Issues with Offshore Call Centres
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Advancements in communications, software development and other technologies have enabled practically every type of business to expand its services to off-shore locations with the probable choices of countries where both the infrastructure and specific needs of the clients can easily be met. Examples of such services include but are not limited to call-centers, as also the subject of our present dissertation, back office operations, insurance claim processing, revenue accounting as well as web/digital development. Indeed one of the successful areas have the disciplines which involve information technology (IT) related services, making it a crucial element and part of a value chain for present day businesses. These IT enabled services and business processes are generally sourcedfrom a location where the end-user are not located, hence the remoteprovision of such set of services. The concept behind this phenomenonis to deliver services from off-shore locations using the state of theart technologies in communication, also called data networks which mayinclude wireline or wireless. Thus, clients or customers are providedthe same set of services or business processes from workers or subsidiaries based in offshore locations. An example to this respect is that of serving the clients of a multinational in the United Kingdom,where as the individuals involved in serving these clients are located in far off region such as India. In such an environment, there is noneed for the British clients to know about the whereabouts of the individuals serving their particular needs, nor is it necessary for theworkers to divulge such information to the British clients. The gap between the clients and the workers in such a situation is fulfilledthrough the modern forms of communication software. These software enable a British caller for example to place a call to India, withoutrealizing that the call has actually been made to India and in responsean Indian worker will respond to the said query of the British callerrespectively. The objective behind the entire exercise of outsourcingand running an offshore facility by a business operating in the UnitedKingdom or the United States of America is truly economical. As theparent company has to spend only a fraction of the amount otherwiseneeded to run and operate the same set of services in their homecountry (UK or the United States of America).
As the global businesses move ever closer to globalization and spreading their business wings in practically every corner of theglobe, outsourcing or setting up off-shore facilities has indeedemerged as one of the fastest and perhaps most successful modes ofaspects of a business value chain. Some of the primary reasons for the immense popularity of the outsourcing include increasing levels ofproductive through measures that are both cheap as well as efficient.Above, all where companies maintain their level of excellence in theservices and businesses processes offered to their clients, the phenomenon of outsourcing has added tremendously to their pool of revenues.
One of the first aspects business seek in setting up an offshorefacility is the requisite level of skilled manpower, which is todayavailable in huge quantities in a number of third world countries. Thisskilled manpower's primary and basic requirements include individuals who can speak excellent English, are highly quality conscious, as wellas computer literate. These criteria are found in ample quantify incountries such as India, which has attained the status of being thenumber one choice for companies the world over. Another importantcriteria which business organizations in the Western countries seek arethe factor of cost, as also the largest and most important element inthe entire outsourcing decision. A brief comparison of the wages ofqualified personnel in the United Kingdom or for that matter in theUnited States of America with qualified personnel in India shows thatthere is a huge difference ranging from 70-80 percent. This hugedifference automatically calculates into a net saving of 50-60 percentfor the company based in United Kingdom or the United States ofAmerica. Then there is the aspect of customer service and delivery,which accounts for a major element in any business. This particularaspect has been more than emphasized by majority of the businessorganization with their headquarters and principle offices in thewestern countries. The maintenance of exceptional standards and qualityin both the deliveries of services and business processes ensures thatclients and customers alike remain content. It is these set of reasonsthat more than serve as potentials and viable options for setting upoff-shore facilities for products and services for companies, inparticular those with principle bases in the western countries. A briefsurvey of the Fortune 500 companies revealed that more than 200companies from this elite list had already set up their off-shorefacilities in a country where the availability of the above set offacilities had more than provided for their continued and progressivesuccess over the years. (Youndon, 2004)
As reiterated in the above lines, the outsourcing phenomenon andsetting up of offshore facilities in a more economical and professionalenvironment is increasingly revolutionizing the entire mode of runningand operating businesses. This is not only in the United Kingdom, theUnited States of America, but in a number of countries of the Europe aswell. The majority of the focus is however limited to the countrieswhere English is the first language spoken, and where the entireclient/customer base is English speaking. It is precisely thiscriterion of the English language that both the United Kingdom andUnited States of America have found third world countries where Englishhas reached the standard and status equal to or nearly equal to thestandards found in the said western countries. The fact that Indiabecame a number one choice in approximately a decade's time isprecisely the reason as Indian government and the public both havefocused on making their populations excel in the English language, aswell as the various basic forms of computer literacy.
Youdon, E., writing in his book "Introduction to Outsourcing" printedby Prentice Hall quotes studies carried out by an American surveygroup, "Cutter Consortium" notes that outsourcing has become amainstream phenomenon in the period between 2000 and 2004. The samesurvey also revealed that, unlike the dot.com bubble of the 1980s, thisphenomenon shown no signs of recession. On the contrary the high-techboom initiated by the outsourcing phenomena will more than likely takeon the shape of a permanent trend, one which will keep on increasingwith the passage of time. (Youndon, 2004)
The survey by 'Cutter Consortium' also showed that the rising trends ofoutsourcing has led to extremely high levels of unemployment in thecomputer industry of the United States of America, and in additionthere has been a gradual shift of tens of thousands of IT related jobsto countries such as India, the Philippines, Russia, and China. Thus,one may note that though setting up of offshore businesses has led to atremendous boom for companies and organizations in the UK and theUnited States of America from every practical perspective. The sametrend has resulted in the rising levels of unemployment, particularlyin the US, as also mentioned in the preceding paragraphs.
A brief into the not so recent history, say the decade of the 1990swould reveal that even the largest of multinational companies couldnever have imagined, and for some it was a radical thought to moveentire departments from hub of US cities to for example the city ofBanglore in India or to Moscow in Russia. However, the age-old conceptof savings and down-right economics led the path to seekinglower-paying employees, yet this was truly difficult as the advances intelecommunication technology and requisite levels of computer literacywas still a far-off dream for countries such as India and Russia.
