CHAPTER 1 INTRODUCTION

1 CHAPTER 1 INTRODUCTION 1.1 CALL CENTRE Call centres are centralized offices that are used for the purpose of receiving or transmitting large volumes of requests over the telephone. The major types of call centre models are: Inbound call centre - Exclusively or predominantly handles inbound calls (Calls initiated by the customer). Outbound call centre - One in which call centre agents make outbound calls to customers or sales leads. Blended call centre - combining automatic call distribution for incoming calls with predictive dialing for outbound calls, it makes more efficient use of agent time as each type of agent (inbound or outbound) can handle the overflow of the other. Telephone answering service - A more personalized version of the call centre, where agents get to know more about their customers and their callers; and therefore look after calls just as if based in their customers office.

2 A call centre is usually operated through an extensive open workspace by call centre agents, with work stations that include a computer for each agent and a telephone set/headset. It can be independently operated or networked with additional centres, often linked to a corporate computer network, including mainframes, microcomputers and LANs. Increasingly, the voice and data pathways into the centre are linked through a set of new technologies called computer telephony integration (CTI). 1.2 HISTORY OF CALL CENTRE Like many revolutionary technologies, the call centre has a creation myth. Call centres as it is known, originate from the automatic call distributor developed in 1973 by US firm Rockwell (the Rockwell Galaxy) to allow Continental Airlines to run a telephone booking system. As it turns out, this was all good marketing baloney. Rockwell did indeed develop their ACD in 1973 and it was installed that year. But it certainly was not the first. Rockwell s claim to the first ACD installation may be inaccurate, but they were certainly amongst the first and most successful manufacturers. But the basic features of the modern call centres can be recognized almost ten years before this, in the mid-1960s. Private Automated Business Exchanges (PABX) began to handle large numbers of customer contacts. Automatic Call Distributor, and its system allows calls to be filtered and assigned to the best possible agents available at the time. An algorithm determines which agent receives which call. The invention of ACD technology made the concept of a call centre possible. Essentially it replaced the human operator with a far more flexible automated system capable of handling much greater numbers of calls.

3 The first ACD systems would probably have emerged in the 1950s to handle central operator enquiries at main telephone companies. The earliest example of a call centre was found in the UK at the Birmingham press and mail. They had a GEC PABX 4 ACD, installed in 1965. The hallmarks of the call centre can be seen in the rows of agents with individual phone terminals, taking and making calls. The Ericsson PABX ET 4 was a fully automatic Strowger Telephone system with a cordless operator s console. It superseded the PABX No. 3 and was manufactured by Ericsson Telephones of Beeston, Notts. The ACD system was an adaptation of this PABX ET 4 system. 1.2.1 Early Adopters By the early 1970s PABX systems were to include ACD technology, allowing the development of large-scale call centres. In May 1972, the New Scientist magazine reported that Barclay s had installed a Plessey PABX at its Northampton processing centre. This included an ACD to allow up to 72 enquiries to be dealt in cyclic order. The agents on this system were able to check the credit card records of Barclaycard s 1.6 million customers via a microfiche reference system. At the same time, Barclay s competitor Access installed a computerized system that allowed very fast access to customer records. It was an indication of the future direction of contact centres. In 1972 Gas World reported the installation of an ACD system at British Gas in Wales. The system had the capacity to handle up to 20,000 calls per week. This may have been the first multilingual system as it handled both Welsh and English calls. It was reported that Welsh-speaking customers in Aberystwyth at first found it strange to be telling someone in Wrexham of their problems.

4 1.2.2 Big Names Enter the Market Throughout the late 1970s and 1980s technological advances consolidated the importance of call centers to business. Many of today s big names established themselves in the UK during this period. In 1985, Direct line founded by Peter Wood, become the first company to sell insurance entirely over the telephone. Call centre technology allowed these companies to base their entire business model on telephone sales. In the USA, Aspect Telecommunications founded by Jim Carreker, improvised upon the early ACDs. They allowed calls made from touch-tone phones to be routed more efficiently, by distinguishing between types of calls and connecting them to specialized teams of agents. This cut down call waiting times, and allowed call centres to deal with an increase in call volumes brought about by the introduction of toll-free phone numbers. Aspect s flagship product was the Aspect call centre, somewhat fittingly, as the company went on to become one of the world s largest manufacturers of dedicated ACDs. Aspect s entered the UK market in 1989, with Microsoft as their first customer. The deregulation of the UK telecoms industry led to a drop in service costs, and as a result the UK contact centre industry became larger than in any other country except the USA. ACDs systems fuelled innovation, such as the launch of First Direct in 1989. First Direct was the UK s first direct-banking company, and proclaimed itself the future of banking with an unusual television advert made to seem as if it was being broadcast from 2010.

