A+ Company is a health insurance organization that deals in provision of medical care and aid programs through customer entailed and made covers to its clients on an annual basis. The company is a renowned trendsetter among its peers through unequalled profit revenues of close to $6 billion as recorded in the year 2013. With the unassailable revenues of close to $120 billion annually, the company has achieved a reputation as one of the best in the business. The company has employed over two thousand individuals responsible for reaching out and calling prospective clients in order to offer them insurance plans according to their preferences and financial incomes. The employees work from a large call centre in Small Town in Ohio on average salary of $24,000. Corporate management has considerations of closing the call centre in Ohio in order to outsource the mechanisms to Philippines. Voice conversion technology enabled in Philippines makes the call centre employees press computer buttons through market pitch without the actual speaking. On average, call centre workers in the Asian country earn close to $9,000 annually. As a member of the Board of Trustees, I would oppose the proposal.
During the process of relocation, it is an expensive operational decision that can be made by the management of the company. A+ Health Company will require huge financial outlay services to equip the new call centre in Philippines, especially at the initial basis. The training regime required with the new set of employees is an added burden in comparison to retaining the services of the present workforce in the firm. In addition, there will be necessitated costs to meet in order for the new call centre to manage fully the operations of A+ Health Insurance Company. Top managerial members will have to be expatriates as they oversee the gradual progression of the new call centre into functioning capabilities. With the traveling and relocating of the top managerial employees, incurred costs will be met while at the same time, no immediate returns will be realized in the overall basis.
When A+ Health Insurance Company decides to outsource the call centre operations to Philippines, the current employee workforce will have to be compensated before the relocation of services is permissible. Hidden costs in terms of the contractual agreement between the company and the workforce have to be settled fully before the process is even commenced. Since the company has employed over two thousand employees in the call centre, the expensed financial outlay for proper settlement can cripple the company’s achieved profits within a short time. In addition, if the decision to outsource the call centre is relayed to the workforce, increased measures of obtaining better and higher payoff remunerations will rise within a short period. Thus, the company will be force to pay even more than the originally planned figures to facilitate smoother process.
One of the biggest disadvantages towards any form of outsourcing work by large organizations and firms is the potential of facing hidden costs through contractual agreement and possibilities of lawsuits. In the first instance, the representative call centre from Philippines carry more authority towards the negotiating terms of the contract agreement between them and A+ Health Insurance Company. Their intention based on the company’s reputation is to gain maximum from the contract while improving the terms of the employees who will be required for their services. Thus, the projected financial costs will be increased in budget and potentially have a negative outcome to the company’s requirements. Secondly, the present workers at the company can file lawsuits for wrongful dismissal or unexpected termination of the contract. Employing the services of lawyers and facing industrial courts will harbor increased costs as well as delay in time for the company’s plans.
A+ Health Insurance Company has gained a worldwide band image and reputation of its exemplary performance based on successful management, positive relationship with its workforce and service delivery to its contingent of customers. Once the company decides to outsource the employee jobs of the call centre to a global destination of Philippines, it will have significant negative results on its brand image. According to the initial plan of the company, minimized costs of employee salary would only be welcome to the management of the firm and financial upheaval. The negative image would result from leaving the current workforce unemployed and without income in order to cut down on expenses. In addition, the lure of Philippines will be termed as exploitation of human rights due to the lower salaries.
Outsourcing of jobs in a different and distant location poses a serious threat on management control. Once the Philippines’ call centre is contracted for the services, A+ Health Insurance Company will rely on the management from the new location to deliver operations and activities for obtaining the new customers. Management control is the basic assurance of successful entrepreneurship as checks and balances are maintained for overall performances. The company’s mission and goals will not be driven with the exact measures as before, since the Philippines call centre will be guided by their own management. In addition, the Philippines’ call centre can be driven into making business from A+ Health Insurance Company and other companies at the same time without keenness to detail and operational requirements. At the end of the day, they will be driven into personal gains.
A call centre is responsible for the human interaction between the customers and the employees for the driving of the company’s services and desirable outlay. A+ Health Insurance Company intends to outsource the call centre jobs into Philippines that use voice conversion technology in its operations. The technology described requires a call centre worker to press designated computer buttons that play market-pitch enabled mechanism to communicate with a customer on a continuous basis. It therefore reduces the integrated need for eloquence and fluency in English especially to the Philippines’ workers. The intended move will be a disadvantage in terms of the quality of communication to the customers who are based in America. Language barrier and non-familiarity of the American setting and culture will lower the trust between the customers and the company. Incurred losses will be easy to be experienced consequently.
Outsourcing of job to a different destination and m managerial control requires exchange of fiscal data, service standards, and confidential documentation in order for the new location to be effective in the operations. By A+ Health Insurance Company sharing the above sensitive aspects of its operations, serious risks and threats lay by the side. Armed with the sensitive data, the new management can disable the security of customer information and details. Security risks associated can lead to loss of data, especially with the established customers who profit the company’s functions. Secondly, risks of enabling checks can cripple the service delivery of the company, thereby exposing it to susceptible levels of lawsuits. The third factor on the risks is the misappropriation of the information shared for personal gain. Fraud and hijacking can lead to serious damages of the company’s bearing.
Loss of Flexibility
At the point of outsourcing the call centre jobs to Philippines by A+ Health Insurance Company, flexibility will be lost, much to the disdain of the company. A new geographical location, different time zone, and cultural differences can hamper the efforts of the company’s operations. Flexibility in introduction of new services, packages, instituting of customer feedback and relevant appraisal of the insurance desirables will all be affected if the outsourcing plan goes ahead. The constant reference of back and forth from the two managements will disadvantage the overall outlook. Despite the possibility of real time communication, virtual conferencing, and information technology, the losses will be incurred due to losses of flexibility. The time taken by the management to fix the flexibility issues would result in major setbacks.
Outsourcing of jobs helps in risk sharing through analysis facilitates swiftness and expertise, concentration on core process other than supporting ones and mainly reduces recruitment and operational costs. However, as a board member of A+ Health Insurance Company, I would oppose the outsourcing plan of the call centre to Philippines. Factors like increased relocation cost, loss of management control, disintegrated quality in service delivery, loss of flexibility and security risks associated with confidential information threaten to paralyze the company’s gains and brand image.