A new survey finds that outsourcing customer service - whether to offshore providers or domestically - typically causes a "significantly negative" impact on customer satisfaction. But the study's authors still contend that despite widespread bad press, off-shoring customer service can work if done right.
The research, according to The Wall Street Journal, came from analyzing the off-shoring and outsourcing activities of 150 North American companies and business units from 1998 to 2006. The study's authors were Jonathon Whitaker, assistant professor of management at the University of Richmond's Robins School of Business; MS Krishnan, professor of business information technology at the University of Michigan's Ross School of Business; and Claes Fornell, a professor of marketing at the University of Michigan's Ross School of Business.
Writing in the Journal, the scholars offered a few steps companies can take to improve the quality of outsourced customer service yet still reap the savings from moving offshore:
- Make sure the provider has enough information and full authority to help customers. To protect customers, the customer-service provider often isn't given complete customer histories and profiles. The provider also may not be permitted to grant credits to customers to resolve complaints. The authors wrote, "Companies need to weigh their concerns about information security and financial control against the damage that such arrangements can do to customer satisfaction."
- Companies can take advantage of the technological innovations available to some foreign firms. According to the authors, "Some foreign outsourcing providers have offerings their domestic counterparts can't match in terms of technologies that help guide customer service by recognizing patterns in consumer behavior."
- Invest the money saved by outsourcing to improve the quality of the company's products or services, or to cut prices. The authors found that most companies are only pocketing the savings. "Among the companies we studied that had outsourced customer service, there was no increase in the perceived-value component of their overall customer-satisfaction score: Their customers didn't feel that they were getting any more for their money than they did before the company started outsourcing," the authors wrote.
Discussion Questions: What are the main problems arising from outsourcing customer service functions to offshore providers? How can companies resolve these issues?