Call Center Performance in the Telecommunications Industry

Executive Summary

Business process Outsourcing is a growing phenomenon in the global telecommunications sector. Many firms are embracing the process because of the cost and quality advantages associated with it. However, not all firms realise the expected benefits of outsourcing. Some companies have suffered from poor quality services, while others have not realised the cost benefits promised by service providers. This paper shows that the transaction cost theory is the main theoretical framework that explains firms’ behaviours in the outsourcing process. Other theories that explain the same processes include the agency theory and the resource based view. Despite the existence of this theoretical background, this paper similarly highlights the gap between the theoretical and practical understanding of the outsourcing process.

Based on this gap, this paper sought to find out the impact of outsourcing process drivers on the call centre performance of telecommunication firms. Using a quantitative research approach, this study sought to answer three main research questions that focused on understanding the influence that strategic evaluation practices have on outsourcing performance, the effect of contractual completeness on call centre outsourcing performance and the impact of relationship management on call centre outsourcing performance. The researcher collected data using online questionnaires and analysed the same using SPSS statistical techniques. The findings showed that all the three independent variables shared a strong correlation with outsourcing performance. Similarly, the study showed that the three independent variables shared a strong correlation. In this regard, this paper argues that telecommunication firms need to focus on contractual completeness, strategic evaluation, and relationship management if they want to improve their call centre outsourcing performance.

Introduction

Outsourcing is a growing global business phenomenon. Multinational companies are leading the trend in its adoption because the concept helps them to manage their huge global supply chains (McIvor 2000). Corbett (2004) and Narayanan et al. (2011) say the adoption of the outsourcing process, in the corporate scene, is a vertical integration process because it involves reshaping organisational boundaries. The process starts by identifying the need for outsourcing and later progresses to identifying the methods for implementing the process. The management of the relationship between the client and the service provider is the last step in this process (Sappington 1991).

Despite the growing prominence of BPO, anecdotal reports show that many businesses are failing to achieve their outsourcing goals. For example, a report by Deloitte Consulting shows that more than 60% of companies, which pursued offshore BPO, had to relocate the same process to the organisation (internal). Furthermore, the study showed that 44% of the sampled respondents did not realize the benefits of outsourcing (Gewald 2010). Motivated by the need to understand why this is so, this paper investigates the key drivers of the outsourcing process and their relationship to the failure of organisations to realise their BPO potential.

Problem Definition

Business Process Outsourcing (BPO) is a new business paradigm pursued by many new businesses to improve their performance. The trend towards BPO adoption has cut across different business sectors (both onshore and offshore) (Tate & Ellram 2009). As companies search beyond firm boundaries to seek performance improvements, the quest by firms to reduce their high costs of business is driving the growth towards BPO (McIvor et al. 2009). BPO is growing amid a quest by companies to outsource complete business functions, such as IT and human resource (HR) to third party organisations (Saxena & Bharadwaj 2009). This popular trend is worth more than $976 billion (Saxena & Bharadwaj 2009). Continuous improvements in the telecommunication sectors are behind the adoption of the outsourcing process. The availability of a growing skill force is also contributing to this trend because it has revolutionised the service delivery process in different value chains (Lillrank & Sa¨rkka¨ 2011).

Companies that have adopted BPO processes have had different experiences with the process. Lacity et al. (2008) and De Boer & Arroyo (2006) believe that most of these companies have had many negative experiences after outsourcing some of their services because they say most of the clients have failed to achieve the performance improvements they expected to achieve. Some of the reasons touted by analysts to explain this outcome include the failure of companies to comprehend the implications of outsourcing and their similar incompetence in managing performance (Lacity et al. 2008; Canez & Probert 2000). Interestingly, despite the identification of these problems, few studies explore the key practices that affect outsourcing performance. Furthermore, fewer studies have investigated the impact of contractual completeness on outsourcing performance. Based on this research gap, this paper strives to investigate the impact of strategic evaluation and contractual completeness on the outsourcing performance of telecommunication firms. In the same breadth of analysis, this paper explains the effect of different pricing schemes on the key performance indicators (KPI) of call centre performance. Centred on a global understanding of the research phenomenon, this paper also focuses on understanding factors that affect the call centre performance of telecommunication firms. The research questions appear below

Research Questions

• What is the influence that strategic evaluation practices have on outsourcing performance in the call centre industry?
• What is the impact of contractual completeness on call centre outsourcing performance?
• What impact does the relationship management have on call centre outsourcing performance?

Rationale of the Study

The BPO sector has lagged behind other sectors, in terms of process implementation. Many researchers who have sought to fill this research gap have done so using surveys or case studies (Busi & Mclover 2008). In this regard, they have failed to put the academic focus of BPO in practice. This failure has created a research gap that has failed to explain the implementation of the theoretical framework of BPO. Interestingly, many businesses are embracing BPO. Nonetheless, the slow development of the BPO theoretical framework has created a research gap that has left many BPO practitioners without adequate knowledge about its implementation, or how to improve its performance. Fewer studies in the telecommunication sector have helped to answer these theoretical concerns (Busi & Mclover 2008). This study seeks to fill this research gap by addressing the above issues.

Purpose of the Study

This paper already shows that some researchers have explored the impact of BPO drivers on BPO performance in the telecommunications sector. Furthermore, this paper shows there is a wide research gap concerning this research area (especially in the telecommunications sector). Based on this gap, this paper intends to point researchers in the right direction by explaining how to improve their BPO performance. Key areas of concern include strategic evaluation, contractual completeness, and relationship management practices (because these are the key performance areas of BPO). This goal aligns with the need to increase outsourcing performance in call centre services (Hasija et al. 2008). By focusing on these important research areas, the findings of this paper will be useful in providing executives, managers, and procurement teams with vital information regarding how they could get maximum benefits from outsourcing processes (Grossman & Helpman 2002; Coase 1937).

Research Objectives

The main objective of this research is to test the outsourcing process drivers that affect BPO performance in the telecommunications sector. To get an objective representation of the research objective, this paper investigates the research phenomenon from the client’s point of view. Similarly, this paper pays a special focus on understanding the impact of pricing incentives on the outsourcing performance of the telecommunication sector.

Theoretical Framework

The theoretical framework of this paper emerged from the works of Handley and Benton (2009). The model appears below

Research Variables

The main research variables used in this paper stem from the different components of the theoretical framework outlined above. They include strategic evaluation, relationship management, outsourcing performance and contractual completeness.

Strategic Evaluation: The strategic evaluation process aims to investigate the main effects of the outsourcing process, before it starts.

Contractual Completeness: The contractual completeness process highlights the terms and conditions that underlie the relationship between the client and the agency. This process often shows how the two parties coordinate and assess the different risks of the contractual agreement (Ross 1973).

Relationship Management: The relationship management process outlines the outcome of the relationship between the client and the service provider (in the outsourcing process). Often, this relationship is mutual, as the clients strive to maximise their productivity, while the service providers aim to improve the quality of their services through their accumulated experience.

Outsourcing Performance: The outsourcing performance refers to the intended objectives of the outsourcing process. Usually, experts evaluate the output of the service providers based on the agreed outcomes of the relationship (during conception).

Research Hypotheses

• Strategic Evaluation practices are significant to the outsourcing process because they influence efficiency and performance expectations in the contractual relationship
• The contractual relationship defines the goals and expectations of the outsourcing process
• Relationship management affects the quality of services offered by service providers in the outsourcing process.

Research Limitations and Assumptions

This paper already shows that limited research studies have investigated the impact of BPO drivers on the outsourcing performance of telecommunication firms. Based on the lack of literature, the main limitation of this study is the lack of adequate references and theoretical frameworks to conduct the study. However, instead of accepting this limitation as an obstacle, the author took this opportunity to present this research as an important contribution to the limited wealth of knowledge regarding BPO outsourcing in the telecommunications sector. Another limitation of the study was the type of respondents who took part in the study.

Chapter three of this study shows that most of the respondents were senior executives of telecommunication firms. It was difficult to secure an appointment with them because of their limited work schedules. Therefore, I had to conduct interviews during odd times and in “casual” environments (where the respondents were available). Lastly, the use of Linkedn professional groups to sample the respondents limited the scope of respondents who could participate in the study because the author was only able to communicate with people who were available online. Furthermore, it was difficult to ascertain the professional credibility of the respondents beyond the information posted in the groups.

Research Methodology

This paper is an analytical study of the main outsourcing process drivers that affect the performance of call centres in the telecommunication industry. The study also uses a quantitative research approach and selects the sample of the study using a purposeful sampling technique. Using a deductive approach, this study’s findings emerge from a theoretical framework developed by Handley and Benton (2009). Similarly, using a confirmatory approach, the paper explores the impact of key outsourcing process drivers on the performance of call centres in the telecommunication sector. For purposes of data analysis, this paper used the SPSS software to analyse the research questions. Key statistical processes included Pearson Correlation, ANOVA and linear regression techniques.

Thesis Structure

This thesis has only five chapters. The first chapter is the introduction section, which outlines the background of the study and “sets the stage” for future chapters. The second chapter is the literature review section, which reviews what other researchers have said about the research topic. It also identifies the existing research gap. The third chapter of this thesis is the methodology section, which explains how the author conducted the research. The fourth chapter is the findings and analysis section, while the last chapter is the conclusion and recommendation section.

