2/09/2008

Should we Offshore Customer Service?

Offshoring is a key nowadays for a business to survive in this very competitive world. Companies that offshore are the ones that can be successful or hold a competitive advantage over others. How come? It is because by offshoring, businesses can pay a fraction of what they would pay over here. They also can get more talented employees overseas.

However, do you guys think offshoring customer service is a good thing? I mean, in this article, it said that offshoring customer service would hurt businesses a lot. It made a point that when a person tries to call to get a question answered, he/she gets a person in another country with a different accent that is hard to understand. I think companies should be really careful offshoring customer service. If a customer gets mad, he or she would hardly come back to shop at that company. Without customers, an organization cannot survive.

11 comments:

LittleWhiteEbook.com News and Views said...

Alright - I have Google alerts set up that led me to your blog. I'm not a student. However, in response to your question, there's a very interesting trend of homeshoring vs offshoring customer service and contact centers. I would love to provide you with a free ebook on the phenomenon. (It's tailored to people who want to work from home, but the reference section may provide you with some information for your class...) You can get in touch by emailing me at littlewhiteebook@gmail.com

Dr. Tufte said...

Anyway ... what's missing here is a metric for thinking about how you should evaluate offshoring.

How about marginal cost vs. marginal benefit?

Do you think that part of the problem with offshoring customer service operations is that it is easier to measure the marginal benefits (inside the company) than the marginal costs to customer satisfaction?

Beyond that, I think at a minimum that offshoring is a good thing to have around: more choices is always better, eh?

Gavin said...

I agree with Dr. Tufte that off-shoring is a good option. I would suggest that companies consider offering a higher wage to foreign new employees who sound more American. Why not pay a little more for the best employees and/or pay for periodic training with language coaches.

Anonymous said...

I think offshoring of Customer Service is REDICULOUS!! We pay out the bum in fees and intrest on credit cards, bank accounts and just about everything now a days, howcome we can't get someone on the phone who actually understands our questions. Why do I have to ask for a supervisor AND then someone who actually speaks and understands english for all of my issues. I think taking away valuable american jobs @ such a bad time for the economy is absolutely ludacris.

binoculars said...

I totally agree with you anonymous. That is what I am saying. Offshoring, I think, is a very good thing to do. It benefits all of us in the long-run. However, offshoring customer service is not a good idea. They don't understand me, I don't understand them - all this can this hurt an organization's business in the future.

Matthew said...

Dr. Tufte mentioned that we should evaluate offshoring in a different way. I agree with Dr. Tufte in that it is easier to measure the marginal benefits inside a company than the marginal costs to customer service. However, I have to say, as a person who has worked in a customer service telemarketing agency, our service was not that stellar. I have called offshore customer service agencies, who may have been semi-difficult to understand, but I could tell they were well-educated, polite, and friendly. Most of the people in American telemarketing agencies are uneducated, don't want to be there, and not very friendly. So, there's costs and benefits to American customer service agencies as well.

Trinity said...

Dr. Tufte's comment was very interesting. I had not considered the lack of analysis on the marginal benefit side. Companies always say it saves them so much to outsource and offshore but never consider the costs of losing customers to the inferior service.
Great point.

William said...

Dr. Tufte,
I think you make a very valid point. I think that so many times companies look at only at one side and do not correctly analyze the whole situation. Every company must take in the marginal benefit and the marginal cost of each decision. If the costs outweigh the benefits then they obviously should not do it.
I do think in this situation it is a lot easier to measure the benefits because it is an exact number that you can find. For instance by off shoring we are able to save 25%. Versus measuring the costs are a lot harder because many times companies do not hear back from customers telling them that they left the company due to poor customer service, most customers just leave and that's the end of the story.
I agree with you Dr. Tufte and think that in majority cases off shoring is good, but again companies must weigh out the costs that are attributed to it and not just the initial benefits that they receive.

Reagan said...
This comment has been removed by the author.
Reagan said...

Dr. Tufte,

I agree that offshoring is a good thing to have around. With my business we were looking for after hour customer service and the prices for companies in the US were higher than offshore companies. We located several companies in Eastern Europe and India that had incredibly good prices and services. When the sales people from the US companies called back we told them we were not interested because the offshore companies had better pricing. The US companies matched the pricing for us so we didn't end up offshoring our after hours customer service but because of the offshore competition saved money. We lowered our cost and raised our marginal benefit because of offshore competition.

Dr. Tufte said...

I'm glad some of you liked my ideas.

Management needs to recognize that accountants provide great information, but not necessarily the information that management needs for each decision. There isn't enough talk in business schools about when to throw out the accounting information.