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A case study on Dell’s call center outsourcing
1. Introduction

IT Outsourcing has become a hot topic since the 1990s. It has been almost waving all the big companies over the
industry as it brings a lot of benefits (check out the list of benefits in appendix?) such as cost savings, embracing new
innovations, as well as making companies being able to focus on their core-businesses etc:-

è Cost savings. The lowering of the overall cost of the service to the business. This will involve reducing the scope,
defining quality levels, re-pricing, re-negotiation, cost re-structuring by accessing to lower cost economies through
offshoring called "labor arbitrage" generated by the wage gap between industrialized and developing nations.

è Embracing new innovations. Companies increasingly use external knowledge service providers to supplement limited
in-house capacity for product innovation.

è Focus on Core Business. Resources are focused on developing the core business. For example often organizations
outsource their IT support to specialized IT services companies.

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As a computer giant, Dell has also given some tries to ride on this opportunity by outscoring its some non-core
businesses, for instance, call center, offshoring to sharpen its core-business[1] to be more competitive in the market
compete and hence to further maximize its return on investments (ROI).

In the past decades, dell has made a lot of successful stories, but in this report we shall use the Dell’s failure
outsourcing case – outsourcing call center to India[2] – to 1) analyze the case to find out what reasons during the
planning and execution might have contributed to the failure, 2) through this case study to draw up some conclusions
and 3) further discuss what good lessons we could learn from and may apply for the future outsourcing success.

The structure of this report we organized is to firstly give an overview of Dell Company and discuss some findings about
its history of outsourcing call center to India. Secondly, we present an in-deep analysis of the case to reason why it
failed. Finally, we give the conclusion and some proposals for the future outsourcing.

2. History of Dell's outsourcing call center to India

Dell is a well-known brand of personal computers which are sold directly to end-users. With the direct sales model, Dell
could save costs and became the cost leader in PC industry. Its revenue increased from 6.2 millions USD in 1985 to 62
millions USD in 2009. Dell was the number one market share in USA and globally for a long time. In order to serve a
large number of customers better and cut down costs, Dell decided to outsource call centers in India. Dell opened its 昵称： lei1016cn
first call center in Bangalore, India in 2001 to provide technical support for customers in U.S. After that, it set up the 园龄： 10年3个月
second customer contact center in Hyderabad in 2003 to deal with the increase in customer base. Eventually, the third 粉丝： 6

call center of Dell was opened in Chandigarh metro area in the north of India. 关注： 3
+加关注
In recent years, call centers are one of the most popular businesses that are outsourced. Not only Dell but also many
global and famous companies such as AOL, American Express, and General Electric have outsourced their call centers
to improve their cost efficiency. Among many countries, China and India are ideal choices for outsourcing due to the
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cheap and skilled labor in these countries.

2.1 Reasons and benefits to choose India

找找看
An interview with Romi Malhotra [1], the director of Dell’s Indian operations, has revealed the benefits in offshoring its
customer services, and also disclosed reasons why Dell outsourced call centers to India.
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The largest driver is talent. Dell found that labor in India is not only cheap but also skilled. In the interview, Romi
Malhotra shared “The people we hired in India are often overqualified for the job”. mac(2)

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Since Dell has seasonality in the business, outsourcing business to India allowed Dell to ramp up and down
mac LAMP(1)
without changing employee count.
Outsourcing helps Dell benchmark its quality and cost.
Dell can gain more working experience by working with third-party vendors. MySQL(1)
Outsourcing to India allowed Dell to spread its call centers geographically, and then, may mitigate something
such as natural disasters.
PeopleSoft(1)
Risk mitigation is another reason for Dell to outsource its business function.

2.2 Challenges Singapore NRIC Check Digit(1)

In the interview, besides benefits, Romi Malhotra also discussed some challenges that Dell has encountered
WEB开发(1)
Dell has encountered the problem talent constraint. Dell has spent a long time to find right people in India and
teach them about Dell’s culture.
Language, cultural dimensions are also challenges. In fatc, it’s not easy to getting an agent to understand the 开发框架(1)
culture in a country that is halfway across the globe.
Technology is also a big challenge. When Dell set up its first call center, it took about seven months for Dell’s
JQUERY(1)
officers to decide what kind of routers and switches to use.
Retention is another difficulty. In parallel with recruiting new talent, Dell had to come up solutions to keep skilled
labor to work for the company. JQUERY MOBILE(1)

2.3 Downfall

Although Dell has set up many call centers in India and the market share of Dell has continued to grow, customer 积分与排名
satisfaction had dropped. In 2003, Dell stopped using a technical support center in Bangalore, Inida to handle calls
from U.S. customers due to many complaints, mainly is poor quality of service, from customers. Some U.S. customers 积分 - 28951
complained that it was difficult to communicate with Indian technical support representatives because of thick accents
and scripted responese. There are other complaints such as delays in reaching senior technicians when speaking 排名 - 26006
technical support employees in India.