Literature Review

Introduction

The global business environment is uncertain because of changing customer preferences, rapid changes in technology, and financial upheavals (Bahli & Rivard 2003). Based on these dynamics, companies have to cope with corporate challenges by adopting innovative and creative operational policies. However, doing so is difficult because the volatility of the global business environment affects business strategies adversely. This challenge has forced many businesses to focus on their core competencies and outsource services that are not part of their core business portfolios (Bahli & Rivard 2003; Fill & Visser 2000). This need explains why BPO has engrained itself at the core of business management processes. Particularly, companies have adopted the process as a key component of their restructuring processes. Pushed by competitive influences, companies have adopted this method to seek performance improvements. To understand this trend, it is, first, important to understand why companies outsource and how the concept became popular in the global business scene.

Why Companies Outsource and How the Concept Became Popular

Researchers have conflicting views regarding the concept of outsourcing (Boguslauskas & Kvedaraviciene 2008). However, Kremic et al. (2006) say the concept emerged during the industrial period, when companies started exploring ways of maximising their competitive advantages. Many 20^th century corporations strived to manage all their organisational processes internally, but when the need to take advantage of diversification and its potential market and financial benefits arose, companies had a difficult time coping because of bloated management structures (Kremic et al. 2006). To increase their flexibility and creativity, these companies evaluated their internal organisational processes and focused on their core activities, while outsourcing non-essential organisational processes. This move led to the recognition of outsourcing as a key business strategy in the late 1980s.

The above advantages of outsourcing highlight some of the reasons identified by Wilson (2010) as the main motivations for outsourcing. The diagram below highlights his views

According to the graph above, cost reduction is the main motivation for outsourcing. Variable capacity, access to expertise, increased effectiveness, and the focus on core business activities are the main reasons for companies to outsource, in that order.

Outsourcing – A Definition

To understand the key drivers of outsourcing, it is first, important to comprehend a definition of the concept. WGC (2014) says that understanding outsourcing requires an organization to evaluate which organisational processes in the company’s value chain should occur internally, and which ones should be external. Therefore, outsourcing has reshaped traditional organisational boundaries. Handfield (2006) defines the concept as “the strategic use of outside resources to perform activities traditionally managed by internal staff and resources” (, p. 4). Other researchers refer to the concept as facilities management, but experts refer to it as a strategy where companies contract out major functions of their organisational processes to third party agents (Narayanan et al. 2011; Hertz & Alfredsson 2003). When such contractual arrangements are beneficial to both parties, the service providers become valued business partners. In line with this understanding, Handfield (2006) says, “Companies have always hired contractors for particular types of work, or to level-off peaks and troughs in their workload, and have formed long-term relationships with firms whose capabilities complement or supplement their own” (p. 4).

There are different categories of outsourcing (Espino-Rodrìguez & Padrón-Robaina 2004). Their distinctions mainly depend on the level of integration and degree of distinction. The table below outlines the different types of outsourcing processes

Table 2.1: Outsourcing processes.

Although the above table outlines different types of outsourcing processes, this paper focuses on call centre services as a type of operational outsourcing. Call centres play an important role in the operations of many telecommunication firms (Hasija et al. 2008). Some companies often outsource their entire call centre operations, while others deem this action “too risky” and only outsource parts of their operations. Here, it is important to understand the different types of outsourcing and their effects on a firm’s decision to outsource. For example, Grover and Malhotra (2003) say outsourcing to a shared service is one way that some companies reduce their operational costs.

Co-sourcing is a different strategy pursued by some companies because it allows them to outsource part of their services, while keeping the rest of them in-house (Akşin et al. 2008). Many companies prefer to adopt the latter approach because they deem it as a safe approach to adopt the practice. Especially, it protects them from serious disasters and allows them to manage services that are most critical to their operations (Grover & Malhotra 2003). The global trend of outsourcing has witnessed many offshore outsourcing procedures because foreign countries provide increased opportunities for countries to get cheap labour (Banerjee & Williams 2009). This trend has further created an increase in outsourcing values around the world. For example, the US outsourcing market is worth more than $28 million (Ren & Zhou 2008). Similarly, statistics show that most companies outsource about 1/15 agency services overseas (Ren & Zhou 2008).

Theoretically, call-centre outsourcing services provide many different benefits to organisations. However, companies have had mixed reviews (Grover & Malhotra 2003; Ren & Zhou 2008). Particularly, western companies that have outsourced their call centre services to overseas countries (mainly Asian countries) have reported poor outcomes from outsourcing (Akşin et al. 2008). For example, America’s Dell Company had to relocate its call centre back to the US after its customers complained of language barriers that prevented them from getting specialised assistance (Ren & Zhou 2008). Lehman Brothers (a big financial company in the US) had to relocate its call centre from India to the US after its customers complained of the poor quality of services offered by its Indian service provider (Ren & Zhou 2008). These cases reinforce the idea that miscommunication, poor coordination and planning failures account for most of the failures of outsourcing. Particularly, Ren and Zhou (2008) draw our attention to the poor understanding of current costs as a common cause of outsourcing failures. These failures may stem from the lack of adequate literature covering outsourcing processes and coordination (Grover & Malhotra 2003; Ren & Zhou 2008).

The Main Failures of Outsourcing

As mentioned in this paper, different companies have different experiences with outsourcing. Similarly, this paper has identified the failure of companies to understand the performance implications of outsourcing as a possible cause outsourcing failure. Some researchers have said that the rush to outsource without understanding the main reason for doing so have also contributed to the disappointments witnessed after outsourcing (WGC 2014). Lacity & Hirschheim (1993) draw our attention to the failures of service providers to provide quality services as a common reason for the failure of outsourcing, especially in the IT sector. For example, they say the low cost of labour in some Asian countries, such as China, Philippines, and India entices many companies to outsource (Lacity & Hirschheim 1993). However, they fail to recognise that the service providers who use such cheap labour are prone to providing low quality services. Mainly, experts blame these companies for poorly executing the tasks given to them, and “spoiling” the good name of the practice. Based on this reason, Schwartz (2008) says, “Outsourcing is not for the faint-hearted or the ill-prepared. It just does not happen” (p. 2).

Building on the above statement, Schwartz (2008) says understanding the outsourcing risks is a good way of preventing its negative effects. This process should save companies the problems associated with the practice. In fact, this reason explains why Schwartz (2008) says companies that have experienced the negative effects of outsourcing have only two things in common – unpreparedness and poor communication when the outsourcing process starts to fail. Based on the risks associated with outsourcing, Putra (2008) developed the pyramid below to guide companies on how to outsource and when not to do so.

Based on the above model, Putra (2008) says the main factors that a company should consider before outsourcing is whether the motivation for outsourcing is critical for the organisation’s long-term sustainability. Similarly, he suggests that such organisations should evaluate whether the core competency pursued is relative to fulfilling the organisation’s core competency functions. Therefore, the above pyramid shows a model of assessing outsourcing risks by explaining when companies should outsource (low risk) and when they should outsource under tight controls.

Benefits of Outsourcing

Companies that prepare for the outsourcing process after understanding its potential pitfalls often enjoy positive outcomes from the practice. It is important to understand the potential benefits of the process because All Business (2008) found out that the failure of companies to understand such benefits account for their hesitation to adopt the process. Besides saving companies money, outsourcing could create many benefits for organisations. They appear below

• Controlling Capital Costs: Capital cost controls are often the main benefits of the outsourcing process. Companies that enjoy this benefit often do so because outsourcing changes fixed costs into variable costs. This way, companies have enough money to invest in other places. They also avoid the huge capital costs associated with starting new businesses in this manner. Collectively, this advantage increases a firm’s attractiveness to investors because they understand that a company has enough money to invest in revenue-generating activities (Jensen & Meckling 1976).
• Increasing Efficiency: All Business (2008) says that most companies, which prefer to undertake new business ventures, incur huge capital expenditures associated with research and development, IT service provision, human resource management, market analysis and similar organisational functions. Usually, such companies transfer these costs to their customers, thereby losing their competitive advantage, compared to similar companies that enjoy increased efficiency by outsourcing specific services, which give their companies a strong competitive advantage.
• Lower Cost of Labour: Companies that do not outsource their human resource services incur huge expenses associated with employee training and development (All Business 2008). Even when they finish doing so, there is little guarantee that such employees would be loyal to the organisation. Outsourcing helps such companies overcome these challenges by allowing them to deploy their human resources where the organisation requires them the most (All Business 2008).
• Quick startups: Starting a new business could be a dicey affair for most entrepreneurs. However, outsourcing simplifies this process because it gives new companies all the resources needed to start. Avoiding this process forces companies to take weeks (or longer periods) to seek new employees, source equipments, locate office space and such like activities to start a business. These processes slow down the business. Therefore, outsourcing simplifies the business start-up process (All Business 2008).
• Allows Businesses to Focus on Core Activities: Most businesses have limited resources to undertake their core business activities. Similarly, business managers have limited time and attention to oversee all aspects of their businesses. Outsourcing allows them to focus more on their core business activities, while delegating the function of managing peripheral activities to third parties (All Business 2008).
• Allows Small Companies to enjoy a Level Playing Field: It is difficult for small companies to compete with big companies because they lack the resources, knowledge and expertise that these big businesses have. However, outsourcing provides a solution to these businesses by allowing small firms to “act big.” Stated differently, it allows them to enjoy the benefits of big business, such as increased efficiency and economies of scale (All Business 2008).
• Reduces Operational Risks: Many modern businesses operate in environments that are characterised by high risks. Such risks emerge from increased competition, heightened government regulations, technological changes and similar changes (All Business 2008). Outsourcing service providers allow organisations to manage these risks by advising them on how to avoid them. This way, companies lower their operational risks (All Business 2008).

