Call center outsourcing: Coordinating staffing level and service quality (original) (raw)

Call Center Outsourcing Contracts Under Information Asymmetry Edieal J. Pinker

Management Science, 2008

I n this paper, we examine contracts to coordinate the capacity decision of a vendor who has been hired by a client to provide call center support. We consider a variety of contracts, all based on our observations of contracts used by one large vendor. We examine the role of different contract features such as pay-per-time, pay-per-call, service-level agreements, and constraints on service rates and abandonment. We show how different combinations of these contract features enable client firms to better manage vendors when there is information asymmetry about worker productivity. In particular, we focus on how different contracts can coordinate by yielding the system-optimal capacity decision by the vendor and consider how profits are allocated between the client and the vendor.

Call Center Outsourcing Contracts Under Information Asymmetry

Management Science, 2008

In this paper, we examine contracts to coordinate the capacity decision of a vendor who has been hired by a client to provide call center support. We consider a variety of contracts, all based on our observations of contracts used by one large vendor. We examine the role of different contract features such as pay-per-time, pay-per-call, service-level agreements, and constraints on service rates and abandonment. We show how different combinations of these contract features enable client firms to better manage vendors when there is information asymmetry about worker productivity. In particular, we focus on how different contracts can coordinate by yielding the system-optimal capacity decision by the vendor and consider how profits are allocated between the client and the vendor.

Service-level agreements in call centers: Perils and prescriptions

A call center with both contract and non-contract customers was giving priority to the contract customers only in off-peak hours, precisely when having priority was least important. In this paper we investigate whether this is rational behavior on the part of the call center and what the implications are for customers. In particular, we show that under contracts on the percentile of delay, which are commonly used in the call-center industry, this is rational behavior, at least under the asymptotic regime considered in the paper. We then suggest other contracts that do not result in this type of undesirable behavior from a contract customer's perspective. We compare the performance of the different contracts in terms of mean, variance, and outer percentiles of delay for both customer types using both numerical and asymptotic heavy-traffic analyses. We argue that including terms reflecting the second moment of delay in a contract would be beneficial to contract customers and, in a sense, fairer.

Impact of Outsourcing on Effectiveness of Call Center Services

Journal of Asian Research

Call center is the frontline of communicating with customers. This paper reports the findings of a survey on service effectiveness of call center operations of mobile communication service providers in Turkey that either use in-house or outsourcing method. The primary objective of this paper is to explore how the customers of mobile communications service provider companies perceive the inbound call center processes for speed, easiness of use, first call resolution, effective inquiry and in doing that what qualities they display. For this purpose a survey was conducted with the customers who use call centers either to make an inquiry or to complain about the services. The aims were: to specify the typical behavior of mobile communications service users; how the firms handle inquiries or complaints; if they solve the problems for good and in what time or how long it takes to get an answer practically useful; to reveal the speed and timeliness of the processes. The survey was conducte...

Call-Routing Schemes for Call-Center Outsourcing

Manufacturing & Service Operations Management, 2007

Companies may choose to outsource parts, but not all, of their call-center operations. In some cases, they classify customers as high or low-value, serving the former with their "in house" operations and routing the latter to an outsourcer. Typically, they impose service-level constraints on the time each type of customer waits on hold. This paper considers four schemes for routing low-value calls between the client company and the outsourcer. These schemes vary in the complexity of their routing algorithms, as well as the sophistication of the telephone and information technology infrastructure they require of the two operations. For three of these schemes, we provide a direct characterization of system performance. For the fourth, most complex, scheme we provide performance bounds for the important special case in which the service requirements of high and low-value callers are the same. These results allow us to systematically compare the performance of the various routing schemes. Our results suggest that, for clients with large outsourcing requirements, the simpler schemes that require little client-outsourcer coordination can perform very well.

Outsourcing Service Processes to a Common Service Provider under Price and Time Competition

SSRN Electronic Journal, 2000

In many industries, firms consider the option of outsourcing an important service process associated with the goods or services they bring to the market. Often, competing firms outsource this service process to one or more common service suppliers. When they outsource to a common service provider, this gives rise to a service supply chain. We develop analytical models to characterize the benefits and disadvantages of outsourcing in service industries in which the retailers compete with each other in terms of the price they charge and/or the waiting time expectations and standards which they adopt and sometime advertise.