5 1.2.3 Dot Com Mania In the 1990s the call centre industry continued to grow, spurred on by the rise of the internet. From 1995 onwards internet-based dot com companies attracted vast amounts of investment from venture capitalists excited by the potential for rapid growth offered by the online economy. As websites became the central point of contact and sales for an increasing number of companies, call centres were essential in dealing with customer service and technical support. Unfortunately it didnot last, and by 2001 the dot com crash saw many internet-based companies go bust. 1.2.4 Rise of the Offshore Call centre The call centres were still on the rise. By 2003 the industry consisted of 5,320 call centre operations employing 800,000 people in the UK. 500,000 of these people were working as agents. The industry had grown by 250% since 1995, and is still growing. The early 2000s saw a trend for large companies to transfer customer service departments overseas. Cheaper labour costs as well as better skills in the workforce made offshore call centres attractive to businesses seeking to cut costs. Located in India, the Philippines and South Africa aggressively marketed themselves as offshore call centre destinations. India was particularly popular, as a large number of graduates available for call centre work made for cheaper and technically qualified agents for technical support phone lines.

6 1.2.5 Late 2000s The call centre has now been an invaluable business facility for three decades. With the recent rise of social media and technology that may allow call centres to become virtual networks of home workers linked by cloud computing, it appears customer service is swiftly evolving. Call centres are a vitally important source of jobs. As call centre helper reported recently, new figures from Contact Babel show that more than one million people are now employed by contact Centres in the UK. 1.3 TECHNOLOGY Call centre technology is subject to improvements and innovations. Some of these technologies include speech recognition software to allow computers to handle first level of customer support, text mining and natural language processing to allow better customer handling, agent training by automatic mining of best practices from past interactions, support automation and many other technologies to improve agent productivity and customer satisfaction. The concept of the universal queue standardizes the processing of communications across multiple technologies such as fax, phone, and email. The concept of the virtual queue provides callers with an alternative to waiting on hold when no agents are available to handle inbound call demand. 1.3.1 Virtual Call Centre Technology With the advent of the software as a service technology delivery model, the virtual call centre has emerged. In a virtual call centre model, the

7 call centres operator does not own, operate or host the equipment that the call centre runs on. Instead, they subscribe to a service for a monthly or annual fee with a service provider that hosts the call centre telephony equipment in their own data centre. Such a vendor may host many call centres on their equipment. Agents connect to the vendor's equipment through traditional PSTN telephone lines, or over voice over IP. Calls to and from prospects or contacts originate from or terminate at the vendor's data centre, rather than at the call centre operator's premises. The vendor's telephony equipment then connects the calls to the call centre operator's agents. Virtual call centre technology allows people to work from home, instead of in a traditional, centralized, call centre location, which increasingly allows people with physical or other disabilities that prevent them from leaving the house, to work. 1.3.2 Cloud Computing for Call Centres Cloud computing for call centres extends cloud computing to software as a service, or hosted, on-demand call centres by providing application programming interfaces (APIs) on the call centre cloud computing platform that allow call centre functionality to be integrated with cloud-based customer relationship management, such as Salesforce.com or Oracle CRM and leads management and other applications. The APIs typically provide programmatic access to two key groups of features in the call centre platform. Computer Telephony Integration (CTI) APIs provide developers with access to basic telephony controls and sophisticated call handling on the call centre platform from a separate application. Configuration APIs provide programmatic control of

