Most of you reading this will already be aware of the term ‘outsourcing’ and the potential benefits it can bring to an organisation. Contracting non-core business activities to third party providers can reduce your operating costs, give you easy access to the latest technology and best practices with no capital investment and, with the right provider, actually improve customer satisfaction in the long term.
However, if you are considering outsourcing your Customer Service function there are some potential disadvantages that need to be considered:
1. Loss of Control and Security
Having another organisation take responsibility for the life blood of your company carries some risk. You are effectively relinquishing managerial responsibility of the way your customers are dealt with to someone else. Keep at the front of your mind that most outsourcers are driven to make profit from the calls they answer and are not necessarily focused on the experience and service your customers are receiving.
The fact that your outsourcer is operating from a different site, with employees that are motivated by a different set of standards to yours, and that you do not have any managerial presence within that operation could all lead to a loss of control of the customer experience. And for any company that values the importance of continuously listening to the Voice of Customer, this disadvantage of outsourcing may outweigh any potential advantages.
2. Loss of Expertise and Staff Loyalty
No matter how much you train someone, an employee of an outsourcer will rarely be as knowledgeable of your services, products and business as someone who has been employed by you for years. The short term gain of reducing your staffing overheads by outsourcing could lead to a loss of expertise, knowledge and loyalty that can never be replaced. Many companies have discovered that customer satisfaction and the quality of customer support is irreversibly damaged after making the decision to outsource their Customer Service function and end up taking it back in house to try and repair their credibility.
If you are going to outsource your Customer Service operation then redundancies may affect your existing workforce. You may also need to retrain employees as part of your staff restructuring. The employees that are kept may be left with a bad taste in their mouth about the company’s decision to outsource and may choose to terminate their employment forcing you to spend time and effort finding replacements. Employee morale always suffers during a shift too outsourcing which may seriously affect employee loyalty.
3. Loss of Accountability and Responsibility
When one of your staff performs poorly, or is identified as being suitable for development into another role, there are many options you have to create a preferable outcome for that person and your business. Put simply, you have control over what the outcome will be and can assign accountabilities and responsibilities to that person, their manager and any other employees that work with them. But if you identify that your outsourcer is not performing, it’s sometimes difficult to determine who exactly is responsible for making it right. And more importantly, you invariably have to leave most of the accountability and responsibility of finding a solution to the outsourcer.
If the outsourcer fails to improve then it’s still you and your business that gets it in the neck – your customers aren’t interested in who is causing them problems, they just want it resolved. Recent research conducted by IPSOS Mori across 39 of Scotland’s local authority CEO’s and CFO’s revealed that the most commonly cited barrier to outsourcing was the loss of accountability, with over half of CEO’s attributing their reticence to Outsourcing to this factor.
So after painting this grim picture of what you could potentially lose from outsourcing your Customer Service function you’re probably asking yourself if there’s an alternative. Well, you’ll be glad to hear that there is – it’s called Insourcing and I’ll be talking about its benefits in my next blog article…
Steve has made some excellent points here in terms of the practical issues that outsourcing can bring.
The other part I find fascinating is the customer perception part (rather than the experience itself). It’s interesting to watch the difference between the level of service and the level of stated satisfaction. You can get funny situations where customers rate the transactions they receive highly (sometimes higher than internal staff) and yet the same customers complain about the level of service they now receive – specifically mentioning outsourcing!
So there can be more to it than just the practical quality of service. Sometimes there is a customer perception that they are just being dealt with as cheaply as possible and that those savings are not being passed onto them. This is particularly the case when a vendor switches from internal to outsourced.