However, only a decade later, in 2002, there have been such tremendousdevelopments and rising levels of computer literacy, as well as commandover English language in the said countries. This has been combinedwith the simultaneous advances in technology, which duly raised thedemand for offshore facilities. The same offshore facilities has nowreached some 28 percent of the entire IT budget for Europe and theUnited States, a mark reached within two years from 2000 to 2002. Asalso confirmed by the findings of "Forester Research" in their 2002survey, the allocation of major IT budgets for offshore facilities willlikely increase by a significant percentage in the coming years. Asimilar survey carried out by 'Gartner Group' showed that by year 2004,some 8 out of every 10 CIOs in American organizations had receivedorders to set-up a part, if not entire technology service department tooffshore facilities. The same studies also confirmed that 4 out 5companies would already have taken the step by the end of year 2004.
To name only some of the famous American names who have already set upshop in the different cities of India, Russia, Eastern Europe and Chinainclude computer giants such as IBM, Microsoft, Oracle, Unisys6, andDell. Also included in the list of companies who have established callcenters in above said countries are a number of banks, firms based onthe New York's Wall Street, insurance companies, as well asmultinationals such as General Electric who serve their clients with atruly information-intensive network and IT departments. Credit-cardcompanies, consumer appliances companies as well as a number of otherindustries have also established offshore call centers. (Robinson andKalkota, 2004)
The offshore facilities of business organization, irrespective of theirorigin in the United Kingdom or the United States of America haveattained the status of the principal phenomena, as also reiterated inthe above paragraphs. Majority of these who have set up shop asoffshore facilities are those involved in software development,maintenance, project management, and it is these particular segments ofIT industries that are earmarked to witness tremendous growth in thecoming decades. Unlike the dot-com bobble of the 1980s decade, thereare no signs that these phenomena of outsourcing, including callcenters will likely see a period of recession in the near future.However, there are questions put up by economic pundits, such as thelikelihood of leveling off, say at 10 - 15 percent or at a higher levelof 50 percent with the focus on overall employment within the sameindustries. The answers to such queries are the same, which is thecontinued growth and competition will remain and serve as the principletrigger for this spate of continued growth.
Taking an insight view of the number of industries which haveestablished call centers in far off and remote regions/countries, itwould be evident that majority of them fall in the category ofknowledge based industries. The phrase of 'knowledge based industriesis coined precisely to make a distinction with other industries as callcenters are providing just this. They are providing services withstrong points in just two areas of expertise; first is their computerliteracy and second is their command of English language. Thus, one maynote that these two aspects are the core, and perhaps the pivotalreasons for the tremendous success of the call centers, aside from thecost factors for the parent companies based in the United Kingdom orthe United States of America.
A brief on the US companies in search of setting up call centers asoffshore facilities shows that they are deemed as innovators in thisparticular phenomenon of outsourcing. In doing so, these companies takeinto account three principle aspects, which also serve as potentialconflicts with the consumers.
One of the first aspects which assists these businesses is theeconomics and high speeds offered in the telecommunication and Internetfacilities for call centers, as compared to similar facilities say adecade ago. Examples to this effect include mortgage-approvaldepartment of a business which wishes to set up a call center facility,as the business would be least concerned whether it is a technologicalpioneer or not. Similarly such businesses need not worry about the highcosts incurred in advanced telecommunications which may otherwise wipeout any savings achieved from strategy of employing low wage employees.(Youndon, 2004)
Second aspect which serves as a conflict between the businesses settingup call centers through outsourcing and their consumers the widespreadknowledge about the phenomena of call centers and outsourcing. Even ifone were to compare the increasing awareness and knowledge about callcenters with that of, for example a decade ago, it would be evidentthat little was known. For example call centers now include in theiragenda conferences held amongst the various call centers throughvideo-phone, or even video conferencing; the increase use and knowledgeof consultants for call centers who assist in such processes asselection of vendors, negotiation of contracts, and management ofadministrative and financial details. In this context, the overwhelmingwave of information at the disposal of these new breed of consultantsin the call center business may not necessarily guarantee the successof the respective call centers. However, they do enjoy an edge in areasof advice and guidance as compared to their counterparts in the ITarena (for example data entry operators/pioneers), say a decade ago.
The third aspect which serves as the conflict between the businessesand their consumers over the call centers and outsourcing is theincreasing pressure to investigate into the affairs of the outsourcebusiness, or the call center in our case study. A decade ago, the casewas somewhat opposite, as there was little or no pressure toinvestigate the activities of the outsource businesses. One may notethat the decade of the 1990s was indeed a boom time for a number ofcompanies, and the general atmosphere was one of generous wages and asteady growth of employment. This trend was augmented by competition atthe global level, which also witnessed a steady growth of outsourcingbusiness the world over. Yet, the single most factors that perhapsserved to halt this growth was outgrowth and rising global demands forgoods and services, which outstripped supply. It would take a decade,when this rising demand of goods and services was be somewhat matchsupply, a phenomenon which we presently witness in entire outsourcingincluding call centers in the third world countries.
Thus, present conditions on the call center arena the world over showthat supply is more than the demand for goods and services. It isprecisely this reasoning, that majority of the companies wishing to setup a call center now have a greater choice to select workers andregions where workers are least expensive. This is more commonlyobserved in the knowledge-based industries, which also includes thecall centers of India, Russia, Philippines, and China. As also a stateof conflict between the companies and their consumers, the first(businesses) are now more pressurized to cut back on costs due tofierce global competition, hence the search for ever more cheaperknowledge based labor force with less demanding working conditions andlow-paying employees respectively.
The above section has briefly discussed the phenomenon and trends thathave become a mainstream for call centers, as also some of the businessperspectives from the point of those companies wishing to set up callcenters for economic reasons, competition, and growth of theirrespective organizations.