8 administrative functions of the call centre platform, which are typically accessed by a human administrator through a Graphical User Interface (GUI). 1.4 DYNAMICS Call centre staff are often organised into a multi-tier support system for more efficient handling of calls. The first tier consists of operators, who initially answer calls and provide general information. If a caller requires more assistance, the call is forwarded to the second tier (in the appropriate department depending on the nature of the call). In some cases, there are three or more tiers of support staff. Typically the third tier of support is formed of product engineers/developers or highly skilled technical support staff for the product. Some critics of call centres argue that the work atmosphere in such an environment is dehumanizing. Others point to the low rates of pay and restrictive working practices of some employers. There has been much controversy over such things as restricting the amount of time that an employee can spend in the toilet. Call centres have also been the subject of complaints by callers who find the staff not with enough skill or authority to resolve problems. Telephone calls are easily monitored, and the close monitoring of call centre staff is widespread. This has the benefit of helping the company to plan the workload and time of its employees. However it has also been argued that such close monitoring breaches the human right to privacy.

9 1.5 CALL CENTRE PROCESS Call is initiated from the customer in the inbound call centre. Call gets connected to the agent routed through the call centre infrastructure provided in the figure as follows: 1.5.1 Automatic Call Distributor (ACD) A specialized switch for routing calls; Intermediary between the PABX and the agents is the ACD switch, whose role is to distribute calls among idle qualified agents. 1.5.2 Public Switched telephone Network (PSTN) The long distance or PSTN company knows two vital pieces of information about each call: Automatic Number Identification (ANI): The number from which the call originates. Dialed Number Identification Service (DNIS): The number being dialed. 1.5.3 Customer Service Representative (CSR) The agents/representatives that handle customer s calls to provide technical support. They are also called as Technical Support Executive (TSE). 1.5.4 Interactive Voice Response (IVR) Interactive Voice Response (IVR) units, also called Voice Response Units (VRUs) are specialized computers allow customers to communicate their needs and to "self-serve". Customers interacting with an IVR use their telephone key pads or voices to provide information.

10 1.5.5 Private Automatic Branch Exchange (PABX) Every call centre has its privately owned switch, called PABX or PBX. The PABX is connected to the PSTN through a number of telephone lines, often called trunk lines. If there are one or more trunk lines free, then the call will be connected to the PABX. Otherwise, the caller will receive a busy signal. 1.5.6 Computer-Telephony Integration (CTI) The middleware can be used to more closely integrate the telephone and information systems. Customers usually dial a special number provided by the call centre. If a trunk line is free the customer seizes it. Once the trunk line is seized, the caller is instructed to choose among several options provided by the IVR. After completing the instructions, the call is routed to an available agent. If all agents are busy, the call is queued at the ACD until one agent is free. Once the trunk line is seized and until the caller leaves the system, any other customer cannot use the seized trunk line. Besides, an agent can serve only one caller at a time. Moreover, a caller remains in the system until it gets the requested service from an agent. Typically, a technical support call centre provides not only voice support, but also support on email and internet. Schematic diagram of the call centre process is depicted in Figure 1.1.

11 Figure 1.1 Schematic Diagram of Call Centre Process 1.6 IN INDIA The Indian economy has been growing rapidly since the 1990s as a result of the processes of globalization, economic reforms and liberalization. Over the past decade, the service sector in particular has witnessed a high rate of growth, most notably in the information technology enabled services (ITES) and business process outsourcing (BPO) segments. The impressive growth of the Indian IT and BPO industry has contributed significantly towards the socioeconomic development by generating employment opportunities and foreign exchange reserves. Besides, the sector has facilitated other industries such as real estate, transportation, catering services, and has thus generated many employment opportunities in the country.

