A Conceptual Framework for the Dynamics of Call Service Center Offshoring

(ProQuest: ... denotes formulae omitted.)INTRODUCTIONIncreasingly, firms have decided to implement call service center (CSC) offshoring. Studies suggest that the primary purposes of CSC offshoring are cost reduction, service improvement, access to skilled people, and establishment of a foothold in a foreign market (Lewin and Peeters, 2006; Manning, Massini, and Lewin, 2008). This has led to consideration of offshoring as a strategic decision to improve service level or reduction of costs associated with sales, marketing, and customer care activities (Robinson, Kalakota, and Sharma, 2005; Sharma, Iyer, and Raajpoot, 2009; Thelen and Shapiro, 2012; Roza, Van den Bosch, and Volberda, 2011). There are variations in the manner in which companies benefit from CSC offshoring. Those who have benefited are likely to maintain their current offshoring and to perhaps launch new offshore endeavors. Those who have not benefited may try to change their offshoring provider, offshore in another location where cultural or geographic distance is closer to their home country (known as "nearshoring"), or withdraw to their home country (known as "inshoring" or "backshoring") (Benito, Dovgan, Petersen, and Welch, 2013; Kinkel, 2014; Tate, 2014). Some firms can evaluate offshoring outcomes in early stages but others have a difficult time evaluating outcomes even much later.This paper develops a simple but comprehensive conceptual framework to explain the variation in outcomes. Prior studies have identified three factors that affect the success or failure of offshoring (Ito and Gehrt, 2014; Lampel and Bhalla, 2011; Roza, Van den Bosch, and Volberda, 2011; Schmeisser, 2013). These include offshore processes (i.e., back office operation, front office operation, more advanced work, etc.), offshore providers (i.e., subsidiary, joint venture, outsourcing, etc.), and offshore locations. While most prior studies have developed frameworks to understand performance implication of offshoring as a static strategy, there is little research on the dynamic process of identifying the optimal offshoring strategy (e.g., Benito, Dovgan, Petersen, and Welch, 2013; Ito and Gehrt, 2014; Jensen and Pedersen, 2011; Murray, Kotabe, and Westjohn, 2009). This paper develops a conceptual framework to capture the dynamic aspect of offshoring strategy, especially in the context of CSC offshoring.Youngdahl and Ramaswamy (2008) categorized the services that are the target of offshore outsourcing into two dimensions; the degree of knowledge embedding (solution/transaction) and degree of customer contact (back office/front office). "Knowledge embedding" refers to the degree of routinization in service delivery system. "Customer contact" refers to the degree of presence of the customer in a service delivery system. This is not the physical presence of the customer inside the service delivery system, but instead signifies customer involvement via information communication technology (ICT). The focus of this paper is on front office services. In services of this type, customers directly interact with offshore agents.CSC offshoring involves four types of stakeholders that are related to each other (see Figure 1) including the offshoring firm, CSC service provider, offshore CSC agents, and consumers (e.g., Jeong, Bekmamedova, and Kurnia, 2012). The offshoring firm is the organization that provides products or services to consumers. This offshoring firm searches for a CSC service provider that can provide CSC services to customers on its behalf. The CSC service provider is an organization that is located in the offshore location and provides the CSC services. The CSC service provider has internal employees who are CSC agents. The agents are the actual providers of the CSC services and directly interact with the offshoring firm's consumers. Finally, consumers are the customers of a given offshoring firm. Consumers generally interact with agents via the telephone. …