AXE Graphic Designers and digital marketers is a branding company whose main aim is to increase the market share and command. AXE company uses big data technology to propel brand awareness of products and services and maximize the ever-growing online population. Their digital marketing models include web design and development, mobile application design and development, social media marketing (Facebook, Twitter, LinkedIn, Instagram, among others), ad sense, search engine optimization (SEO), keyword finders, speed optimization.
Besides graphic design and digital marketing services, the company also provides product induction services, video advertisement promotions, business proposals, business plans, and other content creation activities. The company is looking forward to penetrating the European market, Australian markets, and the Middle East. The company operates both as a B2B and B2C, depending on the nature of engagement of the client. The company has recently announced its desire to venture into 3D printing technology to expand its scope of service delivery.
Assessment of the Outsourcing Alternatives
The company is planning to increase the scope of its services. Due to this, there will be an influx of duties that the central governance or administration can not duly deliver ad meet the organization’s missions and vision. The company thus plans to lobby to outsource some of its services to maintain the same tempo, vigor, and quality of work. The company thus categorized its activities and divided them into key and peripheral activities of the company. The company’s division was as below:
|Data security||Customer service (support and experience)|
|Finance and accounts||Survey|
|Human Resources||Brand promotion|
|3D printing services|
One major service that AXE is planning to outsource is the customer support services, including handling queries, conducting follow-ups for the progress of tasks, conducting after-sale services to ascertain service delivery and areas of improvement. The rise in company activities is a driver of several inquiries that the company would need to handle. This would call for larger office space to accommodate many customer service executives (CSEs). This would mean more time and resources to train the CSEs, which might inconvenience the company’s operation, thus the need to outsource the service and task the outsourced company with the responsibility of training and ensuring excellent customer support for the clients. Besides, due to the attempt to penetrate newer markets, there will be a need to train company services in foreign languages to suit potential customers from the countries, such as Spanish, French, Portuguese, or German.
Further, CSEs often constitute the largest department in terms of the number of employees in the department. While a finance department can barely constitute 15 employees, the customer service department comprises not less than 100 employees. Thus, having the in-house would increase the burden of the finance department while creating payrolls and other payments. When outsourced, the company (AXE) dispatches lumpsum payment to the outsourced company, which will then settle their accounts independently. According to the company’s distinction for key and peripheral activities, most of the peripheral activities involve call centers and survey services. Thus, a single company can be outsourced to manage all call center duties for AXE.
Since the company foundation is based on quality customer services, AXE will retain the power to terminate the contract legally when they feel CSEs do not offer their customers the best service. Thus, outsourcing this department will attract the best supplier or vendors equipped with the best training, recruitment, and motivation skills to maintain their relationship with AXE. The winning company will develop call centers fitted with computers, serves, internet connection and office equipment. The company will have also shared the risk of accommodating many employees in-house, thus reducing the likelihood of conflicts.
Outsourcing will also help the base company AXE: fix downtimes and hitches at the head offices. The call center includes both inbound and outbound communications, and the company can opt to the calls to different vendors and further improve customers’ services. AXE company will nonetheless have a parallel system similar to that of the vending company to monitor the vendor’s operations where they feel there is a lapse or hitch in service delivery.
Possible Results of Outsourcing
The following are among the issues that can arise as a result of outsourcing. The issues must be articulated within the contract to curb uncertainties that may arise at the occurrence if the issues:
The nature of anticipated calls may not be as scripted by both company and the vendor, unstructured questions may require expertise to handle properly. With the company expanding its reach and scope, it is expected that unstructured questions will be experienced. For this reason, a higher level of training will be required for the CSEs.
Since the vendor will be handling the company’s customers, then they will need to have access to company’s databases. Quality customer service requires customer verification and past activity to determine possible call drivers. Allowing the vendor company database posts a risk to the confidentiality of customers’ information and company’s data. The situation can however be overcome by, developing dummy interface, with little or minimum interference to company’s database.
The company will determine whether they need a 24/7 call center operation or 18-hour call center. Since the company is penetrating newer markets, with different time zones, it may need to opt for a 24/7 call center with two or three shifts a day, to meet zonal demands of their customers. Three shifts will ensure CSEs have sufficient rest and rejuvenation before returning to work.
