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Dell case
Dell was considering outsourcing its call center operations to reduce costs and better serve a large customer base. However, its previous attempt to outsource to Bangalore failed due to inadequate planning, risk assessment, technical skills, and cultural issues. The document provides a 7 step framework for successful outsourcing: 1) planning initiatives, 2) exploring strategic implications, 3) analyzing costs and performance, 4) selecting providers, 5) negotiating terms, 6) transitioning resources, and 7) managing relationships. As a service provider, I would pitch quality, trained workforce, infrastructure, technology, training, and outcome-based pricing to help Dell successfully outsource its call center.
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Dell case
- 1. A case studyon Dell’s call centre outsourcing
- 2. What are thekey elements that have led to the closure of the Bangalore call centre? • Lack of long term plan • Inadequate risk assessment Planning and managing • Not enough technical knowledge • Long time to reach senior technicians Technical skills • High attrition rate • Lack of training People • Type of answer • Thick ascent Cultural issues
- 3. 7 Steps toSuccessful Outsourcing 1. Planning initiatives 2. Exploring strategic implications 3. Analyzing costs/performance 4. Selecting providers 5. Negotiating terms 6. Transitioning resources 7. Managing relationships
- 4. I - PlanningInitiatives Identify core and non-core competencies Form an Executive Sponsor team – Why? • Adds credibility • Knowledge & vision of strategic issues of organization • Enables Better assessment • Better control & integration capability Form an outsourcing team including • executive sponsor, outsourcing team leader and • representations from Project management, contracts, finance, information systems, procurement, HR, operations, quality, sales & marketing Train and acquire resources if necessary Risk Assessment Set key business objectives • Serve large customer base • Reduce cost
- 5. I - PlanningInitiatives – Risk Assessment Strategic Risks •Are the strategies compatible? •Any past experience? •Level of executive commitment •Management capabilities •Vendor capabilities •Intellectual Property Risk Operational Risks •Roles & Responsibilities of management and operations staff •Processes & Methodology •Skill availability •Staff transition, training, retention & attrition rates •Cross-Cultural issues Technology Risks •Architectural approach & requirements •Regulatory compliance •Security •Reliability •Standardization vs Customization Financial Risks •Internal costs •Financial stability of vendor •HR costs •Training costs •Transition costs •Communication & Management costs
- 6. II - ExploringStrategic Implications Understand organization’s vision Identify products and services for outsourcing Understand the marketplace and vendor capabilities Define organizational design & culture Lead and manage change Define the roles and responsibilities Align initiative with business strategy • Does it fit in the overall business strategy? • Long term or short term relationship?
- 7. III - AnalyzingCosts and Performance • Staff hours in planning, meeti ngs, negotiations etc., • Change management • FC < CC • Cost of poor performance • Legal fee for new contracts • Employee displacement cost • Communication costs • Employee cost • Administrative cost etc Direct Cost Indirect Cost Hidden Costs Current & Future Costs Performance Benchmarks First call resolution rate Transfer rate On hold time Conversion rate Determine total costs, costing method, cost and performance benchmarks Benchmarking can be done against competitor, internal or process information
- 8. IV - SelectingProviders Cross functional vendor evaluation team Standardized, fair and documented vendor evaluation process • Leader/Rising star in the industry (India, China, Philippines etc.) • With past experience in customer contact center business • Infrastructure requirement • Client References Qualification • Qualifications • Costs • Background check • Geographical location – country risk • Cultural diversity & associated cost Evaluation Criteria • Outsourcing of customer contact center • To cater to large customer base & reduce cost • Qualifications • Backup capabilities expected • Dell’s business, vision, mission, goals – corporate profile RFP ??
- 9. V - NegotiatingTerms Prioritize requirements • Manage a large customer base (approx no.) • Cost reduction ?? • Infrastructure (Capacity) • Time frame • Organizational culture Pricing based on the scope and performance Negotiate to build a relationship & not just to sign an advantageous contract
- 10. VI - TransitioningResources Define roles and responsibilities of domain experts & the project management team Develop an integrated transition plan Training and technical knowledge transfer Define clear communication protocols Identify and resolve issues arising due to cultural diversity Create awareness among the employees Have a contingency plan
- 11. VII - ManagingRelationships Communication Management • Training and education for employees • Usage of portals to pass on information to vendor • Knowledge transfers for new products & technologies Work Administration • Executive team for strategic planning & development • Operational team for overseeing the performance of vendor • Special purpose team for managing critical issues • Committees for overseeing financial and quality aspects of the vendor Focus on strengthening the relationship to achieve long term goals
- 12. Are the recommendationsand conclusions given here implementable, if so, how will you go about implementing them? Planning & Management: Define the scope for outsourcing i.e. degree of outsourcing Progressive model of approach Selection of one of the regional market for trial purpose Evaluate the outcomes of the trial Issues: The same results may not be possible with other regional markets Resolve the problems A vendor must be evaluated periodically with respect to the training given to employees Execute it on a larger scale in a phased manner Staff retention Employee engagement and recreations Compensation and benefit plans Flexibility in working hours
- 13. Investigation and Pre-outsourcingAnalysis: Systematic investigation should be done. It includes those parameter which directly impacts customer like ascent, domain knowledge etc. The third party consultancy must gauge the below stated fields: Skill availability Flexible Infrastructure Cultural issues Other risks like- IP, etc Training and Monitoring: Technical skills Communication skill Culture of dell’s as well as it’s customers Making the whole outsourcing process accountable by standardizing the evaluation process. Manager accountable to the activity, should be having a team under him to continuously monitor/update the evaluation process as per the changing technology requirements
- 14. As a serviceprovider what will be your pitch to Dell to get then to outsource the call centre business to you? Quality Past clients feedback Brand value Well trained & skilled workforce Infrastructure availability Advanced technology to avoid technical glitches Flexible infrastructure for future expansions Feedback based training to maintain Training sessions to understand clients & its customer’s culture Outcome based pricing (Conversion rate, On-hold time, First call resolution rate, transfer rate etc.)