However, the segment of consumers too is ever important and perhapscrucial element of a call center business. As it is the presence ofconsumers for whom the call centers emerge in the first instance.Since, majority of the consumers belong to countries where Englishlanguage is the first language, the emergence of call centers withEnglish language speaking employees is indeed a pre-requisite. The highwages prevalent as well as demanded by employees in the Englishspeaking countries including Canada, the United Kingdom, and the UnitedStates of America has forced large number of companies to outsourcetheir businesses, in part if not in whole to regions and countrieswhere is ample availability of less paying employees, yet havingcommand of the English language and are computer literate. For this theprobable choice falls on countries such India, the Philippine, theRussia and China. However, the standard and expertise of language orcomputer literacy are not the only factors, which make an outsourcingorganization successful.
In this respect, the consumers as the principle beneficiaries of callcenters have a rightful demand to obtain services and products that areof optimal quality; a set of factors that has been somewhat left out bythe companies operating call centers in remote regions of the world. Aprime example to this effect can be observed from a complaint from agroup of consumers against call center operators and their employees,which duly resulted in a ruling from a court of public opinion with thefollowing wordings;
"You have no right to bother us and leave us dangling. And if we dobusiness with you, your word isn't good enough. You have to prove it."
Though the above ruling is only a hint at the prevalent unease on thepart of consumers, yet this more than provides for call centeroperators and businesses to polish up their role in the provision ofgoods and services from offshore facilities, and through the use ofemployees with a little different accent, and perhaps little knowledgeon the actual complaint or command when calling up potential clients.
The consumers at the end of call centers have also found strongfootings from both the laws and regulations, which have more, thanrestricted the activities of operators of, call centers. This can beobserved in the new set of US Federal regulations which place a limiton 'call abandonment rates, caller ID blocking, as well as demandinbound upsetting agents to ask consumers for their account IDs, andabove all to record those calls. A similar act favouring Th consumersis the "Do-Not-Call or (DNC) registry which may become effective in thevery near future. The DNC is said to have a very strong support fromboth the US Congress as well as the US public. Though the registry hasyet to become fully effective and become a law, there are already morethan 50 million US phone subscribers who have filed for the DNCregistry. All these regulations and acts that are deemed to assistconsumers from the operators and businesses of call centers are perhapshuge hurdles from the perspective of the businesses. As theseregulations and laws, also termed as outbound rules will not onlyrestrict call center operations, but also serve to cost huge job lossesboth within the countries where call centers are operating, as well asthe offshore facilities which have been set to gain economic and othercrucial business advantages.
A survey carried out by the American Teleservice Association (A.T.A.)revealed that the outbound rules could mean job losses to the tune ofsome 2 million individuals in the United States alone. As one of thefirst steps taken against the levy of such laws by the US government,legislators and public prosecutors, the A.T.A. has filed suits againstthe DNC regulations.
Another aspect to be noted vis-a-vis the consumers at the end of callcenters is that the implementation of regulations and laws benefitingthe US consumers will have a direct affect on the US employees of callcenters, in turn forcing businesses to give importance and focus onoutsourcing and offshore facilities for call center businesses. Thus,even if and when there is a likely shift in the call centers, the joblosses for US employees will probably be effective even without suchlegislation's. To satisfy the consumers, the call centers will thushave to comply with such regulations, even if these results in huge joblosses as also mentioned in the preceding paragraph.
Yet another set of incentives and benefits for the consumers which alsoserve, as direct conflicts with the businesses are the marketingmethods employed by respective businesses. For example, businesses whenfaced with such strict measures and legislation's as stated above mayturn to options such as direct mail, direct response, and inserts inpublications to prompt inbound calls, emails, and chat sessions. Inresponse to such changes in regulations and calls from publicofficials, the call centers at home will have to undergo and bringabout changes. These may include modifications in 'predictive dialers'including their complete replacements, replacement of modern callrecording equipment's and bring about changes in the mode of sellingfor both inbound and outbound agents, in turn positively affectivityand raising the standard of phone calls to consumers. The call centerson the other hand In contrast, the call centers operating in remote andfar-off locations with advantages in lower costs for both employees andinfrastructure will be least affected from such measures at homegrounds.
In this context there are two particular regulations which directlyaffect the call center operations and which also serve as potentialconflicts with the businesses as well. The first is the TelemarketingSales Rule (TSR) which is administered by the US Federal TradeCommission (FTC). The second is the Telephone Consumer Protection Act(TCPA) which falls under the US Federal Communications Commission(FCC).
Under the workings of both the FTC and the FCC, businesses are allowedto place calls to consumers who have given prior consent, and who haveenjoyed previous business relationships with the respective firms.There is also a time factor involved in such calls according to whichthere has to be a transaction within the last 18 months, and similarlya period of 90 days must have passed since the last inquiry was placed.On the other hand both these regulatory authorities and theirregulations become ineffective if and when a consumer refuses to accepta call, even if there was a business relationship in the recent past,and it is the obligation of the respective businesses to honor suchrefusals.
The levy of and changes in the rules by both the TCPA and TSR havecalled for changes in the outbound calls for call center operations. Anexample to this respect include call abandonment rules, according towhich marketers have to connect live agents to place calls to theconcerned consumers, and this call has to have to duration of 4 ringsor a time limit of 15 seconds, and compliance of neither may result inabandonment of said call/s.
A second rule of both the TCPA and TSR restricts the number of callsabandoned to just 3 percent, which are answered by live persons.However the TSR rules measure the same on a per day basis and a percampaign basis, while its sister authority, the TCPA measures the callover a month's period.
In compliance of such regulations and in response to the complaints ofthe consumers, the TCPA claims that no calls are abandoned if theresponse is in the form of voice messages within 2 seconds of receiptof a consumer's call. Similarly the calls are not abandoned if theconsumer has previously consented to receive messages, includingexisting business relationships. (Read, 2004)
Though outsourcing is being largely concentrated in areas of softwaredevelopment, maintenance, manufacturing, logistics, and adding thelatest area of knowledge based industries, one may note thatoutsourcing has perhaps been there for the last nearly 2 decades.However, the changes that have perhaps revolutionized the entire out-sourcing business, in particular the emergence of call centers includessuch disciplines as customer, transaction processing, finance andaccounting, human resources, desktop support and software development.