The supply chain of outsourcing processes differs from the conventional supply chain process because retailers often get the benefits of conventional outsourcing processes. However, user companies often get the benefits associated with outsourcing supply chains. Relative to this understanding, Hasija et al. (2008) says, “The client uses the contract to influence the unobservable behaviour and poor contract design can lead to vendor actions that reduce client profits and supply chain performance” (p. 28).

Theoretical Framework of Outsourcing

Many researchers have developed new concepts and theories to explain the outsourcing process. The transaction cost theory, resource-based view, principal agent theory, vertical integration theory, and evolutionary economics are common theories and concepts that explain the outsourcing process (Narayanan et al. 2011). Other theories include the strategic alignment theory and the core competence theory. Although some of these theories emerged from the 20^th century, they have been relevant to the business world in the last two decades (Kremic et al. 2006). Interestingly, although there has been an increased interest in BPO, in the last decade, the push for developing new theories on the same has declined during the same period. Outsourcing has also been synonymously associated with “make-or-buy” decisions (Welch & Nayak 1992). Therefore, companies that have considered outsourcing their products have mainly focused on “make” or “not to do” decisions (Narayanan et al. 2011; Tayles & Drury 2001). Nonetheless, there is a huge gap between literature and practice of the outsourcing process.

Gap between Theory and Practice

There is a gap between the theoretical and practical application of outsourcing. As Busi & McIvor (2008) observes, most theoretical practice about the subject lags behind its application. One theoretical practice that has emerged recently is the focus on case studies, as opposed to implementing existing theoretical frameworks. Busi and McIvor (2008) say this research gap should be a wake up call to researchers because their findings do not entirely explain the real-life experiences of outsourcing. Outsourcing practitioners are victims in this regard because they lack the proper tools to implement outsourcing procedures. This is why this paper undertakes a focused research paper that aims to eliminate the confusion and equip practitioners with the proper skills needed to undertake their practice. In the same manner, the practitioners would have the proper skills to manage their outsourced contracts.

Theoretical Analysis

Penrose (1959) and Richardson (1972) encourage service providers to assess BPO drivers during the outsourcing decision-making stage. This section of the paper outlines the main theories and concepts of call centre outsourcing.

Transaction Cost Theory

Proponents of the transaction cost theory, such as Doig et al. (2001) argue that an important issue that determines BPO success is the cost of doing business between clients and service providers. This theory argues that BPO success could only suffice when the cost of BPO is lower than the cost of undertaking the same activity internally (in the organisation) (Watjatrakul & Drennan 2005). Essentially, transaction cost economics explore how companies survive in a competitive business environment. Ellram et al. (2008) say such firms differentiate themselves by replacing coordination functions using price mechanisms. The manager has an absolute authority over this activity. The transaction cost theory focuses on this authority by evaluating the cost of outsourcing and the cost of undertaking business processes internally. Neves and Hamacher (2013) say this theory also explains why companies exist and why they outsource their services to third parties. It argues that most companies should outsource their services if it is cheaper to do so (Neves & Hamacher 2013).

The main assumption of this theory is that most companies strive to reduce the cost of exchanging its resources with the environment. Similarly, the theory assumes that most companies always strive to reduce their bureaucratic costs in this manner (Ellram et al. 2008). These two considerations underscore the principles of the transaction theory because they presuppose that most companies strive to balance the cost of exchanging their resources with the environment against the bureaucratic costs associated with doing that (Watjatrakul, 2005). This analysis highlights the differences that characterise markets and companies alike. For example, the transaction cost theory says that both elements have different organising and coordinating economic structures that make it expensive for companies to trade their resources for profits (Williamson 1985). Therefore, when a company’s external transaction costs are lower than the bureaucratic costs of offering products and services, the companies are likely to grow (Williamson, 1975). Growth would occur because the company will be able to provide its services cheaply (Penrose 1959). The opposite is true because if the company incurs high bureaucratic costs, it will be expensive for it to provide its service, thereby leading to corporate downsizing.

Resource-Based View

The Resource-based view perceives an organisation as a system characterised by different groups. By connecting and coordinating the functions of different individuals and groups, the resource-based view perceives an organisation as a set of productive resources (McIvor 2005; Grossman & Helpman 2004). The sets of organisational resources may vary across different companies, but their contributions to the productivity of the firms are heterogenous. Based on this view, proponents of the RBV argue that most organisations should explore how they could strategically leverage their resources for optimum productivity (Neves & Hamacher 2013). To understand what these resources entail, it is pertinent to understand resources as strengths or weaknesses of organisations. Common strengths may include brand recognition, technical expertise, trade contracts, machinery and similar resources (McIvor 2005).

To understand how this theory merges with the concept of outsourcing, it is important to recognise that the proponents of the RBV model say organisations should only focus on maintaining core competencies that give them an advantage over other firms (Neves & Hamacher 2013). Similarly, they argue that all firms should outsource those services that they do not have specialized skills to manage (McIvor 2005). According to McIvor (2005), if companies are susceptible to the loss of information that is not patentable, they are likely to protect themselves by maintaining such information in-house (by opposing an outsourcing strategy). Therefore, companies are likely to only outsource pieces of information, which have a secure proprietary knowledge. Based on this assertion, Neves and Hamacher (2013) say “the internal mechanisms that protect the firms’ knowledge bases are superior to those present when contracting between firms” (p. 2). The table below shows a comparison of the transaction cost theory and the resource-based view

Comparison between the Transaction Cost Theory and the Resource Based View

Table 2.2: Transaction cost theory vs. Resource-based view.

Principal Agency Theory

Proponents of the principal agent theory, such as Doig et al. (2001) have a contrary opinion to the transaction cost theory because they argue that BPO success mainly depends on whether the client and the service provider share the same goals. Using the same scope of analysis, they argue that the conflicts between clients and their principals only arise when both parties have different views of the BPO process. Comparatively, the transaction cost theory attributes a monetary cost to the conflict between clients and their agents (Logan 2000). Comprehensively, the principal agency theory focuses on developing positive contractual relations between both parties as a prerequisite for BPO success (McIvor 2005). This way, the theory aims to minimise contractual costs and maximise contractual benefits.

Relational View

The relational view explores how different companies could gain competitive advantages by using their internal competencies (McIvor 2005). The development of such a relationship describes the type of outsourcing firms that such companies could contact. Similarly, the same relationships explain the preferred type of outsourcing partnerships that such firms could pursue (Kedia & Lahiri 2007). Based on these dynamics, researchers have used the relational view to investigate management relationships and transitions (Logan 2000; McIvor 2005). Based on this fact, Busi & McIvor (2008) say the relational view is among few theories that have a practical application.

Concept of Core Competencies

The core competencies concept stems from the teachings of the resource based view. Researchers have defined an organisation’s core competencies as the quest by firms to pursue collective learning (Busi & McIvor 2008). Particularly, they have paid close attention to how organisations integrate multiple stream technologies and how they merge the contributions of different production teams to improve organisational productivity. Based on its connection with the quest to improve organisational efficiency, researchers have used the core competency concept to test different outsourcing decisions (Logan 2000; McIvor 2005). Similar to the resource-based view, the concept of core competency argues that all firms should maintain their core activities in-house (Busi & McIvor 2008). Researchers have also used the concept (extensively) to manage contractual relationships between clients and their service providers. Here, researchers who have extensively used such concepts say that vendor competence is the strongest BPO driver in call centre outsourcing (McIvor 2005).

Critical Elements of the Outsourcing Process (BPO Drivers)

Narayanan et al. (2011) explored the main BPO drivers and found out that the client-principle relationship was among the most critical elements of outsourcing. They also believed that the same factors could affect the outsourcing performance that outlines this relationship (Narayanan et al. 2011). In an unrelated sphere of analysis, Ellram et al. (2008) say that risk assessment and performance controls are important BPO drivers that significantly affect the outsourcing performance that emerges from the relationship between clients and principles. Handley and Benton (2009) hold a different view from the above analyses because they argue that strategic evaluation, contractual completeness and relationship-management are the main factors (BPO drivers) that affect the outsourcing performance that emerges from the relationship between clients and principles. Nonetheless, the conceptual framework for this paper has already identified strategic evaluation, relationship management, outsourcing performance, and contractual completeness as the critical elements of the outsourcing process. Researchers have investigated these elements in critical detail as outlined below

Strategic Evaluation

McIvor (2009) says the strategic evaluation process refers to the degree that a company evaluates all the strategic implications of outsourcing. This evaluation occurs on two fronts – a capability analysis and a risk evaluation (Busi & McIvor 2008). The capability evaluation process stems from the resource based view, which considers an organisation’s key competency before taking part in outsourcing processes (Busi & McIvor 2008; Winter 2000). Stated differently, the resource based view views an organisation as a system of resources that a company could use to increase its competitive advantage. The risk evaluation perspective shares a close relationship to the transaction cost theory because the latter articulates the need for evaluating the costs, benefits and resources needed for the outsourcing process (McIvor 2009).

