Risk management in globally distributed call center networks - A Real-Options Approach

The emergence of globally distributed call-center networks, such as Dell International Support Service, has fundamentally increased the challenges to the management. This new trend of networking faces the risk of extensive demand fluctuation both over locations and over time. Existing literature in operation management uses pooling mechanisms to deal with demand fluctuations among different departments, while does not consider system-wide time-varying demand shifts. Queuing literature has developed algorithms to allow the number of servers to change in response to time-varying loads, however, a pooling configuration introduces additional business risk and is thus more complex to change. More sophisticated approaches are needed to accurately describe the reality of call-center operations. In this paper, we study a model generalized from the International Queue run in Dell's globally distributed callcenter network and identify its operation risks from both demand fluctuation and pooling management. Then we propose an economic framework to use a Real-Options Approach (ROA) to systematically analyze those risks to help the management to hedge the risks to a pre-chosen level and hence secure the associated service quality and the costs.