12 The global economic slowdown has put a brake on the growth run of the sector s performance during 2009 as the clients in the west are either delaying or cutting their IT spending, or re-negotiating the prices. Going ahead, the challenge for the industry players lies in maintaining the level of competency and offering high-level customer satisfaction at affordable prices. The current economic slowdown has changed the business scenario across the globe. The changes in macroeconomic fundamentals, protectionism measures are also few important risks looming large on the sector. Players need to adopt an innovative approach to tackle the situation by finding out alternative markets, adopting different business models, improving the quality of services, diversifying service line, and most importantly, focusing on other emerging verticals. The small and medium-sized enterprises have recently had ample avenues to explore in terms of IT services and business process solutions. Due to the boom in the banking, telecom, retail, logistics sector and several initiatives taken by the central government and other state governments, the IT spending in the domestic market has increased impressively. In the last decade, the domestic IT services and software products and engineering services market grew by 21 per cent annually and reached US$11.60 billion in 2011. The role played by BPOs in boosting Indian economy shows that the IT and ITES sector have been contributing largely to the economic growth of India. The growth in the contribution of BPOs to Gross Domestic Product has shown a steady rise from 1.20 per cent to 5.40 per cent. It is hence evident that the BPO industry is making an impact on the Indian economy. In the beginning of the new millennium, the worldwide demand for ITES grew at the dramatic rate of 66 per cent per annum. India considered

13 that it had the potential to bid for a large part of this market. In 1999, as NASSCOM (National Association of Software and Services Companies) predicted, by 2005 nearly 1.10 million Indian workers were employed in ITES in India. By 2008, ICT services and back-office work in India increased fivefold to become a $57 billion annual export industry employing four million people and accounting for 7 per cent of India s GDP. India s export-oriented ICT services are expected to generate 20 million jobs by 2020- a welcome prospect in a country where 200 million people will be entering the workforce during the same period. India has been a leading hub for the location of off shore services. With a large population of young people, India has been well placed to meet the human resource requirements of a growing outsourcing services industry. India has a vast educated English-speaking workforce with computer skills; indeed, it is estimated that over 200000 engineering students and approximately 1.75 million graduates are added each year to this young workforce. Low operating and labour costs and a favourable policy environment are other factors that have contributed to the popularity of India as an outsourcing destination. Currently Bangalore, Mumbai, Hyderabad, Pune, Chennai and Kolkata account for 90 per cent of the total direct employment in the BPO sector. BPO sector employment involves, for the most part, such activities as customer care services, data entry and analysis, payment processing services, audit checks for companies and so on. Typically, each BPO employee responds to a minimum of 100 phone calls per shift. BPOs are aiming at contributing towards bringing in more earnings to the country and IP creation. Currently, BPOs in India are focused on the domestic segments and off shoring. The benefit to the local economy is

14 subject to judicious exploitation of resources existing in these areas. The following are some useful statistics with regard to the growth of the IT-BPO sector during the past 10 years. 1.7 IN TAMIL NADU For many years it was New Delhi, Karnataka and Maharashtra that dominated the Indian IT-BPO scenario. That is until Tamil Nadu, staked its claim to the IT-BPO pie and is fast carving a place for itself as a preferred investment destination for the industry. Tamil Nadu has been catalyzing the growth of the IT-BPO industry on its turf by providing sops such as: a) 100 per cent additional FSI to IT parks, b) A wide range of investment and capital subsidies to IT companies setting up units in the state, c) Facilitating SMEs to attend national/ international trade shows by providing 30 per cent of the stall rent payable as subsidy and d) Rolling out e-governance initiatives to deliver special services required by citizens, According to NASSCOM, among IT-BPO business potential of 50 leading Indian cities, the state of Tamil Nadu is well suited for housing the sector. Talent remains a major edge for Tamil Nadu. Overall, about 237000 people graduate from the state, creating a huge pool of talent that can be leveraged by IT and BPO companies.

15 While Chennai remains the leading IT-BPO location in Tamil Nadu, challenger destinations such as Coimbatore, Madurai and Tiruchirappalli (Trichy) are also being positioned as alternative IT-BPO hubs. 1.8 PERFORMANCE INDICATORS OF CALL CENTRE Key Performance Indicator (KPI) is a measure of performance of a call centre and shows how well a call centre works. A call centre KPIs depends on business goals of an organisation, for sales oriented call centre revenue per successful call and conversion rate will be most the important, for technical support or customer support service call centre main focus should be customer satisfaction. KPIs can be very good means for assessment of an organisations current position and useful in future strategy and planning. KPIs can identify the aspects of functioning where an organisation is going wrong, enabling management to make the necessary corrective measures for turning the things around. KPIs give an organisation an edge over its competitors. Key performance indicators (KPIs) have the biggest impact on call centre quality and call centre cost, helping to reduce costs without sacrificing quality or affecting the customer satisfaction. Call centre generally use the metrics presented by the center for Customer Driven Quality (CCDQ). Anton (1997), suggested the KPIs of call centres by classifying them into operation related indicators, income related indicators, cost related indicators and service quality indicators. The Customer Operation Performance Centre (COPC), an international call centre- related certificate authority, evaluates the operational level of a call