Some of the main issues that outline the limitations of transaction cost theories include bounded rationality and opportunism. Bargaining for small margins and uncertain assessments of information also impede the same process (Espino-Rodrìguez & Padrón-Robaina 2004). However, some of these issues are subjective. For example, opportunism and bounded rationality are subjective elements of the transaction cost theory. Relative to this assertion, Princeton Education (2014) says that bounded rationality refers to the cognitive limitations of the human mind, subject to the kind of information present and the decision-making time. Opportunism shares the same subjective characteristics of bounded rationality because it refers to company decisions that are motivated by self-interests (Princeton Education 2014). Some of these issues manifest when the type of business transaction has many uncertainties (Espino-Rodrìguez & Padrón-Robaina 2004). Some of the common problems associated with the outsourcing process, in this regard, include the poor use of shared intellectual property and the proliferation of opportunistic behaviours in business transactions (Princeton Education 2014).

Capability Evaluation

Capability evaluation defines the extent that an outsourcing decision would satisfy existing customers. Using the same analogy, Princeton Education (2014) says capability evaluation compares customer expectations and project performance to come up with a blend of services that meet organisational goals. Aron and Singh (2005) adopt an alternative view by highlighting the need to assess company capabilities before participating in the outsourcing process. Such processes should consider an organisation’s ability to perform well and the role of the outsourcing process in complementing the achievement of organisational goals (Aron & Singh 2005).

Strategic Risk Assessment

This paper has already shown that outsourcing poses several risks to the parties involved. Consequently, companies prefer to undertake rigorous risk management processes to reduce the incidence of risk. Benvenuto & Brand (2014) believe that all companies need to manage outsourcing risk by operating an active risk management process as shown below

According to the diagram above, companies strive to compare the performance of their outsourcing service providers to a set of well-established risks. The companies then rank the set of potential service providers, according to how they perform, based on the risk profile outlines (Benvenuto & Brand 2014). Cohen & Allie (2005) believe that the best service provider is one who receives the “high-risk” tag because of its ability and competence to use several risk management strategies. The risk analysis stage also defines the nature of the relationship between the service providers and the clients. The transaction cost theory shares a close relationship with this assessment (Handly & Benton, 2009).

Contractual Completeness

Contractual completeness makes sure that all firms deploy their resources effectively to manage outsourcing risks and meet organisational goals (Espino-Rodrìguez & Padrón-Robaina 2004). Here, goal attainment and risk reduction measures are the main advantages of contractual completeness (Espino-Rodrìguez & Padrón-Robaina 2004). When such benefits emerge, there is bound to be a good relationship between clients and service providers (Espino-Rodrìguez & Padrón-Robaina 2004; Afuah 2001). Similarly, there is bound to be improved coordination and control functions in the outsourcing relationship (Mellewigt et al. 2007).

The coordination function outlines how organisational responsibilities transcend across a firm’s border. This function also outlines the expectations of all parties within the contractual relationship and defines their roles and programs. Conversely, control functions outline the limitations of all parties in the contractual relationship (Das & Teng 1998). The purpose of having the control function in the outsourcing relationship is to make sure the outcomes of contractual relationships are predictable. To get the best results from this exercise, Das and Teng (1998) and Mellewigt et al. (2007) say companies should have different cross-functional teams to oversee the integration process. These teams should equally have qualified expertise to carry out their duties.

Relationship Management

Relationship management is an important consideration for the realisation of productive outsourcing relationships. To realise the best outcomes in relationship management, Busi & McIvor (2008) say companies should invest in relationship-specific factors of the outsourcing process, such as the processes and procedures of the outsourcing relationship. Often, many companies hesitate to invest in these factors, unless they share a close relationship with the service provider (Busi & McIvor 2008). However, companies that invest in the same relationship-specific factors without knowing their service providers (well) increase the level of commitment of the service providers (Holcomb & Hitt 2007; Outsource India 2014). Overall, it is important to understand that relationship management plays a crucial role in understanding the outcome of the outsourcing process. This is why Outsource India (2014) says, “A good relationship between the client and the outsourcing provider is essential for the success of the project. Relationships can be effectively managed with regular communication, continual transparency, and by displaying the right amount of flexibility when called for” (p. 3).

Relationship Commitment

Different service providers in the outsourcing relationship often have different levels of commitment during the outsourcing process. Relationship commitment refers to their willingness to sacrifice their time and resources for the betterment of the contractual relationship.

Cooperation

Clients often want their service providers to show high levels of commitment to the outsourcing process (Outsource India 2014). However, such levels of commitment depend on their willingness to be flexible and accommodating of the outsourcing relationship (Outsource India 2014). These factors define cooperation in the outsourcing relationship. Stated differently, cooperation refers to people’s efforts to work jointly and make the outsourcing process successful. Common activities that may lead to this outcome include information sharing and strategic planning (Greenberg et al. 2008).

Outsourcing Performance

The performance of the outsourcing process refers to the extent that a contractual agreement meets organisational cost and quality expectations.

Research Design and Methodology

Introduction

This chapter explains the steps that underlined the study process. Key sections of this paper include the research design, research approach, data analysis method, ethical considerations, and data collection methods. These sections are important in understanding the findings of this paper because Kothari (2011) attests to this fact when he says that the function of any serious research is to conduct a rigorous investigation of the study area. In this regard, the methodology outlined in this chapter aims to provide credible data that would enrich existing knowledge of the study area.

Research Design

This study used the dual-sectional research design to answer the research questions. This method involved using appropriately structured questionnaires to get information from different respondents, spread across four continents. The research occurred as a quantitative research study. The diagram below represents the quantitative research process, as applied in this study

Research Profile

Duening and Click (2005) say different types of research could explain the impact of outsourcing process drivers on the call centre outsourcing performance of the telecommunications industry. However, it is important to understand that the choice of research depended on the process, purpose, and logic of the study. Descriptive and exploratory research studies are common research methods that could have investigated our research phenomenon, but failed to materialise because of the nature of the study. The choice for the study appears below

Descriptive and Exploratory Research

Bryman and Bell (2007) describe descriptive research studies as those that portray a research phenomenon as it exists. This study used descriptive research to describe the demographic of the study population and the characteristics of the participants. Comparatively, exploratory research relates to investigations that aim to reveal the problems that relate to the study questions (Bryman & Bell 2007). Based on its nature, this paper used the exploratory research design to gain a clear understanding of the research questions that characterised the investigation. To do so, this study explained the cause-and-effect relationships that explained the research phenomenon. The investigations revealed the research variables in the study because they sought to explain underlying interrelationships.

Deductive and Inductive Research

This paper shows how this study relied on a deductive research process. Bryman and Bell (2007) describe this process as a framework where researchers deduce the theoretical framework of the study before undertaking empirical investigations. Bryman (2012) says there is a close relationship between deductive research and positivism because the cause-and-effect relationships that characterise deductive research mainly relate to positivism. The inductive research is different from the deductive research because unlike the latter, it develops its hypotheses from a careful observation of facts (Bryman 2012). Based on the differences highlighted above, and the nature of this study, this paper used the deductive research.

Qualitative vs. Quantitative Research

Bryman and Bell (2007) have investigated the distinction between quantitative and qualitative approaches and found out that the qualitative research approach is objective, while the qualitative approach is subjective. In its objective nature, the qualitative research approach looks for facts. Furthermore, its findings are mathematically analysed and interpreted. However, the qualitative research approach looks for positivist methodologies for explaining research phenomena (Bryman & Bell 2007). Since this paper relies on mathematical techniques for the data analysis process, it used the quantitative research approach.

Criteria for a well-designed Research Project

Validity of the Research Instruments

Bryman and Bell (2007) define validity as the propositions, or measures of knowledge or truth. For example, an attitude is valid when its propositions conform to its measures. In a research context, the validity of a paper refers to the truthfulness of the research questions and the extent to which they portray the truth. To maintain this validity threshold, this study first scrutinised the research questions with the supervisor. The study documented coefficient measures that denoted the supervisor’s feedback (a value of more than 0.5 symbolised the validity of the study). Similarly, this study investigated the content validity of the paper through piloting. The results appear in this chapter.

Reliability of Data Collection Instrument

The data collection process was elaborate. However, the accuracy of information obtained from the respondents could have affected its reliability because it was difficult to know whether the researchers gave reliable information, or not. To mitigate this concern, the researcher conducted a pilot study to revise the data collection process and make sure that the information obtained was factual and accurate.

Study Area

The scope of this study was worldwide. It sampled the views of respondents from four continents.

