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.