The core reason, and perhaps the strongest factor to force theemergence of such huge numbers of call centers in remote regions of theworld such as India and China as prime examples are cost-cuttingstrategies by making earnings look all the more attractive. Included inthe cost-cutting strategies was the wages and salaries of theemployees, truly a major chunk of operating costs, which was dulyreplaced with employees hired at a fraction of what would otherwise bepayable for example within the United States of America or UnitedKingdom. This was amply found in the offshore labor, who were bothcomputer literate as well as well suited to serve the English speakingconsumers on the North American continent, and the United Kingdom.
A brief comparison with other process-improvements innovationsincluding but not limited to Total Quality Management, Re-engineering,and Six Sigma, the offshore outsourcing too is predicted to facesomewhat similar consequences, and for arriving such a conclusion, itis only imperative that one studies the cycle of the above saidinnovations measures taken by business organizations.
Included in this management drive innovation cycle are 4 principle steps, through each business organization has to undergo.
The first is the slope of hype, and one may note that outsourcing, inparticular the emergence of call centers are passing through what maytermed as the 'honeymoon period', as also evident from the tremendoussuccesses achieved by majority of the organizations setting up callcenters. The duration of the hype period has witnessed a large numberof organizations somewhat copying or initiating projects based on thepresent forms of innovation. This is done to gain experience from thecurrent and ongoing process management techniques, without the need toinvest in experimenting. Another feature of such a tactic is a merepursuit of a competitor within the same industry. An example to thisrespect can be observed in the trends of e-commerce and e-business inthe later part of the 1990s decade. Thus, it was observed thatpractically every business organization was in pursuit of an e-commercestrategy, often without a detailed insight or logical reasons for doingso. A wave of e-commerce companies thus emerged offering best ofservices, and searching for a place in the market as a 'trustedadvisor' in their endeavours to compete win offshore contracts. Suchcompanies were duly aided by venture capitalists that fueled the hypethrough a number of attractive financial instruments.
The second principle of process management is that of despair, orrather the slope of despair. As the business enters the slope ofdespair, it is evidence that the honeymoon era, as also described inthe preceding paragraph has come to abrupt end. The offshore projectsinitiated in rather haste, including initiation or blindly following acompetitor with the same industry will witness a failure as noconsideration was given, nor any wieghtage given to the decision ofsetting up an offshore facility, or call center. The result of taking adecision in such haste is that promises to consumers remainunfulfilled, in turn triggering a possible 'backlash' from within theorganization. Recent examples to this respect can be observed in thedecisions to call back and close shop decision taken by famous namessuch as Dell and Lehman Brothers. It is also observed that during thisslope of despair, a large number of organizations that are not seriousin operating offshore facilities would opt for closing down theiroffshore facilities. Further, such companies would either go for acomplete re-evaluation of their principle strategies, while those whoare truly serious in pursuing and benefiting from their offshore plans,continue to excel and strive to maximize their earnings from thetremendous set of advantages hidden in the operation of offshorebusinesses, including call centers.
The third important aspect in the process management innovation measureis that of consolidation and assimilation. This step is immediatelyproceeded after that of despair where serious contenders stay on, andthose who step in the market without serious considerations eitherere-evaluate their strategies, or completely fall back and retreat totheir home grounds. The business of e-commerce witnessed similar trendsand behaviors. Having undergone the crucial step of consolidation, abusiness more often than not enters the slope of profit era. As alsoevidenced in majority of the businesses involved in e-commerce, mostorganization have today realized that e-commerce is not a merenecessity, rather a pre-requisite for their businesses. A similar spateof events awaits the offshore business, where call centers arepredicted to reach levels of extra-ordinary profits for their parentorganizations, a likelihood prediction for the end of the presentdecade.
The study of the above 4 principle aspects of process managementinnovations shows, as also evident from recent corporate history, thatit is the home country's economy, which by and large dictates thesuccess or failure of a corporate strategy. Thus, if economy is movingtowards recovery, not only will other businesses suffer, but theoffshore business including call centers will too face the same fate.Similarly, if the home economy is failure, and is continuouslywitnessing a fall, offshore outsourcing as well as all other businesseswill bound to see an acceleration and growth with significant profitmargins who can sustain the ups and falls of offshore businesses.However, there are more than likely chances for the IT sector, inparticular the knowledge based industries which include the callcenters will witness a similar migration as has happened with themanufacturing from the North American and European continents to moveto the Pacific Rim countries. (Gore, 2003)
The above section of the dissertation has briefly discussed some of theaspects of offshore call centers including the businesses as well asthe consumers and the conflicts between them. The above section hasprimarily focused on the US businesses as they enjoy the single largestsegment of the global offshore call centers. The is followed by UnitedKingdom enjoying a second place, and which will constitute thefollowing section of our dissertation. The following part will thustake into account a brief history of outsourcing, and move on todiscuss businesses and consumers from the European perspective, with aparticular attention on the implications on the British businesses,British consumers, and the British job markets with respect to callcenters.
Having briefly touched the US perspective of outsourcing businesses,the following section discusses the businesses, consumers and theirconflicts from a British point of view.
A survey carried by M/s Outsourcing Insight Ltd., Harvard, M., showedthat the year 2000 was a record period for Britain as it witnessed theemergence of some 35,000 call center related jobs, and establishment ofsome 88 call centers.
This tremendous growth pattern in the outsourcing business in theUnited Kingdom proved a number of points. For example, it showed that arecord number of businesses had chosen to shift and expand towardsoutsourcing. It also proved that the consumers had a wider choice. Itwas also evident that each call center was offering a more diverse setof services, a more specialized version and an ever-competitiveenvironment to offer for their customers. (Harvard, 2000)
However, with the tremendous growth pattern viewed in the expansion ofcall centers, British businesses also realized that there was a crucialneed for an approach that would provide for needed end results andoptimization of their outsourcing objectives. For example, theselection of an outsourcing partner was one such area, which requiredneeded diligence and an equally cautious approach. It was largelyobserved that in their endeavours to increase their market share andcompete in their respective industries, majority of the Britishbusinesses failed to recognize that competition and offering truly highstandards of services and products called for an equally high standardsof capabilities and services. This was only possible in the appropriateselection of an outsourcing partner who fulfilled the said objectivesof the parent business. In addition, if aspects such as higher clientexpectations were added, and not provided for; it would henceforthresult in failed expectations for both the businesses as well as theconsumers, hence a grave set of conflicts.