Study Population

The respondents came from 14 countries. Based in four continents, the participants represented the management boards of 18 telecommunication firms. The respondents held respectable positions in the companies. These positions included vice presidents, team leaders, and CEOs. The participants were relatively knowledgeable about the research topic because the researcher selected professionals who had more than a decade experience in the organisation. The highest level of experience was 20 years.

Sampling Size and Sampling Procedures

The study sampled the respondents through personal contacts of managers who headed small and medium enterprises. The study used a systematic and purposeful sampling technique to come up with the sample. To gather information from call centre experts, this paper sought new respondents using LinkedIn groups. The researcher contacted the respondents using Emails, SMSs and phone calls. Similarly, the researcher followed up on the respondents using these mediums of communication. The aim of doing so was to encourage hesitant employees to participate in the research.

Ethical Considerations

The main ethical considerations for this study came from using human subjects to collect primary data. In line with these considerations, there are two ways of perceiving the main ethical concerns of the paper. One way is the narrow moral lens of human regulations associated with using human subjects. The second perceptual concern was the broader ideas and values that underscored human lifestyles. Confidentiality was a central ethical concern that transcended the narrow and broader ethical concerns of the study. Wile (2012) says confidentiality transcends the narrow purpose of hiding the identity of the respondents.

Instead, it also involves deliberating about important data concerning the research participants. Another ethical concern highlighted in this paper was informed consent (Hartley 2010). The researcher did not coerce, or pay, any of the respondents to take part in the study. The participants also understood that their contributions to the study aimed to fulfil academic purposes and not to incriminate them, or reveal information about their businesses. Based on the importance of the ethical concerns in the data collection process, this study aligned with the ethical requirements of the university’s dissertation guidebook. This way, the ethical principles outlined in this paper followed international ethical standards for conducting credible dissertations and did not infringe on the rights of human subjects.

Research Aims

As mentioned in chapter one of this dissertation, this study investigated the correlation between outsourcing process drivers and BPO performance in the telecommunications industry. The research questions were as follows

• What is the influence that strategic evaluation practices have on outsourcing performance in the call centre industry?
• What is the impact of contractual completeness on call centre outsourcing performance?
• What impact does the relationship management have on call centre outsourcing performance?

Research Philosophy

Farquhar (2012) says the importance of understanding a research philosophy is to make sure that the researcher meets the research outcome, effectively. This paper has relied on two philosophies. The first one was positivism. This philosophy investigates the social realities that explain the research topic (Farquhar 2012). Secondly, this paper relied on the realistic philosophy, which sought to understand peripheral identities. This philosophy was useful to this paper because it helped to explain customer behaviours.

Research Approach

As highlighted in this chapter, the main research approach for this paper was the quantitative research approach. Supporting this technique was a deductive reasoning method, which allowed the researcher to test the hypotheses (Veal 1997).

Data Collection Methods

This study used primary and secondary research information as the main sources of data. Collectively, the information obtained from these data collection methods aimed to answer the main question, which was to understand the impact of outsourcing process drivers on the outsourcing performance of the telecommunications industry.

Primary Data Collection and Respondents

The researcher collected data using questionnaires, as the main tool for gathering primary data. The respondents gained access to the questionnaires electronically. A response rate of more than 37% was acceptable for the study (the study achieved a 40% response rate). This outcome was close to the findings of Rodney (2006) who said the average response rate for online surveys was 41%. The questionnaires were helpful in answering the research questions because it helped to test the effects of outsourcing process drivers on call centre performance in the telecommunications industry.

Secondary Data Collection

This study obtained secondary data from books and journals. The study also used credible academic websites to obtain information regarding the research topic.

The Questionnaire (Research Instruments)

This study used questionnaires as the main data collection tool. To replicate the works of Rubin and Babbie (2009), the researcher made significant changes to the contractual completeness section of the questionnaire and added a new section of performance management and monitoring. The aim of undertaking such changes was to update the questionnaire by aligning it with current literature. Similarly, the researcher conducted a small pilot study on a selected group of individuals (ten people) to test the reliability of the questionnaires. Based on the responses received from the study, the researcher made five changes to the data collection tool. First, he deleted Q-CC7 because some of the respondents believed it was a duplicate of Q-CC1. Q-CC1 read, “We developed an incentive contract with well-defined performance reward and penalty clauses,” while Q-CC7 read, “We developed the contract Bonus and penalties to limit the opportunistic behaviour.”

The respondents similarly shared the same view regarding Q-CC8 and Q-CC9. Q-CC8 read that “Evaluation Team has chosen a pricing model that supports operational goals,” while Q-CC9 read, “Evaluation Team has chosen a pricing model that influences the supplier opportunistic behaviour to achieve operational goals.” The third change to the questionnaire involved the exclusion of Q-RC3. Two participants declared it was a duplicate of Q-RC1. The fourth change involved an exclusion of Q-RC13. Two participants said it was an unreliable measure of outsourcing performance. The question reads that most suppliers were involved in new product and service development. The last change made to the questionnaire involved an exclusion of Q-RC15. Some of the respondents felt it was an ambiguous and open question. The question argued, “Dispute resolution was open and constructive.”

The above changes strived to make sure that the respondents interpreted the study questions as the researcher intended. Similarly, the pilot study aimed to ascertain the correct measures of the variables of the study.  One limitation of using the self-administered questionnaires was the perceptual bias that could emerge from using such data collection tools. This bias could lead the researcher to collect similarly biased data. Salkind (2010) argues that this bias could similarly affect the accuracy of the information obtained.

Data Analysis and Pilot Test Study

This study received responses from 100 respondents. The author fed them into the SPSS software. This software was useful in identifying statistical points of variation, such as the mean, standard of variation, and one way of analysis variance (ANOVA). Collectively, these statistical tools were useful in understanding the relationship between different variables (Hardy & Brayman 2004).

Summary and Conclusions

This chapter explains intrinsic details about how the author conducted the study. It provides readers with reliable information regarding the “who,” “what,” “where,” and “when” of the research process. After investigating the nature of the research problem, this paper adopted a positivist research philosophy. Similarly, this chapter has highlighted the characteristics of a well-designed research project, which are useful in benchmarking the steps and findings of this research. The main challenges highlighted in this paper include the limited time associated with conducting the interviews and the accessibility of the respondents.

Data Analysis and Emperical Findings

Introduction

This chapter presents findings from the processes outlined in chapter three above. Furthermore, it highlights the relationship between the variables highlighted in chapter one. Collectively, the researcher used this information to test the outlined hypotheses and answer the research questions. Key sections of this chapter analyse the quality of data obtained by investigating the reliability and validity of the information received from the respondents. Other sections of this paper describe key statistics and statistical assessment tools used to come up with the findings.

Data Inspection

One discrepancy that emerged in the study was the erroneous input of information in the wrong sections of the questionnaire. To overcome this challenge, the researcher took a statistical average of the respondents’ views and used the information obtained to formulate the research findings. Zineldin and Bredenlow (2003) say this is an acceptable procedure when a researcher encounters a situation where he has to tabulate missing information. After the data harmonisation process, the researcher analysed the standard of deviation and mean values of every variable outlined in the research process. This process fits into six steps.

The first one analysed the discriminate variables of the research instrument used to analyse the data, while the researcher excluded those that failed to fit in the selected sample from the analysis. The second step used an inner constancy measure to evaluate the reliability of the research instruments. The researcher transferred statistical information that did not meet the selected criteria to the regression model. Thereafter, the author conducted a regression analysis to test the research variables. After this step, the researcher also used a pair-wise-t-test to test the differences between the expected and real outsourcing expectations of the contractual relationships. The final step used a gap analysis to measure the contractual expectations of the clients in the outsourcing relationship. However, before embarking on showing the findings of these analyses, it is important to highlight the demographic profiles of the respondents

Demographic Characteristics of Respondents

Gender

More male participants took part in the study compared to female respondents. In detail, 76% of the respondents were male managers, while 24% of the participants were female. This gender characteristic emerges from the dominance of male managers in the upper-level cadres of management (in the telecommunications industry).

Age of Respondents

More middle-aged professionals took part in the study compared to other age groups. Here, it is important to mention that 36% of the respondents were aged 43 years-59 years. Older respondents were fewer compared to this demographic because 28% of the respondents were aged between 60 years-72 years. Younger respondents comprised of two groups. The first group comprised of respondents aged 30 years to 42 years. They were 30% of the sample population. The last group comprised of significantly younger respondents who were aged from 27 years to 29 years. They comprised 6% of the total sample population

Education

Most of the respondents sampled in this study had a bachelor’s degree and above. Only 10% had doctoral qualifications, 46% of them held a master’s degree, 37% held a bachelor’s degree, while 7% held a secondary school certificate. The high levels of educational qualifications of the respondents stemmed from the fact that they held managerial positions, which required highly educated office holders.

Occupation

Half of the respondents worked as self-employed individuals in the IT sector. The other half worked as heads of telecommunication firms. All the respondents who held a secondary school certificate were self-employed.

