Call Center Outsourcing: Coordinating Staffing Level and Service Quality

Management Science, Forthcoming

38 Pages Posted: 19 Nov 2006

See all articles by Z. Justin Ren

Z. Justin Ren

Boston University Questrom School of Business

Yong-Pin Zhou

University of Washington Business School

Abstract

In this paper, we study the contracting issues in an outsourcing supply chain consisting of a user company and a call center that does outsourcing work for the user company. We model the call center as a G/G/s queue with customer abandonment. Each call has a revenue potential, and we model the call center's service quality by the percentage of calls resolved (revenue realized). The call center makes two strategic decisions: how many agents to have and how much effort to exert to achieve service quality.

We are interested in the contracts the user company can use to induce the call center to both staff and exert effort at levels that are optimal for the outsourcing supply chain (i.e., chain coordination). Two commonly used contracts are analyzed first: piece-meal and pay-per-call-resolved contracts. We show that although they can coordinate the staffing level, the resulting service quality is below system optimum. Then, depending on the observability and contractibility of the call center's effort, we propose two contracts that can coordinate both staffing and effort. These contracts suggest that managers pay close attention to service quality and its contractibility in seeking call center outsourcing.

Keywords: call center outsourcing, outsourcing contract, outsourcing staffing, outsourcing quality

JEL Classification: D24, D82, E22, L14, L15, M55

Suggested Citation

Ren, Z. Justin and Zhou, Yong-Pin, Call Center Outsourcing: Coordinating Staffing Level and Service Quality. Management Science, Forthcoming. Available at SSRN: https://ssrn.com/abstract=945278

Z. Justin Ren

Boston University Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA MA 02215
United States

HOME PAGE: http://www.bu.edu/experts/profiles/z-justin-ren/

Yong-Pin Zhou (Contact Author)

University of Washington Business School ( email )

Box 353200
University of Washington Business School
Seattle, WA 98195-3200
United States
(206) 221-5324 (Phone)
(206) 543-3968 (Fax)

HOME PAGE: http://faculty.washington.edu/yongpin

Register to save articles to
your library

Register

Paper statistics

Downloads
848
Abstract Views
4,456
rank
27,445
PlumX Metrics