Managing the performance of outsourced customer contact centers

Journal of Purchasing & Supply Management, 2008

This research focuses specifically on customer contact services that have been outsourced to external suppliers. The performance of the contact services supplier directly affects end customer satisfaction which underlines the need for appropriate management of customer contacts and consideration of the end customer's perspective in designing appropriate key performance indicators (KPIs). This research draws on various streams of literature including services purchasing, performance management and service quality to derive propositions on how to manage customer contact services suppliers. These propositions are subsequently investigated in an in-depth case study. The results of the case study show that managing customer contact services suppliers on effectiveness rather than efficiency benefits the overall performance of the supplier. This research shows that quality improvements in both process and service delivery ultimately lead to decreased costs. These improvements will furthermore enhance customer satisfaction and improve buying company performance. The current trend in selecting and managing suppliers for outsourced business processes is on efficiency improvements and cost savings. However, this research shows that this type of focus can actually decrease customer satisfaction and increase costs.

Outsourcing via Service Competition

Management Science, 2007

We consider a single buyer who wishes to outsource a fixed demand for a manufactured good or service at a fixed price to a set of potential suppliers. We examine the value of competition as a mechanism for the buyer to elicit service quality from the suppliers. We compare two approaches the buyer could use to orchestrate this competition: (1) a Supplier-Allocation (SA) approach, which allocates a proportion of demand to each supplier with the proportion allocated to a supplier increasing in the quality of service the supplier promises to offer, and (2) a Supplier-Selection (SS) approach, which allocates all demand to one supplier with the probability that a particular supplier is selected increasing in the quality of service to which the supplier commits. In both cases, suppliers incur a cost whenever they receive a positive portion of demand, with this cost increasing in the quality of service they offer and the demand they receive. The analysis reveals that (a) a buyer could indeed orchestrate a competition among potential suppliers to promote service quality, (b) under identical allocation functions, the existence of a demand-independent service cost gives a distinct advantage to SS type competitions, in terms of higher service quality for the buyer and higher expected profit for the supplier, (c) the relative advantage of SS versus SA depends on the magnitude of demand-independent versus demand-dependent service costs, (d) in the presence of a demand-independent service cost, a buyer should limit the number of competing suppliers under SA competition but impose no such limits under SS competition, and (e) a buyer can induce suppliers to provide higher service levels by selecting an appropriate allocation function. We illustrate the impact of these results through three example applications.

Outsourcing a Two-Level Service Process

Management Science, 2012

This paper studies outsourcing decisions for a two-level service process in which the first level serves as a gatekeeper for a second level of experts. The objective of the system operator (the client) is to minimize the sum of staffing costs, customer waiting costs, and mistreatment costs due to unsuccessful attempts by a gatekeeper to solve the customer's problem. The client may outsource all or part of the process to a vendor, and first-best contracts exist when the client outsources only gatekeepers or experts. When the client outsources the entire system as a two-level process, a client-optimal contract may not exist unless the exogenous system parameters satisfy a particular (and unlikely) coordination condition. In addition, optimal incentive-compatible contracts exist when the vendor's structure choice (one-level or two-level) can deviate from the client's preference. Finally, we numerically examine how vendor structure choice and labor cost advantages influence the client's optimal outsourcing option.

Managing Service Quality And Efficiency In Call Centers: A Tautology Or Contradiction?

International Journal of Business & Management Studies, 2022

This article reports on the experiences of managers in outsourcing telecommunications call centers in South Africa on service quality and efficiency, and whether service quality is sacrificed for service efficiency. This qualitative case study collected data from eight participants through semi-structured face-to-face interviews. Inductive reasoning was applied in this study. Participants were purposively selected through criterion sampling based on their experience within the call centre industry. Thematic analysis were conducted whereby themes and sub themes were identified. Call center managers use different metrics to manage service quality and efficiency and two thirds of them suggests that service quality is not sacrificed for service efficiency, and a quarter feels otherwise. These findings contradict previous studies on service quality and efficiency. The article provides actionable insights for the management of outsourced call centers on managing service quality without compromising service efficiency. The findings can be implemented in the operations of inbound and outbound call centers.