A number of factors may be accounted for in the emergence of above saidconflicts. These include for example the shortage of skilled labour,with particular focus on the middle management, which largely handlesmajority of businesses. Then there are the factors of unclear set ofmotives and timeframes, which may not necessarily match those of theparent businesses which had decided for the outsourcing in the firstinstance. However, one of the most commonly made mistakes is that ofchoosing a partner who has neither the experience, nor the skilledmanpower which perhaps make up for the core reasons of a successfuloutsourcing business, particularly an offshore call center. From anorganizational perspective too, such conflicts lead to poorperformance, in turn leading to an unhealthy, and somewhat pressurizedrelationship between the parent business and its out source partner.(Harvard, 2000)
With the rise in the growth of call centers across the United Kingdom,the single most important segment, that of consumers too emerged as avital and crucial element in the call center industry. A brief on theconsumers' perspective, their expectations and demands showed thattheir standards of expectations and services too witnessed asimultaneous rise with that of the call center businesses.
An increasing number of consumers now vie for services that suits theirparticular needs, such as obtaining a requisite set of information froma channel of their choice. Apparently, such request and desires on thepart of consumers would appear to be trivial, yet the depth can beassessed in the complexity of fulfilling each consumer's particularrequest and demand.
An example to this respect is a segment of consumers receiving servicesfrom a particular range of business sector and duly finding that theirdesires should meet their levels of standards and excellence. However,if another business segment fails to offer services and products of asimilar level, for example, this would in turn be somewhatdisappointing for the respective consumer. Thus, consumers expect thesame level of standard and excellence as received from a particularsegment of business. One may therefore note that competitors alone arenot a formidable enemy; consumers of a particular business are equallyworthy opponents for a call center business. Hence their requirementsand needs, must be met even if this implies that a call center has toadopt wider channels of services, and an equal wider scope ofservices.
A related aspect of consumer conflicts is their rising demands orchoice of channels of communication. This could include a telephone,e-mail, interactive television, or the traditional postal service. Itis for the call center to recognize and duly fulfill the requisiteneeds of their consumers through the integration of requisitetechnology available for the different modes of communication inpractice today. One need not emphasize that the failure to incorporate,or integrate on-going technology in providing for services and productsmay as well result in creating a severe conflict, not to mention adisgruntled consumer.
Though provision of services and products through the latest modes ofcommunication may appear to be a somewhat simple task, yet it is easiersaid than done. This is because the entire call center industry can bewitnessed to enter a period of polarization. This is all the moreevident as such services are more client-led, rather than OSP(Outsourcing service provider) led. The OSP may have invested intechnology to win over clients and consumers, yet as is with all areasof a given industry, the services area too has reached a stage ofpolarization, and it is not merely a set of demands which the callcenter can fulfill. One may as well witness that call centers are everstruggling to keep up with the advancements in communication technologyas one example; thus making all the more difficult to fulfill all therequirements and needs of a segment of consumer (Harvard, 2000).
Though the polarization factor or the inability to match technology inthe communications area may as well mean that consumers or clientsusing the services of call centers will continue to remaindissatisfied. Yet, there are other areas, which too are observed tohinder the services provided by the call centers. These include forexample areas such as effective customer management.
The growth of service providers with equally varied set of backgrounds,different organizational objects, personnel with varying set of skillsand expertise, technological capabilities, there is an ever demandingneed for managing as well as developing a truly effective customermanagement portfolio. This is only possible with the necessaryexperience at the disposal of the parent businesses, as well as theunderstanding of several disciplines which serve to bolster ratherhinder the provision of services.
Thus, an effective customer management portfolio may include modernprocesses of management, state of the art technology, skilled andtrained personnel, and the ever important ability to address theemotional issues which is perhaps a new feather in the value chain oftoday's businesses.
The above brings us back to the issue of an appropriate selection ofservice provider, who must have all the above said requisites to make acall center function in a truly successful mode. As also brieflymentioned in the above paragraphs, the wrong selection of a serviceprovide can turn into a disaster for the call center business, not tomention the headache which is surely to evolve from the unsatisfiedlist of clientele. Researches into this particular area of call centerbusiness and their consumers show that the percentage of dissatisfiedcustomers, or the levels of dissatisfaction are as high as 73 percent,with majority of those researched ever willing to change over, and lookfor new call center suppliers.
Such high levels of dissatisfaction amongst the call center businesseshas given rise to individuals who are experts in mediation andfacilitation services, who serve to bring about improvements in boththe call center business operators as well as the operational aspectsof the business. (Harvard, 2000)
Though the term of 'outsourcing' was first coined by Webster's 10thDictionary in 1982, the phenomenon only commenced and began to bepracticed in the middle of 1980s decade, aggressively picking up paceby the beginning of 1990. In this respect some of the famous businesseswhich pioneered this particular phenomenon included Kodak, AmericanStandard, and Aventis (formerly Rhone-Poulenc). By the end of the 1980sdecade, this phenomenon not only grew in recognition, but incontroversy too as some the corporate sector termed the emergence ofoutsourcing as a set of mere fad, while others coined it fantastic. Thelatter term however held fast, as outsourcing rapidly grew in both paceand momentum, and soon became an integral part and parcel of valuechain amongst majority of businesses. Statistics to this respect aloneprovide significant evidence as to the tremendous growth cyclewitnessed by businesses engaged in outsourcing. A brief on theoutsourcing spending when taken as a percentage of the averageexecutive budget, showed that its figures nearly doubled from a 16percent in 1983 to some 31 percent by the end of 2002. Europe's role inthe outsourcing too witnessed tremendous growth as figures taken as of2001 duly predicted that they would more than double by the end of 2003that would be in a matter of just 2 years. In addition, similarstatistics also predicted that Europe's share in the internationaloutsourcing business would reach a healthy 23 percent share. Thesestatistics were compiled by Corbett, M. F., and duly published in theirarticle of March 2003. (Corbett, 2003)
An insight into the historical perspective of the development of theoutsourcing phenomenon from the European and British perspective, inparticular the setting up of call centers in far and remote regions,was narrowed down to 3 principle reasons.
