OUTSOURCING AND OFFSHORING

Outsourcing

There are a number of reasons for transferring the running of the contact centre operations to another organization, such as:

• it allows the client organization to concentrate on its core competencies;
• the outsourcer may have skills the client does not have and therefore can carry out the operations more effectively and more cheaply;
• by separating the contact centre operations from the parent organization the true cost of providing the service is made clear.

Outsourcing an operation does not mean that clients absolve themselves from the operations of the outsourcer. Before transfer there is considerable discussion undertaken and key performance measures and actions are specified in detail. The clients may also influence human resource practices in numerous ways, including determining the skill set used in recruitment, selection and training, for example the direct provision of product training by the client to ensure that advisers strongly identify with the brand.

On occasions advisers may identify more with the client organization than their direct employer, the outsourcer, which may create loyalty issues and also challenges when advisers are transferred to work for other clients. Contact 24, an outsourcer, had to reintroduce its induction programme in order to raise internal identification. This training increased awareness of the Contact 24 vision from 41 to 51 per cent, and knowledge of business objectives from 46 to 52 per cent.

Another challenge for the outsourcer is that the skills possessed by employees are relatively stable but the contracts won and lost may influence the balance between the skills supply and demand. Sometimes transfer between clients is relatively simple because the generic contact centre skills can just be topped up with a few days’ training. On other occasions contracts may be arranged at very short notice and, ‘This can cause problems in matching supply with demand because CSR skills and knowledge can be very client-specific’.

Frequently, the driver for outsourcing is cost and this may have implications for investment in advisers. Outsourcers tend to have the lowest salaries and least training, and more than a quarter report that they have multiple issues regarding skills gaps.

Offshoring

The financial imperative that brought many call centres to low cost, economically deprived areas of Ireland, Wales, Scotland and the North of England may also be a driving force that encourages them to leave. For example, there can be a 20–40 per cent saving on operating costs for those organizations relocating overseas. Indeed, for some organizations offshoring is an operational imperative .

The potential for job displacement is considerable and there have been significant relocations offshore from the United States and the UK. In recognition of these pressures the Tosca D6 Project Symposium concluded that there was a critical need to increase the skills of call centre staff to prevent jobs being relocated outside the European Union. Indeed, CallNorthWest acknowledged that the UK is competing with low-cost nations for call centre business: ‘As a national and regional economy the North West cannot compete on labour costs but where it will need to compete long term is the quality and skills of its workforce.’

To ensure a vibrant and competitive home-based call centre economy requires call centres and the various agencies to work in unison to create a supportive environment. This needs the creation of ‘a supportive world class infrastructure’ allied to customer relationship management.

There is a consistent message being communicated about the importance of education, skills and qualifications. The Department of Trade and Industry emphasized:

Through skills, training, qualifications and advice, contact centres must be helped from focusing purely on call handling, towards the more complete and valuable action of customer contact management. 

The government has a key role to play in promoting further debate and research, influencing and bringing parties together, and providing the right commercial and legislative framework to allow the industry to flourish in the longer term. . . the focus should now be on creating a commercial landscape to allow the industry to develop in the long term, through improving skills, and supporting best practice.

Following an analysis of this increasingly competitive market, Van Zoest argued that:

it is clear that the future of the British call centre industry lies in high value jobs, such as those in sales and maintaining customer relations. Whereas UK call centres cannot compete on low wages, they can compete on quality and skills. If the industry wants to keep its competitive advantage in the long run, call centres will have to invest in skills, training and qualifications, thus creating opportunities for personal growth, more value-added positions and be er service to customers.

BUILDING A POSITIVE REPUTATION | Learning, Training and Development in Contact Centres

One of the biggest challenges facing call centres is that of building a positive image to replace the negative one that is o en perceived by the general public. Hathway editor of Call Centre Focus said, ‘The British public hate call centres. That’s a fact. And it means it’s difficult to overcome caller prejudice and leave them with a good impression.’

Even before many customers make a call they anticipate problems and become defensive or aggressive, creating a hurdle too high for the adviser to overcome. There have been a number of causes for this negative perception, some of which have to do with employee skills and training; most are caused by other factors, eg technology, systems, work scheduling, operational constraints, etc.

Contact centres are o en considered to be a classic example of Taylorism, which involves detailed work structuring and close monitoring of performance. As a result they have attracted negative comments and have been called, ‘assembly lines in the head’ ; ‘electronic sweatshops’; and ‘twentieth-century panopticans’.

