on time-wasting...

Share this

Lack of competition in the

Lack of competition in the banking industry caused by barriers to entry?

something doesn't make sense

something doesn't make sense to me (not related to outsourcing).

If banks make money refinancing loans then the scenario you described basically is preventing them from making more money.

If banks lose money refinancing loans then they should not even offer the opportunity.

They must offer the

They must offer the oportunity to refinance, or no one would take out a loan with them. That said, the bank would prefer you did not refinance and kept the old higher rate, but they must promise to allow you to refinance or you would find a competing bank.

By making it difficult, they bank is cutting down the odds of you refinancing. Of course, they may lose business because of this policy as customers warn neighbors and friends to find another lender that, hopefully, makes it easier to refinance.

LoneSnark, the people who

LoneSnark, the people who aren't desperate enough to spend hours trying to get through are likely to be exactly those customers that the loan officers don't want to haggle with, one would think.

but when you refinance you

but when you refinance you don't have to do it with the same bank that currently holds your loan. so the new bank is gaining an advantage by "winning" your business rather than the old bank "losing" it by not having the annoying phone maze.

Although any given bank

Although any given bank should want you to refi with them (ceteris paribus), refinancing is against the interests of the banking industry as a whole. A higher rate loan is converted into a lower rate loan. If banks can cartelize sufficiently, we should expect that it will be hard to refinance. OTOH, if it is always easy to refinance, that is evidence that the banking sector is competitive.

Of course, we know that American banks are cartelized via the Federal Reserve system. However, the degree of cartelization is debatable. This datapoint inclines me towards the "they're really a monolith" point of view.