Human Resources and Strategy in Outsourced and In-House Call Centers: Empirical Findings from Brazil

Recursos humanos y estrategia en centros de atención telefónicas en outsourcing y propias:
Resultados empíricos del Brasil

Pedro Lucas de Resende Melo* , Felipe Mendes Borini** y Moacir de Miranda Oliveira Jr.***

Recibido: 13-07-2009 - Aprobado: 02-09-2009

Contenido

• Introduction
• Theoretical background
• Hypothesis
• Methodology
• Exposition of the model and construction of the variables
• Results
• Final comments
• References

Introduction

When we analyze the structure of the call centers, we realize that 64% of the costs and expenses of the call centers come from labor costs (Anton, 2005), in such a way that labor is considered one of the most relevant factors in services, in spite of the fact that the salaries in Brazil are low – the annual income for attendants represents an average of US$ 4,513 (Oliveira Jr. et al, 2006).

However, when services are rendered by outsourced call canters, the annual income for the attendants has a greater variance; in Brazil the averages are around US$ 5,579 for in-house call center and US$3,374 for outsourced call centers (Oliveira Jr. et al, 2006).

Nevertheless, the outsourced companies show a very low-cost structure when compared to the in-house ones resulting that companies make use of outsourced call centers services in order to decrease the costs and focuses their operational activities in their business strategic activities.

In addition, the subcontracted companies that work with call center service, besides of showing a more efficient low cost structure in relation to human resources, also have as their core business the Information Technology (IT). The focus of these companies is the tele-marketing services, which involves all information technology and telecommunications, which result in others 31% of the costs of services from call center (Anton, 2005).

So, it is expected that the subcontracted companies for such call center show a decrease in costs, as a result of the information technology, not only for paying lower salaries but also for making better use of this technology, in many cases replacing the labor force of their own attendants. It is also expected that the subcontracted companies are more advanced in relation to the information systems, in order to assure the improvement of the products and call center’s servicing.

At this point, we can ask if the companies that make use of an outsourced call centers have their costs reduced in comparison to in-house call centers. The answer is not a simple one.

The efficiency is the main driver of the organizational arrangement of call centers: the modern sweatshops are characterized by a strict and formal process, qualified work, vertical strong hierarchy, with a strict supervision connected to an intensive control (Azevedo and Caldas, 2002). Then, if the operational efficiency is the focus of all call centers, the choice of using an outsourcing strategy or not in this activity doesn’t mean a strategic trade-off between cost and differentiation, but a choice between focusing on the client or on the product (Ohmae, 1982; Treacy e Wieserma, 1995).

We assume that, once the operational excellence is the target of any call center, the central strategic question is choosing between a personalized service for the client or searching for better technologies to coordinate, control and attend clients. Following the premises of the Resource Based View (RBV) (Barney, 1991; Wernefelt, 1984), the first choice would demand higher investments in human resources and not the hiring of an outsourced service, while the second one would demand focus on technology and in the acquisition of an outsourced service, because the subcontracted companies would be much more efficient in the implementation of the technological changes, once this is their strategic focus.

In this way, the following hypotheses investigate if there is a relationship between the outsourcing of services and the strategy of attending in call center and if strategic resources of these companies are different in such a way they can guarantee a difference in performance. For this purpose, a survey was carried out involving a total of 200 companies associated to ABT, in which more than 50% have effectively participated.

Theoretical background

The outsourced services practice is recent in some areas such as in IT (Information Technology); back-office services, accounting and in customer services through call centers. Other areas, such as logistic and services in general, outsourced services started in the 60’s and 70’s with the provisions of services of the financial area and operational support to departments which relied on the intensive use of computers (Ramanujan and Jane, 2006). This practice of outsourced services has been more frequent in the strategy of organizations, in a global environment, with competitors improving themselves more often in searching new technologies, in order to improve the quality of processes and to reduce costs (Gurung and Prater, 2006).

The logic behind the outsourcing of services is to make the organization free to focus in its core business, keeping the control over strategic areas and dedicating to the critical questions in order to survive and transfer those areas that are less critical to an organization which is specialized in that specific services, delegating the corresponding risks to the department that is making use of an outsourced service (Farncombe and Waller, 2005; Sink and Langley, 1997; Quinn and Hilmer, 1994).

The organization must dedicate efforts to the maintenance of the core competences, that is, those that provide differentials in performance, protecting the elements which are considered crucial and generators of differentials for their customers and difficult to be imitated by the competitors (Prahalad and Hamel, 1990).

For a better visualization of this selection, the activities that are recommended to maintain under organization’s domain are: (i) the execution of key activities, sources of competitive advantages; (ii) the accomplishment of emergent activities, which possess great potential to generate sources of competitive advantages in the future and (iii) the non involvement in the treatment of commodities, in general available and common in all market (Insinga and Werle, 2000).

Besides this, the promised reduction of costs with the outsourcing of a service is attractive, something around 20%-40%, considered the main factor of attractiveness that makes the organization search for outsourced services (Piachaud, 2005; Farncombe and Walle, 2005; Brody, Miller and Rolleri, 2004).

Despite these parameters of reduction of costs and focus in the central activity, an internal evaluation of the situation of the organization is required before taking the decision on outsourcing. Therefore, the profits with the outsourcing of services would be uncertain if the objectives desired to reach with the adoption of this practice have not been organized and stipulated (Farncombe and Waller, 2005). The decision of hiring an outsourced service must take into consideration the implications that this new joint can bring to the organization, in terms of human resources, engineering and manufacturing and in the positioning of its competitors before the adopted technology (Nayak, 1993).

A factor of great relevance in the outsourcing of services planning is to find a partner that has a compatible organizational culture, where it is possible to join forces and expertise, not exerting impositions on one another, establishing a mutual relationship (Piachaud, 2005). It is prudent to have in mind that this partner can be a competitor in the future, and that it comes to gain learning in its market later and it starts to operate as a strong opponent (Bettis, Bradley and Hamel, 1992).

In the case of call centers, the outsourced services allow the access to top technologies without a great investment in the purchase of these devices, including the transference of responsibility for the hiring of operators to the company who offers such service, which will also be responsible for an addition or reduction of the number of attendants, as needed.

In summary, from the several advantages that the organizations can get when hiring outsourcing of services (La Londe and Maltz, 1992; Anderson and Parkers, 2002), between the companies that use call centers in their activities, they would have as benefits: (i) focus in the central ability (core competence); (ii) reduction of expenditures; (iii) increase of the service flexibility; (iv) contour of problems of low production scale; (v) prevent labor issues and hiring of employees and (vi) increase in the performance of the service.

Following, it is important to point some Brazilian studies, such as the one carried out by Prado and Takaoka (2001) treating the outsourced service of IT and undertaken in 100 companies of the industrial sector in the State of São Paulo, which shows the main motivating factors for the adoption of this procedure. Seven hierarchical factors ordered by importance for the adoption of the outsourced service hiring are: (i) reduction of costs; (ii) acquisition of technology; (iii) management of human resources; (iv) delegation of routine activity; (v) rendering of services; (vi) act of hiring labor force and; (vii) delegation of activities with high degree of specialty.

Nevertheless, in a wide scope of analysis of the searched companies, the survey lead by Bastos, Peixoto, Souza and Gondim (2004), involving the analysis of twelve of the practical ones of the work management and the production in prominence in the 1990’s, shows that among them the outsourcing of services shows a positive evaluation for the managers, referring to quality, costs and speed of reply, presenting a panorama of the use of these practices.

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