The Hidden Cost of Outsourcing

Alien54 writes to tell us CNNMoney is reporting that outsourcing may not be as big of a bargain as some might think. From the article: "With consumers enjoying more choice than ever before, evidence is growing that great service is essential for long-term customer retention. To cite just one example, a recent survey of pension policyholders in the United Kingdom found that 75 percent would leave their current provider if they experienced bad customer service."

Comments

Slightly OT

[kortex]

"evidence is growing that great service is essential for long-term customer retention."

To me this is a remarkable indicator of the high cluelessness level of a very large number of businesses. This is such a basic truth, it's like "Please open mouth to breathe".

Happy Customers/Happy Employees can make a successful business even if the product is just 'adequate'. People resist change more when they are happy than not. F---ing duh.

Some companies are already ahead of the game

[AnotherDaveB]

From the article, "you'll soon figure out that competing solely on price is a fool's game"

Quote below taken from DNUK's website

The DNUK Advantage

• We currently offer all the major GNU/Linux distributions on our systems; including Debian, Fedora, Mandrake, Red Hat, Slackware, SuSE and White Box
• Unlike other system builders we offer all GNU/Linux distributions at no charge with our systems and we also sell the retail boxed products as an option
• We can offer a degree of customisation for our customers that the large OEMs simply cannot match
• We pride ourselves on our customer support - all our technicians are experienced with GNU/Linux support
• Customers can communicate directly with the very same technicians that built their systems
• We do not use offshore support departments in India!

Re:Dollar is king

[twiddlingbits]

You obviously have not been paying attention. Dell caught hell for lousy customer service outsourcing to India, and they saw repeat Sales drop. They have since moved a lot of the call centers back to the USA. If you want CHEAP go with Dell, but if you are a business beware the consequences. If you want ultra-reliable machines with enterprise level features then you need Sun or IBM servers, or the DL series from HP.

India is a great place for development,as they have very skilled programmers for cheap wages and "tech speak" has less problems with the language barriers than customer service.

Outsourcing has other benefits for companies

[Magnus Pym]

In the boston area, software salaries have been effectively capped. In the company where I work currently (which I shall be leaving soon), a raise that accompanies an excellent review is less than 3%. Complaints are met with the following justification: "You are getting paid about 10 times what someone from India gets for doing the same work. We cannot justify higher raises to the board/investors".

I recently found out that the following policy has been instituted. If an employee gets an offer from another company at a much higher salary, make no attempt to match the salary, just let him/her go. Hire someone else, if necessary at the higher salary. But do not give a big raise to any existing employee!

Unfortunately, this situation seems to be more and more prevalent, my friends who work in other companies have reported similar policies being instituted. I don't know where all this is going to end up.

Magnus.

Yeah, yeah, raising the bar.

[twitter]

what I do to lure customers away from my competition is: 1) "educate" my target segment to expect a higher level of service (change their expectations) 2) tell my competitor's customers that my competitor does not offer that higher level of service (given the new expectations, make them feel unhappy with their current provider) 3) make damn sure my own company offers the higher level of service when my competitor's now-unhappy customers go looking

#2 and #3 are flawed. In practice, #2 is often false or provided by sabotage. As a salesman you really have no control of #3 and may be as duped as your customers.

Cingular's "Raising the bar" is a great example. Instead of building out their network, they are spending money on exclusive phone deals and billboards. The purpose of those billboards is to expect a fictional level of service and simply say, without proof, that theirs is better. Having had Cingular and Sprint, I can say their promise is bogus where I live and I enjoy better service than Verizon and other incumbent subscribing friends do. "Education" has to be built on fact.