Surprise Attack! Revolution carried through by small conscious minorities

Surprise Attack! Revolution carried through by small conscious minorities
Kabul in the Republican Revolution of 1973

Wednesday, April 1, 2009

The Political Economy of an Outsource Call Center Job: Or How To Cut Through the Boss’s BS (Rebel Youth)

The Political Economy of an Outsource Call Center Job
Or How To Cut Through the Boss’s BS
(Rebel Youth)

By Bilal Awami

At almost any job you’ve had you’ve probably wondering why things were setup the way they were. If you asked a manager you would probably get a BS answer that stops making sense if you dig deeper. Talk at work probably included trying to figure out what was really going on.

Political economy is the science of how we relate to each other in making wealth, which under capitalism is for those who own the equipment we use. An outsourced call centre might do the same physical work as an in-house call centre, but the difference is with outsourcing are making a direct profit for the owner by the call. Marx wrote that in his time people who didn’t make anything physical but still made a profit for someone, and so are “productive” in the capitalist sense, were very few. Today however, according to the Government of Canada, Canadian outsourced call centres pull in US$14 billion/year and are the second-biggest market after to India.1

Understanding the political economy of where you work is important for figuring out what’s really going on, why things are setup the way they are, and where they are headed. It isn’t as simple as it looks from the surface: as Marx said if things worked on the inside the way they looked on the outside we wouldn’t need science to tell us anything.

This is just a taste of what lurks behind the way your workplace is setup. Dig into your own workplace’s political economy and write in to Rebel Youth with what you and your co-workers have figured out.

1. Why don’t they let us work all the overtime that’s available, they’d still be making more they pay us even with overtime?

It’s true that call centre outsourcers pull in so much more money per hour or minute or call than they pay, that they could be paying overtime and still make a profit. It might look like a win-win to get lots of overtime so you can make money while the call centre owner makes money too. But it’s the profit rate (profit per $ spent) and not actually profit that the call centre owner is after. This rate has to be a higher than what other industries (not just other call centres) offer.

Think about it from the perspective of an investor. If an investor is going to put in a dollar, they don’t just care that you will bring in some money on that dollar, they want to know how much so they don’t invest somewhereelse. Even though with paying overtime the total profit will be higher for the call centre than not having anyone do the work they don’t have people for, it would lower their profit rate since you would get to keep more of the money that’s brought in than if you were working the regular wage rate. In other words, the rate of exploitation is lower when you are paid overtime because the owner gets to keep less of the money you bring in.

So the call centre owner would rather make a lower total profit, and have less calls answered, than taking a lower profit rate by paying for overtime for someone to take the extra calls they didn’t schedule people for.

There are some situations where call centre owners will want people to work a lot of overtime however, if the penalty for not answering a certain number of calls is looking too high for example.

2. Why do supervisors send us home on VDT (Voluntary Down Time) when I know that there will be more calls coming than the people who are left can handle?

Outsourced call centre managers are judged on the profitability of their queue or section or department. But even the managers and supervisors ultimately can’t make whatever decision they want, they have to defend their decisions based on call forecasts from the client.

The forecasts are based on a mathemetical model, called the Erlang C equation, which basically assumes a random distribution except that some people will give up and call back later. However, call centres often don’t know day to day how many people are out there who would want to call (the customer universe), so the model is a guide at best. The model might tell you, based on last year’s calls, when there will be a bump in calls, but not how big of a bump.

For this reason managers think it’s better to make a safe decision they know is wrong that they can defend with the client’s forecast than take a risk in keeping people on that could end up costing them unnecessarily if they’re wrong, because when the managers are put on the spot by their managers the upper management can pull out the forecast and blast them for wasting money when the forecast said there wouldn’t be any calls coming in. On the other hand, if calls gets missed because more came in than were forecast, the manager can always hide behind the forecast and blame the client.

3. Why do they care so much about my being late – is it because they don’t want too many calls to be in queue?

Outsourced call centres will want you to be on time even if there are no calls in queue, it has nothing to do with catching calls. Their forecasts for how many calls are coming in aren’t that accurate.