The vending company will have to meet the organization’s deliverables as a measure of CSAT and the vendor’s overall performance. Longer calls will question product knowledge of the CSEs or the state of the equipment used (Ge et al., 2021). The following will be included in the performance matrices agreements between the vendor and the organization:
- Total number of inbound calls received
- Total number of outbound calls
- Total number of dropped calls
Service Level Agreement (SLA)
- At least 90%
AHT (average handle time)
- Not more than 5 minutes
Total number of escalations
- Valid tickets
- Invalid tickets
Top call drivers
- Average turnaround time (TAT)
- Total number of repeat calls
- Total number of callbacks/ follow-ups made
Assessment of the Types of Contracts
The company is expanding its reach and scope: thus, it needs to have accurate figures on headcount for the number of CSEs that will be available at any given time to handle their customers. The company will also desire set deliverables in terms of call volumes, both inbound and outbound. Considering the factors named above, the company will choose between the following contract types.
Settled value contract
Under this contract, the vendor and the company agree to a value of amount that the whole project will cost. The vendor is paid a lumpsum amount despite the unit volumes or headcounts of the CSEs. The company’s wishes are in contrary to the principles of the Settled value contract type, making this type of contracts unsuitable for AXE, who will need information on whether the vendor has the capacity to deliver their demands.
Under this type of contract, payment is done according to unit of volumes offered by the vendor. The company will benefit from having knowledge of the number of CSEs the vendor is employing, their SLA and other productivity indexes. The company will have the capacity to request or lobby for increment of CSE numbers to match influx of calls that is anticipated from the expansion of the company. AXE would thus choose the Unit-cost contract over the settled value contract type.
Evaluation Criteria Used to Rank the Proposals
AXE company will consider several factors to find the most suitable vendor to outsource the project. Experience in the customer service industry will be a major factor in vendor’s price, financial stability, and reviews from similar organizations.
Level of technological advancement
The company will review critiques from others.
AXE is an IT company specializing in graphics and digital marketing: their partner will have to meet similar standards of prowess and technological know-how to ensure their customers will be handled seamlessly using up-to-date technology and software.
Reputation, reference, reviews
The company will review critiques from other similar organizations that the vendor has worked with before. This is important to understand their conduct and relationship with customers. AXE will also seek references from other companies to justify the vendor.
The organization will compare prices from different bidders to find which suits their budgets while maintaining the highest standards of professionalism. Moreover, they will look into their ability to negotiate of adjusting bid terms.
Experience in the customer service industry
The interested bidders must have had experience in the customer service industry and not first-time entry. Experience is a boost as the vendor will spend less time learning the organization’s systems, focusing on service delivery.
The vendor will have to be financially stable, with the ability to pay their operational cost promptly to avoid embarrassment and inconvenience to the organization’s survival.
Strength of argument on the number of vendors selected to provide the services
AXE’S customer service necessities are divided into inbound and outbound: they are further classified into customer support and customer experience. Despite the fact that having different vendors for each subcategory being the best, it would be costly: time and financial resources involved (Lok et al., 2018; Ge et al., 2021). The organization will have to oversee several vendors, let alone its own management. Thus, AXE should opt for a single vender, develop trust and offer unwavering support to help attain their customer service goal. It is easier to manage one vendor and offer the necessary support.
The company will opt for a solitary provider to offer all of its call center tasks, this will be beneficial in cost and administration.
Cons of various provider approach
- Too many vendors are hectic to oversee and monitor, considered the organization has headquarter management as well.
- The model is prone to conflict from the different vendors claiming benefits of success of the company.
Assessment and Identification of the Difference in Time Line
|Plan Purchases||Preparation of project plan||1 Month|
|Planning||Preparation of RFP, detailed with the reason for outsourcing and company background||2 Months|
|Seller Responses||Availing RFP and notice to bid to the public for potential bidders, vendors||1 Month|
|Vendor Selection||Selection of the most suitable bidder after considering all factors.||2 Months|
|Administration||Officially offer the bid to the winning vendor||3 Months|
|Contract Close||Score vendor against performance matrices.||15 Days|
Ge, L., Wang, X., & Yang, Z. (2021). The strategic choice of contract types in business process outsourcing. Business Process Management Journal, 27(5), 1569-1589. Web.
Lok, K., Opoku, A., & Baldry, D. (2018). Design of Sustainable Outsourcing Services for Facilities Management: Critical Success Factors. Sustainability, 10(7), 2292. Web.