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Outsourcing Bad for Business

Maybe some new studies will have an effect on the outsourcing explosion that has taken place over the last few years. Everyone knows that the reason that companies looked to outsource was the cost savings. Has it really panned out the way they hoped and delivered what their customers expected? Doesn’t look that way.

There are three problems with outsourcing. The first is the quality of the service provided. As more and more companies looked to outsource, the quality of the available workforce was not what many expected. While India is trying to keep up with the growth, anything that grows as fast as outsourcing did will cause a lag in this new workforce being ready.

The second problem for outsourcing is that the promised cost savings do not pan out as the companies had hoped. This is caused both by increased fees and charges from the company handling the outsourcing, as well as some increase in oversight required on the part of the outsourcing company.

The final and most important problem is customer satisfaction. There is the very real problem of receiving lousy support from a rep, that will happen to a certain percentage of customers in any customer service business. However, there is also a customer perception problem. When a customer receives poor support and knows that support is coming from half a world away, it just further antagonizes them. They have no issue with a company reducing their costs, but when it is perceived that this savings is the cause of the poor service, then the company has a real problem and that customer will be very likely to take their business elewhere.

What all of this leads to is that not only are the companies not getting the savings they expected, but customer retention becomes a real issue. And while a company may be disappointed when the savings are not realized, they will have a huge problem if customer dissatisfaction starts chasing their customers away. That will be the point at which they will have to determine whether the outsourcing is really a positive for their company. I think many will decide it is not worth it.

Posted by Jeff

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