Statistical Procedures and Evaluation

Validity

The validity of a research constitutes the level that a research embodies its purpose (Griffith 2009). Stated differently, the validity of a research instrument refers to how well the measure of assessment defines a research concept and embodies it. Testing the validity of the research instrument happened during the initial stages of the data analysis process. Here, it is important to understand the distinction between discriminate and construct validities. Construct validity refers to how well a research instrument could test a proposed hypothesis and its proficiency in measuring the variables posed in the research study (Bryman & Cramer 2012). Based on this logic, it is easy to understand how the construct validity merges empirical evidence and the hypothetical ideas of a research phenomenon. The discriminate validity evaluates a single dimension of the research variables (Griffith 2009).

Its presence in a research process emerges when there is a low correlation with disparate concepts. Using an exploratory factor analysis, this paper measured both the construct and discriminate validities of the research by highlighting the substructures present in the data collection and analysis processes. To test the validity of the research instruments, this study also used the factor analysis to understand the data spread of different variables in the study. The outcome was a small cluster of analytical factors. Therefore, the factor analysis process helped to show the interrelated nature of the variables in the study. In this paper, the independent variables included relationship management, strategic evaluation and contractual completeness. Thereafter, the researcher related these factors among themselves. The factor analysis process also included an assessment of the interrelationships of the responses. This way, it was similarly easy to understand the construct and discriminate validities of the research instruments.

Reliability

The reliability of the research instrument depended on the accuracy of measuring the inner consistency of the reliability instruments. To do so, the researcher used the Cronbach Alpha Reliability Coefficient, which removed individual items of the measuring instrument, to improve its reliability. Here, it is important to understand that a value of 0.7 was “acceptable” for the Cronbach alpha reliability test (Griffith 2009). Comparatively, values that were lower than 0.6 were unreliable, while those that were close to 0.7 denoted acceptable reliability measures. Lastly, coefficient values, which were more than 0.8, showed reliable measures. The results of the reliability assessment tests appear below

Table 4.1: Results of the Reliability Assessment Tests.

Based on the findings stated above, the independent variables that had a value of more than 0.7 had a strong internal consistency. During the assessment, the researcher had to reduce the number of measures in the questionnaire to come up with an easy assessment of the main research variables. Therefore, it was pertinent for the researcher to conduct a reliability test to investigate the reliability of the three independent variables outlined in this chapter.

Multi linear Regression Analysis

The researcher used the multi-linear regression analysis to investigate the impact of the outsourcing process drivers on the call centre performance of the telecommunication industry. This assessment was an extension of the bivariate regression analysis. This process allowed the researcher enough room to perform concurrent investigations of the independent variables. Overall, this analysis helped the researcher to investigate if the independent variables had a significant effect on the call centre outsourcing performance of the global telecommunications industry.

Descriptive Statistics and Data Collection

Descriptive statistics explain the main types of data collected during the research process. The number of respondents in the study, mean values, standard deviation and frequency of scores that characterised the data collected were key issues in this section. The descriptive statistics of each model present in the paper appear below

Strategic Evaluation

Table 4.2: Descriptive Statistics.

The above table shows that the respondents evaluated the strategic implications of outsourcing as a key business process. More than 70% of them agreed with the above factors. Similar contractual completeness findings appear below

Contractual Completeness

Table 4.3: Findings for Contractual Completeness.

The above table shows that the respondents evaluated the contract risks associated with the outsourcing process. Similarly, they evaluated how the outsourcing process would bring synergy through resource coordination. More than 70% of the respondents agreed with the above statements. Similar findings (of relationship management) appear below

Relationship Management

Based on the findings outlined above, safely one could say the clients felt the need to maintain a cordial relationship with their outsourcing service providers. More than 71% of the respondents felt the need to do so. Results for the outsourcing performance appear below

Outsourcing Performance

The above table shows that most of the respondents agreed that operational performance was important during the formulation of outsourcing decisions. More than 65% of the respondents felt this way.

Descriptive Analysis of Model variables

To come up with the dependent and independent variables of study, the researcher evaluated the values of all the variables and divided them by the number of items. The researcher did this for every respondent. The values appear below

This paper used the factor analysis method to reduce the variations among the independent variables in the paper. There is a possibility that some of the variations in the three independent variables studied in this paper could mirror variations in other unobserved variables in the study. Although this paper modelled the observed variables as linear combinations of the potential factors, the information obtained from the process could be useful in reducing the sets of variables in a set of data. Analytically, this method is similar to low-rank approximation (Field 2007). Based on this assessment, the factor analysis provided the researcher with several advantages, including giving the researcher enough room to convert subjective elements into scores that were essential for computational purposes. This method also helped the researcher to identify latent constructs, which were unavailable using other analytical tools. Here, the researcher strived to include all useful attributes in the analysis because their exclusion could have reduced the value of the procedure. Similarly, based on the nature of factor analysis conducted in this paper, it was important to seek knowledge of theory when naming factors because it was possible for dissimilar attributes to show a strong correlation.

Inferential Analysis

The author of this study used the Spearman’s rho-test to investigate the relationship between the dependent and independent variables. To do so, the author used bivariate correlation procedures. This tool helped to test the correlation between variables (Griffith 2009). The same process helped to evaluate their significance levels. The coefficient values stretched from +1 to -1. The positive and negative values of the relationship show the direction of the relationship between the two variables. A neutral value (0) shows no correlation between variables, while a positive value (+1) shows a good correlation between the variables. Comparatively, a negative value (-1) shows a poor correlation between the variables. To understand the correlation between these variables, it is also important to understand that the same values show strong, moderate, and weak correlations. The distinction appears below

• A strong correlation emerges when the correlation coefficient is between 0.1-0.3
• A moderate correlation emerges when the correlation coefficient is between 0.3-0.5
• A correlation coefficient of more than 0.5 denotes a strong correlation

The Continuum between Dependent Variables to Independent Variables

The table below shows how the Spearman’s correlation tests the dependent and independent variables. In the context of this study, the independent variables are strategic evaluation, contractual completeness, and relationship management. Alternative correlation tests include the independent variables as contractual completeness and strategic evaluation as the independent variable. Similarly, the correlation test analysed relationship management as the independent variable and strategic management as the dependent variable, while the same process analysed relationship management as the dependent variable and performance management as the independent variable. The table below shows the values for the tests

The above table shows an insignificant correlation because the level of significance starts at 0.01. The table below outlines the results for contractual completeness and relationship management

The diagram below outlines the outcomes for performance management and monitoring

The above tables show that performance management, contractual completeness, relationship management, and strategic performance share a close relationship with one another. This is true because the correlation coefficient figures varied from 508-725. Nonetheless, the Spearman’s correlation test also served as a precursor of the linear regression analysis.

Linear Regression Analysis

The researcher used the regression analysis to test the research hypotheses. Based on the nature of the study, Field (2007) says that the sample size needs to be at least ten times more than the number of predictors included in the sample framework. Gavetti and Levinthal (2000) added to this debate by explaining the conditions for including respondents in the sample size. They said researchers should focus on understanding the overall fit of the regression model as the first precondition for undertaking the regression analysis (Gavetti & Levinthal 2000). Researchers could use the same precondition to test individual predictors in the research framework, or to test the overall fit within the regression model R². Cheng (2014) says the minimum recommended sample size (of research studies) is 50+8k. This sample size is ideal for testing individual predictors within the research framework. Hinton (2004) explored the above issue and affirmed the same findings when he said an ideal sample size should be between 50 respondents (minimum) and 500 respondents (maximum). Multivariate analyses have their different ideal structures because Field (2007) says their sample sizes should be ten times more than the variables highlighted in the study.

R-Square

The R² value comes up as the squared value of multiple correlations because it explains the degree of variation between the dependent and independent variables.

ANOVA Tests

ANOVA tests refer to the level of statistical acceptability of the research findings. Values that are below 0.05 refer to statistically acceptable values because such outcomes do not emerge when a researcher relies on chance (Gavetti & Levinthal 2000).

Bivariate Regression Analyses

Strategic Evaluation and Outsourcing Performance

• Null Hypothesis: Strategic Evaluation is insignificant to the outsourcing performance
• Alternative Hypothesis: Strategic Evaluation practices are significant to the outsourcing process

To test the above hypothesis, the researcher used strategic evaluation as the independent variable, while the outsourcing performance was the dependent variable. According to the table below, the Bivariate regression analysis revealed that the independent and dependent variables had a statistically significant relationship because Beta was.578, while R² was 0.396.

A Summary of Model.

ANOVA (b).

Co-efficient (a).

Strategic Evaluation

• Null Hypothesis: Strategic Evaluation has an insignificant relationship with contractual completeness
• Alternative Hypothesis: Strategic Evaluation practices are significant to contractual completeness

In this analysis, strategic evaluation was the independent variable while contractual completeness was the dependent variable. The regression analysis revealed that the two variables shared a significant relationship because Beta was 719, while R² was 0.569. The table below present this outcome

Summary of Model.

ANOVA (b).

Co-efficient (a).

Strategic Evaluation and Relationship Management

• Null Hypothesis: Strategic evaluation shares an insignificant relationship with relationship management
• Alternative Hypothesis: Strategic evaluation shares a significant correlation with relationship management.

This analysis showed that strategic evaluation and relationship management share a significant relationship because Beta was 489, while R² was 0.398. The outcomes of the model summary, ANOVA (b), and coefficients (a) appear below

Summary of Model.