随笔分类 (62)
3. Case analysis

There are some reasons why Dell had failed the outsourcing call center in Bangalore in India. In fact, many business
.NET Framework
white papers outsourcing IT have clearly stated that outsourcing can only be beneficial to those who do so analyzing
the short as well as long term goals of an organization. Therefore first and foremost organizations should research

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outsourcing what is it and in which way will it be beneficial to them. IT outsourcing advantages are many, but same is
Android相关(1)
the case with operations failing and organizations backing up. [1] Here are the reasons:

3.1 Planning and Managing

ASP.NET(3)
The most difficult part in outsourcing is planning. For a big outsourcing project like the call center in India, proper
planning is very important. Dell had failed to plan and predict for their growth. That is why the call center worked in the
C#
way that did not have any clear processes or well-structured plan to serve for the big growth. In the end this become
more complexity and unmanageable. In the Dell case, the poor management comes from the fact that they did not
plan enough for the call center in long term. Dell had been growing a lot in their sales and the call center did not have C++(1)
enough resources in handling a large volume of call from the customers. Everything is not structured in processes and
requires more time to support. Therefore, the quality of the answer from the service went down and did not meet
Flex & Flash
customer satisfactions. Customers had complaint a lot due to the poor answer and long waiting time. In fact, it is
indirectly affecting their sale revenue since out of 10 calls from the customers; there is likelihood that 8 customers will
Iphone相关(3)
buy the product from Dell. As a result, the call center in India had failed to meet the expectation. Managing processing
in outsourcing is a challenge.
Java
3.2 Technical skills

The technology keeps changing; Dell’s products are more complicated. Moreover, Dell has been growing a lot and the
Linux/Unix/FreeBSD(10)
number of product lines also increase. Therefore, the skills of the staffs need to be improved so that they will have
more domain knowledge as well as technical skill to answer all the complicated questions from the customers. However,
Dell had not planned enough to catch up and train the staffs with the new technology. In fact, a lot of phone calls were Mac OS X(4)
being transferred to different technicians and in the end the customers were frustrated and not happy about the
service. As reference [4], we can see that how important of agent with good skill, they can convert one call to become
MS SQL Server(3)
one sale if the answer is qualified. The call center in India did not have enough domain knowledge to deal with a lot of
difficult questions. That is why it led to a lot of complaints.
MySQL(3)
Surveys released in February showed that, while Dell's market share has continued to grow, customer satisfaction has
declined. The company has acknowledged the problem and said steps are being taken to improve tech support and
PeopleSoft(3)
other customer services. [3]

Brooks Gray, analyst with research firm said Dell customers complained of language difficulties and delays in reaching
PHP(3)
senior technicians when speaking to tech support personnel in India. [5]

3.3 People
Web相关(6)

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The call center in India needed a large volume of employees since it needed to handle a lot of calls. Although, India is a
big country and the number of talented people is large, but Dell still had problem to find enough quality employees. Windows相关(9)

India is famous as an outsourcing country, and the needs in finding talented people are high. Dell had also faced some
difficulties in finding quality people, keeping them so that the turnover is not high is always a challenge. In fact, there 程序设计(1)
are possibilities for the local workers to change to another job because the market and the high demand are very hot
that they do not need to stay at Dell. Dell had lost 30 percent of manager because other companies are willing to pay
程序相关(2)
more than Dell. With the current rapid growth of Dell, the call center was not able to find enough people to deal with a
lot of phone calls.
喃喃自语(2)
3.4 Culture issues

Culture is always a big issue in outsourcing, especially the call center is the one that dealing with most customers in
企业与项目管理
other countries. Call center seem to be easy if you serve the people that you understand well, but different cultures
may lead to misunderstanding or miscommunication and the result is the customers are not satisfy about the service.
For instance, what does a customer mean when they say “this”? Agents have probably never been in the customer’s 译文集合

shoes, how do they learn what the customer means? [6] For the Dell case, most of the customers that the call center in
India serve are American, they expect a clear and straight forward answer (that is the culture of American), however, 杂七杂八(8)
Indian tend to answer in a lengthen way and usually forward the phone to other people that take a long time for
waiting. Although most Indian speaks English, but most of the complaints are about the thick accent and difficult to
communicate with them is also a problem. So the lesson learn from this is, Dell need to train the people in call center 随笔档案 (63)
not only their culture in Dell but also the culture of the customers that they serve.

In conclusion, there is a lesson from this case study is that outsourcing is not easy, you need to have a proper planning 2018年9月(1)
for your short term and long term plan.

3.5 Recommendations 2015年11月(1)

3.5.1 Planning
2015年10月(3)
Planning is the biggest problem in Dell’s case. First of all, to outsource, especially do an offshore outsourcing, the
degree of outsourcing shall be well tuned. A progressive model is highly recommended due to the uncertainty,
especially the call center services directly affects the main business process. Dell shall use one of its regional markets 2015年3月(1)
as the test bed to try out the result before they fully outsource the whole call center services to India.

Besides that, a careful execution planning shall be made before the actual action was taken into place. The planning 2014年11月(1)
will cover the schedule, cost involved and the milestones, which gives the clear picture.