16 centre using a total of 32 measurement indicators for the four domains of leadership planning, process, people and performance. 1.9 SERVICE QUALITY AND CUSTOMER SATISFACTION IN CALL CENTRE The theoretical basis of call centre quality is analogous to the dominant conceptualization of service quality, namely, the confirmation disconfirmation paradigm. When the service delivered does not meet initial expectations, the customer is dissatisfied, whereas if the service meets or exceeds those expectations, he or she is satisfied. The first dimension is reliability, or the customer s sense that the customer contact centre performs at a constant level. It comprises aspects such as answering questions, being able to trust the employee s knowledge, and consistency of information. The second dimension of customer call centre quality, empathy, pertains to the ability of the employee to make the customer feel that he or she is taken seriously and that the employee is able to put him- or herself in the customer s shoes. It includes friendliness, listening, and understanding. As a third dimension, customer call centre quality consists of customer knowledge. The customer should believe that the customer call centre really knows him or her and uses information to benefit that customer. Its aspects make customers feel as if the organisation knows them. The fourth dimension of customer call centre quality pertains to customer focus, which shows, whether the call centre has customer s interests at heart. It comprises giving proactive advice, providing information to enhance customer satisfaction, and making sure the customers questions get answered.

17 Accessibility, the fifth dimension of customer call centre quality, indicates whether the customer call centre is easy to access for customers when they need it, based on the ease of finding the phone number and the operating hours of the customer call centre. Because some customers must wait for this access, the sixth dimension of customer call centre quality is waiting cost. It involves the effort the customer must make to reach the centre, which includes not only waiting time but also the cost of calling. Finally, the seventh dimension of customer call centre quality is user friendliness of the voice-response unit (VRU). This dimension consists only of aspects related to the VRU, that is, the automated menu through which customers must proceed before they can speak to an employee. In many sectors (and perhaps most especially telephony, banking, and utilities) call centres have rapidly evolved from being a simple add-on, customer-facing service to an important differentiator. In effect, in a world of increasing price competition and internationalization, a customer's experience of a company's online or telephone service can have serious impact on its bottom line. And while it's easy to calculate the direct cost of losing a customer due to a negative interaction with a company, the hidden costs of that customer sharing his experience with his immediate social network is often ignored. Even so, management focus has been on finding cheaper ways to achieve the same or better service performance results at lower cost. Typically these cost-saving exercises have seen the wholesale export of a customer service function to places where labor costs are typically lower. Organisations have also concentrated on streamlining the customer service process, through scripting or automation.

18 Despite these efforts the net impact on corporate performance and profitability seems to be negligible. Although process optimization or general cost-cutting exercises can impact the bottom line directly, they have little impact on a customer's experience and therefore do not generate the virtuous circle that customer service is meant to create. What organisations have failed to realize is that in attempting to improve call centre processes, they have ignored the fundamentally interactive nature of customer service transactions. Concentrating on internal processes alone will undoubtedly achieve short-term cost advantages, but it ignores the quality of the interaction, and more important, the cost of variations in that quality. In addition to the investment savings captured through the development of procedures, additional economies of scale can be captured through the elimination of quality variance. A customer's perception of a company is developed not through one-off interactions, but usually through the whole lifetime experience of their dealings with that company. Thus, the potential costs in terms of customer loyalty and customer advocacy of suboptimal quality performance also depend on the consistency of the agent-customer interactions. Gains during one transaction can be easily lost if the next interactive experience is a negative one: It does not matter if the first two contacts result in successful outcomes if the third does not. Consistency of quality performance is an important factor in ensuring overall quality of a customer service function. 1.10 SUMMARY The introduction to the call centre and process, history of the call centre and the technologies used as well as the evolution is discussed in this chapter. The key performance indicators, service quality attributes and its influence on customer satisfaction in the call centre context is also briefly discussed.