Another reason for the negative public perception is that outbound sales calls, which sometimes use aggressive tactics, have alienated a great many people and thus made it much more difficult for ethical and well structured organizations. Fortunately, increased legislation and industry self-regulation have significantly reduced these types of calls.

A third reason for the poor image is a result of technology. ‘Silent calls’ describe the phenomenon in which a person answers a ringing telephone only to discover that there is no one there. This situation is caused by multiple-dialling technology where a number of calls are made simultaneously and the call centre agent responds to the first one that is answered, leaving the other people who answer with a dead line. This has decreased significantly in many countries with the introduction of legislation banning this practice.

The use of automated call distribution (ACD) technology gives callers a range of numbered options from which they are required to choose. Sometimes, there are numerous sub-levels, increasing the potential for the caller to become frustrated with the delay before speaking to an agent. This can then be compounded when the agent asks for some of the detail again. Yet ACD enables calls to be answered by customer representatives who are knowledgeable about a particular area and who can then be more effective and helpful to the caller.

From the perspective of the call centre many of the frustrations described above can be easily explained. Automated call distribution allows the routing of calls to people who are more knowledgeable; waiting times allow for fewer to be employed thus reducing costs to the customer, etc. However, many customers are only concerned about their experience and o en forget or overlook the huge benefits in convenience, time saved and reduced costs that call centres have provided.

Fortunately, the call centre industry is rapidly maturing with greater regulation and higher standards of customer care. Unfortunately, overturning the legacy of the circumstances described above will take a considerable period of time. Therefore, it is the responsibility of all call centres and their strategies to determine whether or not the vast majority of its customers are satisfied.

THE LABOUR MARKET AND CALL CENTRES

All organizations operate in the labour market and both external factors and internal ones impact on their ability to recruit, motivate and retain employees. If this equation is balanced properly organizations will be able to hold onto desirable employees; if they get it wrong then it will leak employees to other call centres or outside the industry.

The turnover of employees in the contact centre industry is approximately 20 per cent and is relatively high compared with other industries. Worryingly, although official figures are relatively high they may under-represent the true picture. One source suggested a median tenure of 15 months ; and some managers reported that the average period of employment was 18 months, which translates into a harsh 67 per cent turnover. This discrepancy is also described by the TUC, which reported that many employers publicly state that turnover is 20–30 per cent but privately state it is double that figure.

Part of the reason for this variability in turnover figures may lie in the way they are calculated, eg people leaving during induction or a probationary period may not be included in some measures. Not only do 5.3 per cent of those offered a job not turn up, but 6.7 per cent of agents leave during induction. This increases to over 10 per cent in the finance, retail and distribution, and outsourcing sectors. Furthermore, 17.8 per cent of new agents had le within six months. In one case, 80 per cent of trainees who graduated from a pre-employment training programme and then a ended a six-week induction programme had dropped out before its completion.

In some cases the level of attrition is extraordinary; one centre experienced over 50 per cent per month for a significant time. This turnover is indicative of an unsuitable recruitment process or ‘poor management’. The main reasons for attrition are:

• agents do not like the type of work they are being asked to do;
• the shi pa ern does not suit them;
• they do not feel as though they can do the work;
• they get a job elsewhere;
• there are personality or management issues at work;
• they are using the contact centre as a stop-gap.

The turnover in some call centres is a result of employee burnout. A few call centres have a ‘sacrificial HR policy’ in which employees are worked hard and high emotional demands are made of them. When they run out of motivation and energy they are encouraged to move on.

This revolving door strategy is only sustainable when it is possible to draw from a large pool of available labour that ensures recruitment and replacement costs will be relatively low. However, it can be more difficult to recruit suitable employees during buoyant economic periods when there are more attractive employment opportunities with better conditions and remuneration. In employer-led markets there are plenty of applications for jobs; in candidate-led markets employers may have no choice but to employ staff who may not fully match person specifications and job descriptions.

The average turnover figures for call centres do not always present a sufficiently detailed and accurate picture of what is really happening. It would appear that there are two groups of employees. The first move on rather quickly, ‘Young, middle-class, well-educated and single people of both sexes – particularly university graduates – were generally perceived to be the most likely to move out of call centre work quickly’.

The second group were more long-serving employees. Fortunately, there is a ‘substantial core’ of long-serving employees who provide a valuable ‘stability’ for organizations. One manager said that the best employees were not the high flyers but the ones in the middle who were content to stay in their role as agents. Indeed, there are organizations that actively target women and some women admit that they are content in not being promotion-minded because they have other responsibilities at home which they prioritize.