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Moreover, based on the investigation result, the whole process shall be evaluated again and the major problems found
2013年12月(4)
shall be addressed and possible solutions shall be proposed before the whole plan was actually executed. Dell found the
staff retention problem in the investigation process but they had never come out solutions to solve the issues.
2013年11月(1)
3.5.2 Investigation and Pre-outsourcing Analysis

The investigation and analysis shall be done in a more systematic way. The pre-outsourcing analysis in Dell’s case
missed out the important details, e.g. heavy accent. And all these led to a serious consequence and directly affect the 2013年1月(2)

whole operation. Dell shall be doing this investigation as detail as possible, which will give the management accurate
information. If Dell does not have enough power to do that, a third party consultancy shall be engaged to guarantee 2012年11月(3)
the investigation and analysis result.

3.5.3 Training 2012年10月(1)

Communication and skill set needed by the call center service shall be proper defined and the corresponding training
plan shall be made and executed upon the outsourcing starts. Although this introduced additional cost but it is 2012年9月(1)
compulsory to guarantee the quality of the service.

American Express sets the good example in providing the English language training for its outsourcing center in India. 2012年8月(1)
This will reduce the communication problems which were created by the Indian operators’ heavy accent.

Moreover, Dell’s call center is also in the role of converting the calls into orders, which is also an important marketing 2012年4月(2)
method in the direct sales model. By providing the training, Dell will have more skillful operators for the call center and
eventually the sales will be increased as well.
2012年3月(1)
3.5.4 Monitoring

Proper timelines shall be set and the management shall keep track of the progress and take necessary action to make 2012年2月(1)
sure the timelines are strictly followed. By all means, the router and switch shall never block the whole process by 9
months. The lack of monitoring caused the schedule slippery and it also reflected the low execution power. For
2011年10月(1)
outsourcing project, especially the offshore outsourcing project, the monitor process must be introduced and there
ought to be some outsource manager to keep an eye on the whole process throughout the whole development and
operation period. 2011年9月(2)

4. Conclusion
2011年7月(2)
IT Outsourcing still has its strong position and momentum to bring values across the different industry. But these
values achievability should not be arbitrary, as this Dell’s call center outsourcing case study revealed, but subject to the
below dedicated contexts: 2011年6月(1)

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The first and foremost is to work out a better long term plan, which should together with proper processes and well-
structuring defined. It will help improve the management efficiency and relieve the management chaos as the 2011年5月(4)

expanding sales volume in the future. Moreover, with a good plan in hand plus a good execution, it will help increase
the sale revenue indirectly but significantly as the user satisfaction improved. 2011年4月(1)

Secondly, as an outsourced company, Dell in this case for example, in order to provide consistent and better services to
the customer, who cannot overlook the importance of developing a technologies competence team but just focusing on 2011年3月(1)
the market exploiting, otherwise the adversary of the customer relationship, say retaining existing customers and
develop new customers, will be hurt.
2011年1月(4)
Thirdly, enhance the people management’s ability to remain talents. Talent recruiting competition is quite intensive in
the outsourced country and when turnover rate reaches a certain degree, it could be very disruptive to an outsourcing
2010年12月(4)
company. E.g., In India the turnover rate will go up if the people management does not do well as other outsourcing
companies can tempt the staff by offering better package. This, without as stable team, will directly affect the service
quality also. 2010年11月(1)

What is more? The culture for outsourcing is also posting its importance. Language influences and communication ways
should be diversified based on the service destination preferences, such as American prefers direct conversation with 2010年10月(12)

local accent but not a lengthy one.

2010年9月(3)
[1] Why does Dell have such a strong position in the personal computer market?
http://tutor2u.net/business/strategy/core_competencies.htm
2010年6月(1)
[2] Dell’s call center outsourcing started in 2001 and due to insufficient planning and huge complaints aroused, it was
forced to drop in the late 2003.
2010年1月(1)

分类: 杂七杂八

2009年12月(1)
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1. Re:在Windows Server 2008 R2上

设置FTP 服务

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大哥，图片访问不了

--栖息之鹰

2. Re:CodeIgniter的Session问题

@ zhang5zhang5 谢谢指出那段演示代

码的错误，只是这个问题不是我下的结

论，只是整理一下大牛们的结论和做法罢

了。 :)...

--lei1016cn

3. Re:CodeIgniter的Session问题

博主。。。你二了吧。。。

你看看你的 view a 中的 表单的name

和 controller a 中的 取post 的name是

不是一致的再下这个结论吧。。。

--zhang5zhang5

4. Re:在Windows Server 2008 R2上

设置FTP 服务

@ perfectdahai非常同意 :)...

--lei1016cn

5. Re:在Windows Server 2008 R2上

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2008 上的IIS7.0安全性高。开FTP需要

两步。（这可不是人家微软BUG,添加svc

host.exe或者inetpub.exe,\inetinfo.ex
e例外的方法都不安全）1) 添加端口例外

n...

--perfectdahai

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