One of the first reasons for the unique shift from the traditional andvertically integrated business firms into models of outsourceorganizations was the availability of truly world-class segments ofservice providers excelling in both the computer literacy as well asthe medium of language, English. These were the initial triggers, whichnot only gave impetus, but also rather provided for fulfilling thedemands of the customers. It is only logical that, once theseorganizations discovered that there was requisite potential in the formof a literate working force, there was no stopping, and the marketforces carried out the rest of the spadework. The result was theemergence of a line of outsource firms and call center was just oneexample to this respect.
The second important element and reason for the tremendous growth ofoutsourcing businesses and call centers was the advancements intechnology, which practically made this business 'placeless'. Thisimplied that business could truly be carried out from anywhere and byanyone, provided the basic ingredients were met. Thus, activities suchas processing of information, accounting and answering to customerqueries was shifted to locations and countries which provided for thetechnology and the trained personnel. Thus, it could be said that oncethe physical barriers of organizations were broken, it was all too easyto expand the organizational barriers of businesses. The Europeans andparticularly the British amply exploited these elements, hence theirphenomenal growth.
The third element and perhaps the strongest reason was that ofcompetition. Irrespective of the locale, whether at the local level orinternational, it is only natural that with the rise in compassion,each organization had to become all the more efficient, more effectiveand competitive, simply to survive. The notion that an organization,however large or small, can capture a given market, and maintain theirstronghold is totally misleading. Thus, to keep pace with the marketforces and simultaneously remain competitive, majority of the firms hadto join the line.
Yet, the single largest set of factors which have perhaps madeoutsourcing a success the world over include an improvement in therespective organizations' emphasis on core activities, significantreduction in costs, as well as rapid improvements in both business andquality of their services or products (Corbett, 2003).
A brief on the European horizon of businesses, and in particular in theUnited Kingdom shows a similar trend of outsourcing with that ofwitnessed on the North American continent. In fact, there seems to benewer levels of energy on the European front as the traditional'physical' aspects of the businesses, including those of operations andmanufacturing, were observed to undergo a gradual shift, and changingto the more specialized segments of the businesses, namely areas ofinformation technology and process operations. The latter witnessedtremendous growths as industries that were being outsource by Europeanand in particular British businesses included the pharmaceuticalindustries, computer and electronics, government and diversifiedfinancial services industries. A survey carried out by a BritishProcess Outsourcing firm, M/s Nelson Hall, the British market segmentof BPO witnessed a growth of more than 45 percent in 2003 alone. Asimilar survey carried out by another firm M/s Input revealed a 17percent growth rate in the European government outsourcing sector fromthe period of 1988 to 2004, which was more than double that ofwitnessed in the United States of America in the same period.
In discussing the European and British outsourcing businesses, one maynote that though China and India are today the single largestrecipients of outsourcing business, attracting clients from majority ofthe English speaking countries of the world. Yet, the notion that Chinaand India are the only countries where outsourcing is being done wouldbe somewhat wrong, in particular from the European and Britishperspective. (Corbette, 2003)
A deeper study of Europe and in particular Britain reveals they arealso outsourcing to their neighboring countries of Iceland, Ireland,Eastern Europe as well as Russia. As this group of countries tooprovides for skilled labour and technology, not to mention theincentive element provided to local governments of these countries.(Corbett, 2003).
In studying offshore call center businesses and consumers, there is yetanother development that has more than served as a direct conflict withthe phenomena of both offshore call center businesses and servicesprovided to the consumers; this is the growth and encouragement ofScotland's call center industry.
In this context a report prepared by the BBC's world Edition of January2005 revealed Scotland's "Calling Scotland" campaign, where the localgovernment of Scotland has initiated a campaign to attract workers forcall centers in Glasgow as well as the west of Scotland. Developed bythe "Scottish Enterprise Glasgow", the said campaign is assisted bylocal organizations and a number of local call center employees.
Included in the call for call enter employees for different regions ofScotland, are various tours of call centers, job fairs, as well as anumber of advertising campaigns. A brief statistics on Scotland's callcenters reveals that as of the date of preparation of this report byBBC, it was reported that some 300 contact centers were already workingin various parts of Scotland employing some 56,000 employees. Thesestatistics when compared with the nation's overall working populationsshowed that these figures were one employee per 43 employees.
The case of the Scottish call center industry also shows similar trendsand reasons were observed for their success, as also discussed forEuropean, Britain as well as Indian and Chinese call centers; one thatfocused on quality and skilled manpower.
Maclennan, G, an executive at the "Scottish Enterprise Glasgow' whichcarried out the detailed survey on Scotland's call center industry dulypresenting his comments for the BBC News noted that that the city ofGlasgow was already home to some 100 call centers, engaging some of theglobal names in business, with equally diverse range of businesses andoperations. Thus, with the expansion in the call center industry as awhole across Europe and major parts of Britain, it was only foundimperative that the Scotland's call center was duly encouraged. Hencethe campaign for call center employees offering job opportunities forpractically every segment of the population, ages and experience.
Scullion, H., A union officer at M/s Amicus, representing majority ofthe employed at the call centers in Scotland in his comments to the BBCNews notes that though the efforts of the local government in Scotland,local businesses and employees working at the various call centers inScotland are continuously striving to retain call center employees.Yet, this trend may not be sustainable for a longer period, andeventual pave the way for the disappearance of the workers to offshorelocations. Providing some statistics to this effect, Scullion notesthat in 2003 alone some 2000 workers have already left Scotland, whichare part of a total 18,000 workers who have left Britain to work inoffshore call centers in the same period.