ANOVA (a).

Co-efficient (b).

Strategic Evaluation and Relationship Management

• Null Hypothesis: Strategic evaluation shares an insignificant relationship with relationship management
• Alternative Hypothesis: Strategic Evaluation shares a significant relationship with strategic management

Using a bivariate regression analysis, this paper evaluated strategic evaluation as the independent variable, while relationship management was the dependent variable. The outcome of the paper showed that both variables had a significant relationship because the Beta value was.456, while R² was 0.345. The table below shows these values

A Summary Model.

ANOVA (a).

Co-efficient (b).

Contractual Completeness and Outsourcing Performance

• Null Hypothesis: Contractual completeness shares an insignificant relationship with outsourcing performance
• Alternative Hypothesis: Contractual completeness affects outsourcing performance

Using a bivariate regression analysis, the researcher analysed contractual completeness as the independent variable and outsourcing performance as the dependent variable. The findings showed that both variables shared a strong correlation because Beta was.420, while R² 0.271.

A Summary of Model.

ANOVA (a).

Coefficient (a).

Relationship Management and Outsourcing Performance

• Null Hypothesis: Relationship management shares an insignificant relationship with outsourcing performance
• Alternative Hypothesis: Relationship management affects outsourcing performance

Using a bivariate regression analysis, the researcher analysed relationship management as the independent variable and outsourcing performance as the dependent variable. The findings showed that both variables shared a strong correlation because Beta was.639, while R² 0.341. The table below shows the products of bivariate regression analysis

Model Summary.

ANOVA (b).

Co-efficient (a).

Relationship between Performance Monitoring and Outsourcing Performance

• Null Hypothesis: Performance Monitoring and Outsourcing Performance share an insignificant relationship
• Alternative Hypothesis: Performance Monitoring affects the outcomes of Outsourcing Performance

Using a bivariate regression analysis, the researcher analysed performance management as the independent variable and outsourcing performance as the dependent variable. The findings showed that both variables shared a strong correlation because Beta was.310, while R² 0.124. The table below shows the products of the regression analysis

Model Summary.

ANOVA (b).

Coefficient (a).

This paper used ANOVA tests to analyse the hypotheses proposed in the study. Since the study included multiple variances, the ANOVA technique generalised them across the scope of study. The analysis was factorial because the researcher conducted experiments at all level of combinations of all the factors sampled. The efficiency of the experiments increased after the completion of every factor. The 3-way ANOVA tests posed one problem – the interactions of the variables could have created a false positive accidentally. However, the researcher sought solace in the fact that higher order interactions were rare (Field 2007). Therefore, the possibility of researchers identifying interactions among all the factors involved was a significant advantage for the study. This is why the researcher had to conduct the multiple regression analysis because analysing one factor alone could have yielded to inconsistent experimental results. Although identifying the interactions was good, it complicated the data interpretation process because it was unwise to take the values that emerged from the calculation of significance at face value.

Regression Analysis for the Hypothesised Variables

In this analysis, the author analysed the relationship between the independent variables and the performance of the outsourcing relationship. The independent variables were performance management, contractual completeness and strategic evaluation. The multiple regression analysis showed that strategic evaluation shared a highly significant relationship with outsourcing performance because its significance level was 0.001. Relationship management and contractual completeness also shared a similar significance level of 0.000. The author used the standard coefficient test to understand which variable in the multiple regression analysis had the strongest relationship with the outsourcing performance. A comprehensive assessment of the multiple regression analysis revealed a high level of significance because R² was.472. This figure shows that the average regression score was higher than the individual assessment score for each variable. The tables below show the outcome of the multiple regression analysis

Based on the findings highlighted above, the researcher used the regression analysis to understand the relationship among the variables studied. Mainly, the analysis helped the author of this paper to understand how the value of the dependent variables changed when the researcher influenced the values of the independent variables. This way, he was able to learn about the conditional expectations of the dependent variables when the values of the independent variables changed. Furthermore, the findings of this relationship provided the researcher with information regarding the average value of the dependent variables when the measures surrounding the independent variables remained the same. Albeit uncommon, the focus here remains on the quantile that characterises the distribution of the dependent variable. Although the nature of this study did not permit, further tests could have helped the researcher to come up with the probability distribution.

The researcher could have done so by analysing the variation of the dependent variables in the regression analysis. Nonetheless, the overall assessment helped the researcher to understand which independent variables had the strongest relationship with the dependent variable (outsourcing performance). However, Vining & Globerman (1999) caution people from adopting this approach because of the possibility of creating illusive relationships. He supports this assertion because correlation does not always lead to causality (Vining & Globerman 1999). Since it is difficult to get the full picture of the data generation process, the success of this technique mainly depends on making assumptions about this process. McIvor (2000) agrees with this fact, but he says it is possible to test some of these variables if there is sufficient data to do so. Regression models that subscribe to this approach could be useful if the researcher violates only a few of the assumptions described. However, these models may fail to perform optimally.

Summary of the Descriptive Statistics

This study’s findings reflect the views of knowledgeable people in the governance of major telecommunication firms of the world. Based on this fact, it is crucial to note that the findings of this paper reflect reliable views about call centre performance in the telecommunication sector. Furthermore, the educational qualifications of the respondents show that most of the views shared in this analysis come from people who had technical knowledge about the research questions. Alternatively, their views reflected the perceptions of learned professionals. In this regard, this paper’s findings are reliable.

Discusion, Conclusion, Recommendations and Reflections

Discussion

This paper has shown that the three variables studied in this paper share a strong correlation with outsourcing performance. This chapter has equally shown that the transaction cost theory is the most dominant theory that explains outsourcing relationships in the telecommunication sector (Snieška & Vasiliauskienė 2010). This view does not differ with the assertions of Ertel and Enlow (2012) who say that although different companies consider many factors before seeking a service provider for outsourcing processes, their main concern is the cost of outsourcing, how well the service provider will deliver, and the nature of the relationship that would emerge when working with the service provider.

These concerns highlight strategic evaluation, contractual completeness, and relationship management as the main outsourcing process drivers in the telecommunications sector. Particularly, the last concern showed by Ertel and Enlow (2012) (the nature of the relationship that would emerge when working with the service provider) highlights relationship management as a core outsourcing process driver. Research also emphasises this fact by saying that managing good relationships could lead to more than 30% increase in annual contract value (Ertel & Enlow 2012). Ertel and Enlow (2012) say that experienced service providers understand this fact and know of its close relationship with customer satisfaction and profit making. However, inexperienced service providers have learned the hard way by realising that the nature of their relationships could affect the success, or failure, of their business relationship.

Ertel and Enlow (2012) believe that even inexperienced clients, today, could easily evaluate the resource capabilities of different service providers and assess their capabilities to govern good business relationships. To do so, they have understood the role of structures, tools, skills and mindset in helping service providers to do so. In recognition of the role of these factors in building beneficial relationships, Ertel and Enlow (2012) say many service providers invest in improving their relationship improvement capabilities. Others have only focused on developing statistical assessment tools for relationship management without any tangible actions to accompany the process. This group has never achieved much success in this regard. The pressure is higher for telecommunication firms to provide quality services because customers are increasingly getting impatient with companies that have attractive corporate cultures, on paper, but do not have any tangible services that reflect what is on paper. Vasiliauskiene and Snieska (2011) agree with this observation and say different customers want to see more than (mere) generic models of service provision as they ponder on the decision regarding how it would be like to work with them. This is why many successful outsourcing relationships (in the telecommunication sector) involve service providers with a record of accomplishment and capabilities of maintaining good customer relationships.

The above information is useful in seeking the best outsourcing model for a company. Researchers say that integral parts of outsourcing models include crucial information that would inform a company’s decision when choosing an outsourcing framework. Vasiliauskiene and Snieska (2011) uses this explanation to point out that outsourcing contracts pass through three stages price stage, resource stage, and partnership stage. The process below outlines its makeup

The three stages outlined above strive to understand an organisation’s position (concerning its outsourcing needs) and prepare for possible strategies to move it forward. In this regard, the above processes also strive to move the organisation into the future. Similar to other sections of this chapter, which highlight the dominance of the transaction theory in understanding the impact of outsourcing process drivers on the call centre performance in the telecommunications sector, the above flowchart outlines the theory’s impact on understanding outsourcing decisions among telecommunication firms. Its impact, especially, suffices in the price stage. During this stage, we are likely to understand the opportunistic behaviours of service providers in the outsourcing process. Vasiliauskiene and Snieska (2011) add that the neo-classical theory and the agent theory similarly contribute to its understanding. The resource-based view emerges more dominantly in the second stage of the flowchart – resource stage.

Collectively, based on the findings derived from the SPSS analysis and the theoretical contributions highlighted above, correctly, one could say that cost concerns are the primary motivations for telecommunication firms when they make outsourcing decisions. This assertion emerges from the common understanding (among these firms) that for them to offer competitive products and services, they must realise cost advantages first (Snieška 2008). This idea resonates with the assertions of Vasiliauskiene and Snieska (2011) when they said, “Here emerges the question if services should be provided to outside customers or if the market could make products and services for lower prices than it could be done inside the company” (p. 434). Thus, most companies are concerned about if they will realise cost advantages when they perform their services internally, or externally. Therefore, telecommunication firms would only outsource their services when they realise cost advantages.