Yet, these levels of attrition do not need to happen. One call centre in the north of Sweden had only two people leave in two years, and these were for maternity leave and the women were planning to return. It is clear that if the work is structured well, reward is satisfactory, and other conditions are amenable there will be low levels of employee turnover. Organizations that make excuses for high turnover are actually revealing that they are content to live with these levels; otherwise there are things they could do about it!

A vicious circle: the cost of employee turnover

The impact of high levels of attrition has caused some centres to closely examine their training and development policies. If people leave relatively quickly after induction the rate of return on investment in recruitment, training and development may influence the extent to which organizations are prepared to commit spending. Dimension Data  warned:

Managers may well ask, ‘If agents are leaving at such a rate, why spend time and money training them to work in competitor contact centres?’ Of course, attrition may well be influenced by agents’ frustration or stress about their ability to effectively carry out their job due to insufficient training which creates a vicious circle.

The cost of recruiting an employee has been reported as being £500  yet this is only part of the expense. The cost of employee turnover can be surprisingly high if all the costs of recruitment, induction, reduced productivity and departure are added together. One ‘rule of thumb’ is that ‘The average cost of turnover is o en calculated at time and half of the lost employee’s annual salary’.

One significant impact of high turnover is that many advisers have only been with their organization for a short time. This means that they do not have fully developed knowledge and skills, which results in lower levels of productivity. The CCA Research Institute referred to case studies conducted by Tele-users Action Group and Saville Holdsworth which calculated that inexperienced employees may be four times less productive than experienced ones.

Employee turnover at lower levels is not necessarily bad for an organization and a level of 10 per cent is probably healthy because it helps to introduce new life into an organization. However, three-quarters of employees who leave a call centre also leave the industry altogether, taking knowledge with them and thus denuding the whole industry of those skills.

One solution to this problem would be to use the call centre as a proving ground from which staff could transfer to the parent organization; however, the responsibility for losing 75 per cent of departing employees must lie with the contact centre and the parent organization.

Freedom or control?

The labour market cannot be blamed for all the current problems the contact centre industry is facing. In an article entitled ‘Call centres: battery farming or free range’ Crome made the case that advisers should be freed from rote delivery and given more opportunities to act independently. He argued that:

Historically. . . training for call centre operators has focused upon product and procedures rather than how to build effective relationships with customers. Many call centres invest the bare minimum in customer service training because, with an annual 30 per cent staff turnover rate and low training budgets, development training is seen to be a ‘nice to have’ rather than a ‘must have’. It is a vicious circle: staff who are not given the training support to maximize their potential are more likely to leave and, with constant churn, achieving consistently high levels of service becomes a greater challenge as the company constantly struggles to train new recruits in basic procedures and standards.

THE LABOUR MARKET AND EMPLOYMENT

A maturing industry

The growth of the contact centre industry has been rapid and has occurred in an ad hoc manner. The result is that it has o en lacked the maturity and integrated nature found with more established industries. Until more recently this meant that there was no clear career structure; no specific qualifications; and no fully coordinated industry representation. Organizations would mostly use in-house training to ensure quality because there were no clear means to understand or benchmark external provision.

Another implication of the lack of industry structure was that those organizations providing good quality training had little incentive to encourage developments beyond their gates. There were also other shortcomings including a low-cost approach to recruitment and training, and poaching of good employees by organizations that had weaker or nonexistent training and development departments.

Enlightened self-interest gradually emerged as it became recognized that organizations could not advance without joint action. In Britain, there was also a governmental recognition that the industry needed supportive guidance to prevent the haemorrhaging of jobs overseas because of ineffective self-regulation. The Department for Education and Skills commissioned the CCA Research Institute to investigate the area and it was acknowledged that there was a need for ‘the skills equivalent of “Keynesian Pump Priming”’.

Spurred on by a number of reports about contact centres relocating offshore, the Department of Trade and Industry  commissioned a report, The UK Contact Centre Industry: A study. Some of the findings that specifically relate to skills and training are presented belo

Support and opportunity for developing skills and education relevant to contact centre work is not well understood throughout the industry. Contact centres should be encouraged to improve their knowledge about standards and development tools available to them. 

In order to move up the value chain, the existing workforce needs to improve a wide variety of skills and capabilities. There is the need to coordinate, promote and encourage existing and new contact centre training and qualifications relevant to the businesses which go from pre-job training up to senior contact centre management. 

Through skills, training, qualifications and advice, contact centres must be helped from focusing purely on call handling, towards the more complete and valuable action of customer contact management.

The need for more training is widely felt, and although some detailed skills and qualifications frameworks have been put in place recently, the industry needs to be encouraged and educated in how best to use them. Some businesses do not support qualifications which improve – rather than develop – employees’ skills, as they fear this will only make the employees more a ractive to other organizations. 