The campaign of "calling Scotland" has also been assisted by a numberof other organizations, such as the 'Call Center Association (CCA),Careers Scotland and 'Jobcenter Plus'. All these organizations areindeed vying to retain majority of the Scotland's call centeremployees, and their efforts to this respect are somewhat paying off.Yet, they face the threat of lucrative offers for businesses in regionssuch as India, China and the East European group of countries whichoffer a more diverse set of services, more economical and a higherlevel of skilled manpower at their disposal. In view of the aboveorganizations, if the workers employed at the various call centers indifferent regions of Scotland are to be retained, it is cruciallyimperative that the increasing demands of the businesses as well asthat of the consumers be met. and that is only possible in theavailability of a vibrant workforce which must come at par in bothexcellence and expertise with those in the more common and economicalcountries such as noted above. (BBC News World Edition, 2005)
A looming threat and an equally related conflict for the businesses aswell as the consumers across the United Kingdom is the large-scaleshift or movement of call center employees to places such as India, asalso briefly mentioned in the preceding paragraphs.
A prime example to this respect was found in the city of Liverpool,where IBM workers providing services for M/s Royal & Sun Alliancewere told that they were being outsource to India, with a possibilityof loosing their jobs. The number of IBM employees under risk ofloosing jobs stands at somewhat 48, which also included employeesworking for M/s Manpower, another firm working in Liverpool. A similarthreat appears in the offing for another set of IBM employees workingat IBM's Norwich branch, which still remains to be decided.
The above developments at the British businesses of call centers is notonly a conflict with the businesses and their consumers; in fact it ispresumably a negative trend for British workers who face threats ofloosing jobs. On the other hand, the firms responsible for such shifts,the IBM and other like it contend that by shifting jobs to cities inIndia such as Banglore, they would be saving huge amounts in wages,which according to one analyst stated could be anywhere around 10million pounds sterling per year.
Though there were reassurances from IBM, and other businesses thatalternative jobs would be provided for those loosing jobs due to theoutsourcing. Yet conflicts continue to rise amongst businesses andconsumers from such trends of moving entire businesses to offshorelocations at the expense of local manpower, irrespective of the reasonsand factors for such endeavours. (BBC News World Edition, 2005)
Rising Consumer Complaints As Conflicts Between Businesses and Offshore Call Centers
Though a number of conflicts have been discussed in the above sectionsof the dissertation between businesses and offshore call centers. Yet,the single most important conflict are those generated by dissatisfiedand impatient consumers. Investigations to this respect carried out bya number of British survey firms on the British consumers alone revealsome startling information.
One of the surveys to this respect carried out by Citizen AdviceBureaux (CAB) found that some 27 percent of the people remaineddissatisfied with call centers offering services on behalf of financecompanies. Harker, D. CEO of Citizen Advice Bureaux duly notes thataccess to information, whether on finance companies or other segmentsof the business should not become a 'barrier' for the consumers. Inreality, it is exactly the opposite, as leaving only a few, practicallyall the call centers are criticized with a major segment of theirclients left dissatisfied.
Some of the common issues and problems left unresolved on the part ofconsumers include problems about money (cash statements, balancesheets, credit/debit limits), debt and benefits.
To test the efficacy of a call center, a Citizens Advice Bureaux inSurrey placed a call center on behalf of an elderly individual. Therespective call center did not respond, and after a series of automatedoptions were given to the caller, the line simply went dead.
Another example was that of a single mother from Kent, who could notget any information when she enquired about an overpayment of a taxcredit advice amounting to 1900 pounds sterling.
Researches into the level of falling patience and unsatisfied consumersreveals there are a number of factors involved. For example, a rise inthe number of calls by approximately 20 percent per annum is one of thecauses for consumers to loose patience. These researches revealed thatonce a consumer listens to the welcome message, they simply hang upafter an average of 65 seconds of listening to pre-recorded music.
Another reasons for the rise in consumer dissatisfaction, as surveyedby an IT firm M/s Diemont Data, was consumer demand or the idea thatonce they place a call to a call center for any information, it istheir right to be responded immediately, and that the respondent mustalways be available.
Similar survey from the call center's perspective showed that there wasa rise in customers abandoning calls, with statistics of 5 percent in2003, to more than 13.3 percent during 2004. It was also found that onesixth of all callers abandoned the call rather than wait for a responsefrom the call center. These figures did not take into account automatedphone messaging systems which forced a caller through a number ofoptions and messages, before a real life individual finally answeredthe call.
A possible factor for the lack of patience as cited by Diemont Data'sMs Diemont was that a number of callers placed their calls from mobilephones while they were moving about. Such calls placed while they wereon the move, more than increased their chances of abandoning a call, asthe respective individual may be engaged in a number of activities,such as driving, walking to the office, shopping, having a meal, andthe list simply goes unchecked. Hence, the caller is immediatelyfrustrated as he or she assumes that the call center respondent is athis or her entire disposal.
An important element in the rising number of complaints against callcenters, and simultaneous rise in consumers not being attended orcomplied with their requisite information or queries is the lack oftraining of call center personnel.
A brief into the workings of the call center shows that when the callcenters first commenced, their responsibilities were limited toproviding information on mortgages as one example. With the immediatesurge in call centers, the responsibilities of the call centerrespondents too has increased manifold, as they are equally requiredinformation about credit cards, insurance and current accounts. Theseactivities may not have been part of the initial training of therespective call center employees, hence the lack of response rate.
A survey carried out by 'Dimension Data' showed that in 2003, theaverage induction time for a call center employee was approximately 36days. This period has now been dropped to just 21 days, leaving the newentrants little choice to master and address all the needs of thecustomers. The result is a staff who is poorly trained and frustrated,in turn creating somewhat of a nuisance for the customers, not tomention a bad image for the respective business. This trend also meansa high drop out rate amongst call center employees, with studiesshowing that approximately 25 percent of the callers leaving the fieldaltogether. As a consequence, businesses have to face the additionalcosts of training new staff for call centers.