In this regard, transaction cost theories continue to play a significant role in understanding the key outsourcing process drivers that affect BPO performance because the three variables sampled in this paper have a cost implication that affects outsourcing performance. Particularly, it is important to mention contractual completeness and strategic evaluation as key outsourcing drivers that have a cost implication (the main motivations for engaging in BPO). Already, this paper showed that strategic evaluation focused on evaluating how contractual relationships would complement organisational goals. Since many organisations strive to make a profit and outsource because of cost benefits, correctly, one could say that the transaction cost theory highlights the relationship between strategic evaluation and outsourcing performance well. Stated differently, outsourcing should help companies cut costs and improve their performance. This goal aligns with the goals of the transaction theory, which encourage companies to outsource their core services if the process would create cost advantages. The same is true for contractual completeness as another independent variable because outsourcing contracts strive to increase resource coordination and reduce business risks, as alternative strategies for increasing a firm’s profitability.

Although other non-monetary benefits such as improved goal alignment may emerge from contractual completeness, the variable mainly strives to realise cost advantages, as its primary focus. This analogy similarly reinforces the dominance of the transaction cost theory in explaining the key outsourcing process drivers of call centre outsourcing performance in the telecommunications industry. Nonetheless, the contributions of the resource-based view also emerge in this study when the researcher evaluated contractual completeness as an independent variable that affects outsourcing performance. As mentioned in this paper, contractual completeness seeks to improve resource coordination as a strategy for increasing outsourcing performance. This strategy stems from the resource-based view, which advocates for the use of resource analysis as a baseline for evaluating outsourcing performance (Wernerfelt 1984). Relationship management, as an independent variable that affects organisational performance, also highlights the contribution of the agency theory to this analysis because the latter mainly focuses on the role of the relationship between the service providers and their clients, as a precursor for understanding outsourcing performance. The table below shows theoretical contributions to the research process and their associations with the independent variables analysed

Based on the above findings, understandably, most firms strive to minimise opportunism in the outsourcing relationship. Referring to this issue, Vasiliauskiene and Snieska (2011) say, “Since outsourcing includes repeated inter-organisational trades, in the course of time cooperation becomes an important protection mechanism which defuses external and internal risks” (p. 434) The biggest problem in outsourcing is the differences in views between service providers and their partners. Differences in risk profiles between the service providers and their clients further compound this problem because most clients often want to realise cost savings while the service providers strive to increase their profits. This difference also emerges in call centre performance, as shown by service provider and client behaviour differences.

In detail, the behaviours of service providers differ from clients in terms of average handling time and service level accessibility. Such behaviours affirm the tendency by service providers to be opportunistic. For example, service providers prefer to reduce the actual average handling time, as opposed to the stipulated handling time. This outcome mostly emerges when the service providers are under increased pressures to answer more calls and increase their profits through the same process. Comparatively, the service providers increase the average handling time when their contracts stipulate that their revenues increase when doing so. Based on the opportunistic behaviours of the service providers, it is pertinent to mention that the latter group (described above) barely meets its service level accessibility objectives, while the first group succeeds in this regard. In fact, Momme and Hvolby (2002) say vendors that fall in the latter group often fail to meet their outsourcing objectives and targets. Based on these facts, Pilinkiene (2008) says the limits of both parties depend on the available market size. For example, if market size increases, telecommunication firms are bound to outsource their services without trouble.

Conclusion

Outsourcing is a growing global business phenomenon. Multinational companies are leading the trend in its adoption because the concept helps them to manage their huge global supply chains (McIvor 2000). Corbett (2004) and Narayanan et al. (2011) say the adoption of the outsourcing process, in the corporate scene, is a vertical integration process because it involves reshaping organisational boundaries. The process starts by identifying the need for outsourcing and later progresses to identifying the methods for implementing the process. The management of the relationship between the client and the service provider is the last step in this process (Sappington 1991).

This study’s findings aim to help telecommunication firms, which want to outsource some of their services, about important factors to consider before they do so. Such information is particularly useful because such companies have to consider the impact of supplier opportunistic behaviours in outsourcing processes, especially when call centres have different pricing schemes (Gottschalk & Solli-Saether 2005). By understanding the issues highlighted in this study, clients could easily forge win-win relationships that would help them to enjoy the benefits of outsourcing relationships.

Based on these dynamics, it is crucial to appreciate the findings of the paper, which show that contractual completeness, relationship management and strategic evaluation are important influencers of the outsourcing performance. Therefore, a successful outsourcing relationship requires that the service providers and their clients concentrate on improving the above variables to achieve optimum performance in their business relationship. Maintaining and improving the contribution of the above variables will not only improve the organisation’s performance, but also positively transform consumer perceptions regarding the quality of goods, or services, they receive. Thus, it is important to appreciate the contribution of contractual completeness, relationship management and strategic evaluation on call centre outsourcing performance.

This paper also recognises the multidimensional relationship among all the variables highlighted in this paper. Particularly, the study has shown that all the three variables have a strong correlation with not only the outsourcing performance, but also among themselves. This correlation means that one variable possibly affects the outcomes of another. Therefore, to make sure that there is a positive impact of all the variables on the outsourcing performance, it is important to make sure that there is a sound correlation among all the variables.

Lastly, this study assumes that the research design and methodology answered pertinent questions about the research, such as when, where and how the research occurred. Based on the details of this analysis, this paper also assumes that the research outlines the structure of a well-designed research project. Furthermore, this study explored the main research questions of this paper, which sought to find out the influence that strategic evaluation practices have on outsourcing performance in the call centre industry, the impact of contractual completeness on call centre outsourcing performance, and the impact of relationship management on call centre outsourcing performance.

Recommendations

Business process Outsourcing is a growing phenomenon in the global telecommunications sector. Many firms are embracing the process because of the cost and quality advantages associated with it. However, not all firms realise the expected benefits of outsourcing. Some companies have suffered from poor quality services, while others have not realised the cost benefits promised by service providers. This paper shows that the transaction cost theory is the main theoretical framework that explains firms’ behaviours in the outsourcing process.

Although this paper has found out that contractual completeness has a significant impact on outsourcing performance, it is important for future research to investigate if the same relationship would suffice if researchers enforce contractual completeness with other performance measures. This view aligns with the assertions of McBlaine and Moritz (2003) who say empirical studies should understand the influence of other performance issues on the effects of contractual performance on outsourcing processes. Saxena and Bharadwaj, (2009) share similar views when they merge the influence of contractual completeness with outsourcing performance and recommend that most clients view the two variables as having the greatest effect on outsourcing performance. Here, it is important to understand that performance management refers to an organisation’s ability to introduce controls and procedures that define the outsourcing process. Since the findings of this study aim to improve the success of telecommunication firms in BPO, it is pertinent to understand that cost controls could significantly improve the performance of BPO. Based on this understanding, the researcher recommends that BPO clients should introduce a penalty clause in the contractual agreement, if the service provider fails to deliver on what the client expects. Such a clause could associate with customer satisfaction, or another metric.

Reflections

Sample Population

The researcher relied on information from known managers who understood the research problem and had gathered enough experience working in the telecommunications sector. Although time and technical constraints of obtaining global data limited the researcher, it was essential to have chosen a wider sample study and allocated more time for conducting the paper. Similarly, since the findings of this paper aim to present a global picture of the key outsourcing process drivers of call centre performance in the telecommunications industry, it is essential to gather information from all the continents of the world. This is the only way that a truly global outlook of the research phenomenon would suffice (Jaafar & Wai 2008).

Sampling Technique

This paper used a purposeful sampling technique to come up with the required sample. Although it helped to identify helpful respondents who were willing to work with the researcher to provide adequate information about the research topic, the probability of data skewness (because of their association with the researcher) could be high. A random sampling technique could have been more objective and eliminated the possibility of this bias occurring because it could have provided the researcher with a highly representative sample of the studied population. Furthermore, since simple random sampling evaluates similar samples, it is possible to generalise the findings across the population sampled (strong external validity). Comprehensively, this approach would have provided the researcher with a global picture of the research sample.

Limitations of the Study

Hinton (2004) says that study limitations refer to issues that affect how a researcher interprets, or formulates, a study’s findings. The scope of this study required huge investments in time and financial resources to conduct the study. However, these resources were few. For example, because of financial constraints it was difficult to use interviews, which would have been a more effective technique of getting the respondent’s views. The small sample size also limited the researcher. This limitation made it difficult to come up with highly significant relationships between the independent and dependent variables. In fact, Field (2007) recognises this limitation when he says that statistical techniques, such as the ones adopted using the SPSS technique, require statistically large samples to come up with reliable research findings. Moreover, this is the only way that most researchers could come up with representative findings. Furthermore, considering sample size is less relevant in qualitative research, it was important for this study to get a large sample because of its quantitative nature.

Lastly, there was insufficient information about the research topic. This limitation made it difficult to formulate a strong basis for understanding the research problem. Furthermore, it was more difficult for the researcher to recognise trends and useful relationships in the research process. The main consequence of this limitation was a limited scope of analysis.

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