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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."
The article is terse, inapplicable to those many markets which are almost entirely price-sensitive, and ill-supported. Pension policies don't really compete on price; they are about service and ROI.
And people often say that they will take their business elsewhere, but then stick to the cheapest vendor when push comes to shove. Self-report is not the best indicator of actual behaviour, especially for a hypothetical.
What's a pension?
Outsourcing does not mean, bad service. It's about getting a service from abroad with most probably lower costs. It's evident that same quality of service taken from India, or China is a lot cheaper than the one taken from US or some other European countries. Companies should be more selective on outsourcing, then they won't lose customer due to bad service, but in no way there's a direct connection with outsourcing and bad service.
It's a good thing that inhouse customer service can't be terrible!
Seriously, this just means that you have to be careful who it is who provides your outsourced service just like you'd have to be careful who it is who provides your inhouse services. The big difference is that outsourced service contracts are generally easier, quicker and cheaper to terminate and replace if they're don't meet the agreed standard.