Related studies on resolution rates, rates at which a caller and clientis mutually and fully satisfied are presently estimated atapproximately 50 percent. This rate however rises to 70 percent as thecall is passed on to a senior manager or a specialist of a particulardiscipline. The industry target for resolution rates is however muchhigher at 85 percent, thus showing prevalent resolutions to be lessthan requisite target.
Representatives at M/s Diemeont also opposed notions presented by asegment of call center industry that outsourcing call centers todeveloping countries such as India and China was one of the reasons forthe falling respond rates, or lack of expertise in call centerrespondents. Ms. Diemont was of the view that there was no differencein waiting time nor for a call resolution when comparisons were madebetween performance levels of call centers in Europe and North America,or those located in India or China as few examples.
According to the Ms. Diemont, the performance of any call centerlargely depended on the respective management duly combined with theutilization of correct processes of management.
M/s Diemont in collaboration with another survey organization conducteda survey of some 166 call centers in 24 countries of the world. Theresults of their findings provided significant evidence and support fornot setting up an offshore call center, and instead focus and continuethe operations of the call center within their home countries. Some ofthe salient findings of this survey are presented in the followinglines.
The above survey carried out by M/s Diemont revealed and somewhatrejected the general notion that majority of the businesses opt foroffshore call centers simply to cut back on costs and increase theirrevenues respectively. Though these are certainly strong set oftriggers for moving businesses to offshore locations, however there arecertainly some other considerations as well.
The said survey to this repeat revealed that only 42 percent of themshowed interest in setting up businesses at offshore locations andclosing domestic call center operations. Another 50 percent of thoseinterviewed revealed that employees at offshore locations and countriessuch as India and China offered a much better set of services andskills in return for their foreign investments.
Yet another segment was somewhat against the establishment of offshorecall centers citing a number of reasons for their decisions againstoffshore call centers. For example a survey of a segment of callcenters showed that some two-thirds of all those researched totallydisagreed against setting up an offshore facility such as the callcenter. Major reasons by this particular segment included thefollowing.
One of the first reasons cited for not setting up an offshore callcenter was that their call center operations formed a 'core function'of their entire business, hence their choice against moving their corefunctional business facility outside their home country.
Second reason cited for not setting up an offshore call center abroadwas security and the risks involved in moving a part of the principlebusiness operations abroad.
An important reason for not moving the offshore call center operationsto another country was the risks involved in damaging the brand oftheir services or products, which would evidently be case once therespective business is moved to an offshore location.
The above dissertation on the conflicts between offshore businesses andconsumers or clients of call centers that obtain varied services andinformation from such call centers. The above dissertation thusprovides comprehensive information from the US perspective, theEuropean as well as the British point of view duly taking considerationthe differing aspects, factors and reasons for such conflicts. Theabove dissertation also includes a particular study and addresses theBritish perspective from a number of avenues, including the businessperspective as well as the consumers of British call centers.
The above dissertation thus leads us to conclude that though therewould be a continuous rise in the offshore businesses, with particulargrowth in call centers. Yet, there will be a simultaneous rise in thedifferences and conflicts between consumers of call centers andoffshore businesses. As also evident and discussed in the abovesections of the dissertation, these conflicts, in particular complaintsand issues of British consumers are already at a significantly highlevel. Though business, including those based in Britain will continueto focus on cost cutting and expansion measures and strive to establishoffshore call centers.
However, consumer satisfaction and resolution factor continues towitness a downward slope, instead of rising. Some of the reasons forthe continuous decline in consumer satisfaction, hence the risingconflict as deduced from the above dissertation include the following.
The inability of call center respondents to answer and addressinquiries and issues, other than those listed in front of theircheck-list. This also implies significant wastage of time forconsumers, not to mention the effort of not comprehending a caller'sproblem, thus creating a nuisance, and a somewhat dissatisfied caller.
Another frequently observed source of conflict for the caller is thetime spent while holding on to the phone waiting for the rightindividual to attend the call. The automated options provided, such asinstructions for pressing a selected number and routing the call, makesthe consumer even more furious. One can imagine the frustration for theconsumer, who even after getting to the right person, finally finds outthat the requisite information of service is unavailable.
One of the more economical reasons found to be a principle factor inthe rise of abandoned calls, and frustrated consumers was the shiftfrom the toll-free number of 0800 to 0870 and 090, where the caller hasto pay for each call. One can imagine the level of rising frustrationand a truly source of nuisance, where first you have to pay for thecall, and then fail to get the required information or assistance; notto mention the time wasted for holding on for the concerned respondentto reply.
An equally disturbing aspect is observed from the caller's point ofview. A call center respondent has to listen to all sorts ofconversation, which is all the more hurting if the same turns intoscandalous. A simple observation would show that if such a conversationwas carried out on the street, it would be pretty difficult not to hitthe consumer. Worse still are cases when the call center respondent isright about the information, has presented correct calculations, andprovided detailed and appropriate information to the consumer. Yet, inresponse he or she hears abuses such as 'idiot', or the likes of suchabuses, truly turning a perfectly normal conversation into an unhealthyone, hence the emergence of a severe conflict.
Whether it is the fault of the call center respondents, inexperiencedcall center employees, disgruntled and impatient consumers waiting toblow the head of the call respondent; the most ethical and normalattitude for both the consumers as well as the call center employeeswould be to stay calm. A polite, calm, and requesting consumer with athankful attitude can easily win over the attention of the call centeremployee. There are 9 out of 10 chances that in response, the callcenter employee would go out of the way to assist and help out therespective caller, consumer and duly raise the resolution factor forboth the businesses as well as the consumers or clients of callcenters. For the businesses too, they could well integrate automatedcommunication facilities. Such state of the art set of communicationduly note down a caller's number and instead of the caller waiting forsomeone to attend the call, the automatic responder could immediatelycall back. Such integration of modern technology would not onlytransfer the expenses of the call to the respective call center; itwould also serve to win over the confidence of their consumers.
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