BARRIERS TO LEARNING, TRAINING AND DEVELOPMENT

Although there are many forces encouraging learning, training and development there are also a considerable number of barriers. Not surprisingly the financial cost of agent downtime is the principal obstacle to the provision of training. Budgetary constraints have also resulted in external training being stopped after initial training, which affects the skill levels in the sector. Furthermore, Chamber Business Enterprises reported that 23 per cent of employers cited training barriers; specific ones identified were the cost of training (42 per cent); staff time (37 per cent); and timing of training (25 per cent). CallNorthWest also noted practical difficulties with staff signing-up for a programme and sometimes not being able to a end because too many had applied for the programme. Also, there were a significant number of ‘no-shows’ because there was no mechanism for ensuring that those who registered actually a ended a programme.

Another significant barrier to training is the fact that some employers suggest that the benefits of training were greater for the employees than the organization: ‘Staff come here, undertake the training, get the experience and then leave; we are not going to invest in people who are going to go elsewhere for higher wages.’ One case study trainer commented similarly: ‘A number of staff have le to take up other jobs in other organizations. We train them too well.’

It is not just the employer who is responsible for learning. The most successful forms of learning occur when the individual has developed a personal ‘hunger’ or interest in learning. Where people are self-motivated and take personal responsibility the quality and quantity of learning are found to be much higher.

Another obstacle to training is the flat structure of call centres, which have few hierarchical levels. This may result in few positions becoming vacant even though there are advisers queuing for promotion.

It is largely financial pressures that affect the degree of support for employees. With staff expenditure representing 71 per cent of the overall budget it is inevitable that it is regularly targeted for cost reduction; however, the savings have potentially negative implications. Dimension Data  noted that:

The reduced levels of agent training, performance appraisal and staff satisfaction investigations. . . support the observation that many centres are failing to focus enough attention on the development of the agent. The long-term consequences of declining agent development and focus could be extremely damaging to organizations and the risks far outweigh any short-term cost improvements that have been realized as a result.

DRIVERS OF LEARNING AND DEVELOPMENT

The purpose of training within an organization is to improve knowledge, skills, attitudes and ultimately financial performance. Learning at individual and organizational levels is not a goal in itself but a major foundation in providing a successful interaction with the customer and ensuring that the organization prospers and survives into the future. There are a number of primary drivers for call centre training.

Business opportunities

Commercial organizations are frequently looking to expand provision and increase market size and share. Thus, each contact with the customer is o en used as an opportunity to sell new or upgraded products and this may result in wider and more complex demands on CSRs, requiring different knowledge and skill sets.

Problems

Problems within the organization are o en addressed through focused training, which can provide a quick solution to unanticipated situations. This form of reactive training may reduce resources and limit the potential for delivering ongoing development training. Furthermore, it can be stressful for trainers because of the need for rapid responses to the sudden challenges.

Management planning

Managers have responsibility for the smooth operational running of centres and for this reason need specific knowledge and skills as well as generic management skills. In particular they need training in the specific technologies, systems, so ware, planning, queuing principles, industry developments, etc.

Changes in technology

One of the main reasons for the growth of the contact centre industry has been the advancement of technology and this continuing development means that employees need to regularly update their knowledge and be able to use the various systems and technologies. In addition, as the number of communication channels increase, eg e-mail and text chat, agents will need to develop new skills in written communication. Furthermore, the so er skills of selling and customer service may alter when provided with different contact media.

Changing customer requirements

Customer expectations of quality of service are continually increasing, o en as a result of competition. For this reason increased knowledge, skills and rapport need to be developed to attract new customers and prevent existing ones from defecting to alternative providers.

Political/regulatory changes

As the main point of contact for the organization with the customer, CSAs (customer service agents) must be up to date in order not to put the organization at risk of negative publicity or legal action. New legislation, product recalls, etc need to be conducted accurately.

Labour issues

Training is o en used to address agent attrition and when the labour market is tight good quality training is used to attract potential advisers. The delivery of induction training has been found to retain new recruits for longer if the induction programme is provided at intervals rather than in one intensive block. Staff who receive ongoing training feel that their skills are progressing and recognize that this may then enable them to advance within the organization.

Reward

Training is also provided as a form of reward rather than being essential. It can be motivating in its own terms without being directed at specific issues. In one organization it was reported, ‘The mentality of training used to be that it was a reward not a necessity’.

High involvement work practices

In high performance work organizations  that have integrated human resource functions, productivity and profits tend to be higher. Also, in high involvement work practices ‘unions are likely to spend less time in workplace grievances and more time on initiatives such as joint training programmes’.