The real reason call centres are big on tardiness is because they make money for every minute you are on the phone or taking a call or, in some cases, in your seat regardless of whether there is a call or not. Losing money because agents aren’t bullied enough for tardiness by a manager will make the manager look like they can’t manage to their supervisors, and since tardiness is one of the things managers think they can control more than other things they will pick on tardiness. They might excuse it saying it puts stress on the team to not have someone who is scheduled there to take calls in queue, but that’s not why the manager cares about attendance.

4. What does the outsourced call centre’s profit rate have to do with auto and steel, or general, profit rates?

Outsourced call centre’s biggest expense per dollar spent on a call is the wage they have to pay a worker – their variable cost of production (taking calls which bring in money). The fixed costs of the telephone bill and equipment you use is relatively low. Call centres are labour intensive rather than capital intensive, constant capital (the means of production) is low compared to labour costs. In other words the “organic composition” of capital is low (less constant capital than variable capital). With auto and steel plants the organic composition of capital is high: the equipment and raw materials that go into a car or roll of steel take up more per dollar invested than the labour that makes the wealth.

Because profit is made from only the labour and not the equipment and raw materials, i.e. a telephone or car factory only makes money while someone is working on it, call centres should have a higher profit rate than auto and steel factories (more profit per each dollar invested). This is because more of a dollar spent in a call centre pays for work bringing in money than in an auto plant or steel factory, where for each dollar spent much more of it is going into equipment than the labour. An hour of labour might produce more in an auto plant or steel factory, but the capitalist’s dollar doesn’t buy as much labour there because more of the dollar goes to the expensive equipment and raw materials. Remember the profit rate is per dollar invested in both capital and labour, not how much you get out of an hour of labour which is the exploitation rate.

But outsourced call centres aren’t in a different society than auto and steel factories, capitalists can shift their dollars from auto and steel plants with lower profit rates to call centres with higher profit rates. Capitalists don’t care about the total profit as much as the profit rate, since to maximize profits they need to make more for each dollar they put in. In this way in capitalist society as a whole more investment goes for a while into industries with higher profit rates, until because of competition from all these capitalists crowding into call centres the profit rate goes down in call centres, and goes up in auto and steel factories from capitalists pulling out and decreasing competition. In this way most of the businesses in a capitalist society end up with a similar, average rate of profit. If any industry could do better than average, and they do, capitalists would crowd into there and drive the profit rate towards a new average. This is constantly happening under capitalism as the economy develops.

So what does this average rate of profit under capitalism mean for your call centre job? It means that the profit rate the owner of your call centre takes in doesn’t just depend on the industry your calls are in or the call centre industry itself, but it depends on the whole of capitalist society and what the average rate of profit is.

From my own call centre company’s numbers there are different minimum profit rates to do business in different countries. Profit rates from centres in underdeveloped ex-colonies are about 150% the rate for an imperialist country like Canada. 40% profit might be super in Canada but won’t cut it in the Philippines. This is related in part to less capital-intensive industry (lower organic composition of capital) in ex-colonies, but that is changing.

Notice how because call centres will initially turn a higher profit for each dollar invested (even though they may require fewer dollars), their profit rates go down from the competition from the different capitalists getting in to the business. This means call centres end up charging their clients less than the value of the calls they take as the price is driven down by competition. Similarly in capital-intensive (high organic composition) industries, because there is decreased competition from a lower profit rate (less profit per dollar invested because more of the dollar goes to equipment and raw materials that doesn’t do anything by itself), they can sell their goods for a higher price than the real value since there is much less competition.

This means that when you look at what’s happening from the perspective of capitalist society as a whole, the value produced by workers in industries with a low organic composition of capital is effectively “moved” to the capitalists in industries with a higher organic composition of capital by the averaging out of profit rates.

In other words, when you take a call you are not only making money for the owner of your call centre but also for the owner of an auto plant or steel mill. More broadly, under capitalism workers aren’t just making money for their employers but as a class we are making money for the capitalists as a class. This is a big reason why call centre workers should be in solidarity with their brothers and sisters in auto plants and steel mills, and vice-versa. This analysis is not obvious and requires some serious following of the money, as Marx said in Capital III “The actual difference of magnitude between profit and surplus value (money you bring in over your wage) … in the various spheres of production now conceals completely the true nature and origin of profit, not only for the capitalist who has a special interest in deceiving himself on this score, also for the labourer.”2








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2 Capital vol. 3, Karl Marx, Kerr Edition, p. 198

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