On-demand call centers in the house next to you
Posted on April 17, 2011
When disaster in Haiti happened, lots of people around the world wanted to help through donations. But who can organize a huge call center to accept donations on a one-day notice and dismiss it after a week or so? This task was taken on by LiveOps, a contact center company based in San Francisco. Although you probably have never heard about the company, it might have serviced some of your calls to order a pizza, for instance. So what allowed LiveOps to handle this enormous task of establishing an overnight call center? The answer is: a novel approach to labor management which places LiveOps in the prominent company of renaissance innovators.
By far the largest cost of the traditional call center is labor so any such company wants to keep labor utilized as much as possible. However, as call center volumes vary and are often not easy to predict (think about collecting donations for Haiti!) keeping utilization high is not easy. The risk of underutilized labor is the key issue for contact centers. However, instead of hiring labor, paying fixed salaries and taking all the risk of unused resources, LiveOps completely redesigned the risk-return trade-off. Service agents at LiveOps are home-based freelancers: calls are routed to them as they arrive and agents are paid based on the amount of time they spend on the phone answering calls. As this video demonstrates, call volumes are tightly monitored and, depending on the need, agent capacity can be quickly scaled up and scaled down. Now all the risk of agent under-utilization is borne by the agents themselves. However, since the opportunity cost of sit-at-home agents is pretty low (there are not that many other jobs that they can do) and since the agents can typically tend to other tasks (kids, house duties etc.), the agents in this case are best positioned to manage these risks. As you can well imagine, for instance, in case of Haiti earthquake many agents would be willing to service donation calls even on a short notice and even without pay.
Interestingly, average education level and experience of agents at LiveOps is much higher than at a “normal” call centers and yet the number of potential agents is almost infinite: in essence, instead of customers lining up in queue waiting to be serviced, agents line up in queue to service calls. This is an enviable way to reallocate risk in the value chain, the approach that is closely related to Zipcar, Rolls Royce, Blockbuster and Better Place examples we had written about earlier. Just like in other examples, the party that is best positioned to take the risk (home-based agents in this case) should do so.