THE DEVELOPMENT OF CALL/CONTACT CENTRES

Although there have been switchboards and telephone operators since the early days of telephone systems the contact centre industry in its present form is relatively new. It plays an increasingly important strategic role within the organization and its rapid expansion has occurred for three main reasons.

Firstly, the starting point for the growth of call centres was the development of information and communication technologies combined with reduced telecommunication costs. The second factor driving the development of the industry was that organizations could achieve large-scale economies through the increased systematization and consolidation of office functions. 

Traditional back-office functions have increasingly become front-of-house operations as organizations have a empted to build closer communications with the customer. Knowledge management and customer management systems have created an environment in which the call centre is moving from being a peripheral, and o en geographically distant operation, to one that is now pivotal and central to the organization.

The third major factor is that expectations of service among customers have risen and contact centres have enabled swi er and cheaper contact with organizations. The greater efficiency of organizations has meant reduced prices for customers, but this has o en been achieved through transferring labour costs onto the customer through self-service. Furthermore, mechanized delivery systems have tended to restrict customer options.

Scientific management and contact centres

The scientific management approach of F W Taylor has been highly influential in the development of contact centres. Indeed, it has been suggested that call centres represent a return to Taylorism with ‘an assembly line in the head’. In a similar vein, ‘Tayloristic work organization minimizes skill requirements, discretion and job cycle time. Learning is limited to repetition of simple rationalized tasks (“practice makes perfect”).’

There is little doubt that mechanistic principles have influenced the design and operations of contact centres from the choice of technology and building design through to the greetings delivered by the CSRs (customer service representatives). If savings can be made without unduly influencing performance they will most likely be introduced, eg a one-second reduction in call time for directory enquiries in the UK could translate into a saving of £2 million. Similarly, replacing ‘Good morning’ and ‘Goodbye’ with ‘Hi’ and ‘Bye’ in a US centre was believed to save the equivalent of $22 million.

Market segmentation and differentiation

Yet, this Taylorist approach to contact centres does not present the whole picture. A consideration of expenditure is important and according to Dimension Data (2005) the main purpose of the call centre is cost reduction. But competing on cost alone implies a commodity market where all the offerings are indistinguishable. In reality, there are significant differences between providing a telephone number and giving detailed advice and guidance to someone contemplating buying a pension plan. Essentially, it is the combination of cost and quality that are the main mechanisms by which service provision can be differentiated.

Research into the interplay between cost and quality of service provision has indicated that there are, in general, three main types of business model which organizations tend to use in their interactions with customers; see Figure 1.

Figure 1: Types of service and efficiency

 

1. Mass production model – transactions

Some organizational strategies are based on minimizing costs and providing a very limited no-frills service. These transactional operations maximize call volumes and limit costs, creating a mass production model. Where there are low-value customers and a simple service, the process is highly scripted and there is little discretion for employees, eg telephone directory enquiries.

2. Professional service model – solutions

At the opposite end of the scale is the professional service or relational model which is frequently directed at high-value customers and where detailed interactions occur. In these circumstances there is o en more discretion and empowerment for the agent to find specific solutions for the customer, eg customized personal insurance.

3. Mass customization model – sales

Between the two extremes of the mass production and professional service models lies a hybrid version that a empts to balance the competing demands of cost and quality. This is the mass customization or pseudo-relational model which offers a medium-service, medium-efficiency interaction with the customer, eg simple holiday bookings.

This differentiation within the market has implications for the role of training and development. Tayloristic job designs enable the employment of less skilled and cheaper labour, which requires less investment in recruitment, training and development. Alternatively, with organizations competing on quality, contact centre employees require skills which will enable them to provide a customized service and this requires detailed and specific training.

There is an increased emphasis for organizations to encourage customers to go down the self-service route on the internet because it is so much cheaper. The use of automation, interactive voice recognition, internet and other channels represents a movement to reduce costs and increase accessibility. Thus, customers seeking to make simple and low value transactions will be encouraged to use the internet, eg most budget airline bookings are undertaken on the internet.

Figure 2: The provision of service in contact centres 

 

Yet there are limitations to the types of interactions that can be conducted electronically, ‘For complex interactions where a high speed of response is required, a real-time human touch is required’. However, employing people to operate like machines is self-defeating: ‘No sane business today would want a workforce of automatons: after all, anything an automaton can do, we can automate’.

Interacting with a customer builds the relationship, which benefits the customer and the organization. So, for this reason it ‘ensures that the human operator will never be entirely superseded by a machine’.