Stop Outsourcing Help Desks

Businesses need to find a way to give employees technical assistance that doesn’t involve speaking with overseas IT operators. Pro or con?

Pro: Automation Is the Answer

While e-mail and the Web have made strides, the phone remains the primary channel consumers use to interact with customer care. In a 2007 Harris Interactive Research study sponsored by our company, 97% of respondents reported that they most often use the telephone to contact customer service. Today, more than 79.8 billion calls are made to call centers annually, and that is only expected to rise as use of the mobile phone for customer care increases. However, providing one-to-one call center interaction is not always economically feasible.

On the surface, overseas outsourcing—with live human operators—might appear to be a good means to save operational costs. However, research from the University of Michigan Ross School of Business shows that as a group, those that outsourced customer service saw a drop in their score on the American Consumer Satisfaction Index, or ACSI, a measure created by the National Quality Research Center at the University of Michigan. The same research found that the average ACSI decline at companies outsourcing customer service is associated with a drop of roughly 1% to 5% in a company’s market capitalization.

What we do know is that customers are willing to use automated systems. This has been borne out by the likes of ATMs and airline kiosks. They are convenient and fast and the customer is in control. According to a Harris Research Study, consumers actually prefer to use automated customer care for the following reasons:

• It is available any time of the day.

• It can address simple questions.

• “I can do it myself.”

• “I get immediate service.”

• It’s faster to use.

The phone channel isn’t going away and will only increase with the use of mobile devices. This presents new opportunity to reduce costs and increase revenue—and automation can help.

Con: Outsourcing Delivers Quality and Value

Whether we’re talking about a consumer contact center or an internal IT help desk, there is no question that outsourcing delivers tremendous benefits. There are several factors companies should consider before taking the outsourcing leap, and potential customer backlash for offshoring is clearly one of them. However, outsourcing’s track record shows the risks are nominal.

Today’s consumers understand that support calls are as likely to be answered from Hyderabad as from Houston. For the most part, this is not a concern. Of much greater importance to consumers is having their questions answered quickly, competently, and courteously.

As such, companies should strongly consider outsourcing call centers and help desks. They’ll benefit from lower total cost of ownership, multi-language support, improved call-handling processes, guaranteed service levels, and extended operating hours.

Moreover, companies that outsource don’t have to maintain physical space or expensive call-routing equipment. They don’t need to hire, train, or retain employees, and have more flexibility to adjust staff to handle call volumes. And because they are consulting with help desk experts, they tap into best practices, complying with Information Technology Infrastructure Library (ITIL) framework that results in better call handling—which means satisfied customers. Companies that outsource the help desk function can establish 24/7 call center capabilities without having to pay for facilities on multiple coasts or even in multiple countries.

Ultimately, businesses with outsourced call centers and help desks free up resources so they can concentrate on increasing core competencies and strategic programs that lead to profitable growth.

Opinions and conclusions expressed in the BusinessWeek Debate Room do not necessarily reflect the views of BusinessWeek, BusinessWeek.com, or The McGraw-Hill Companies.

Reader Comments

RC

By far the worst customer experience I have ever had involved calling a support desk in India for a product that I purchased in the U.S.

If you outsource and depend on customer satisfaction for your long-term success, then stay clear of outsourcing.

Brandon

I just wanted to say that I am a CSR for a company here in the states, and I believe whole-heartedly that outsourced customer service is cost effective for some companies, but at what cost to the consumer? I have never, and I repeat never, been satisfied with customer service from another country.

And on another note, automated services are great for yes or no answers, but I firmly believe that you cannot fully serve the customer with automation, especially as the median consumer begins to increase in age.

Harold R

Multi-language support, as mentioned above, is a definite plus when a company considers outsourcing any kind of customer interface overseas.

What better way for a company to show its interest in its customers than to offer 24/7 customer support in such world languages as Gujarati or Swahili or the favorite language of Wal-Mart customers, Inuit.

Excellent idea all around, say what.

KK

I agree that complete automation can be a better idea as there are many situations where a person needs CSR assistance.

Of course, the quality of the service should be given priority over the cost effectivness to the company.

RU

I agree complete automation is not possible and it won't work, but I disagree that customer service is worst by India. It depends on companies which call center they select in India. I personally feel out of all countries where English is not their native language, India has a best talent of English speaking population.

H Sekhon

Sure it adds value, but only to the business. The customer only gets painful wait times and lower-than-expected quality, not to mention that oftentimes the issue doesn't even get resolved in a single session. Companies outsourcing to cheaper nations tend to discount the quality factor while reducing costs. Not to mention the cultural aspects.

Automated systems in such a case offer limited and superficial help. When enterprise systems and complex consumer products falter, the situation can be complex enough to require human intervention.

Oh, and yes, outsourcing will collapse in times to come when the financial divide reduces among nations, especially once major unions like the EU are formed. Moreover, research indicates that it's more of a hassle to manage and offers only marginal cost reduction.

DM

Outsourcing is what caused the demise of the United States economy, in my opinion. The rest of the world depends on the U.S. economy; listen to the news. Multilingual for the U.S.? Realize we are from different backgrounds, but in the U.S. English is the official, unofficial language. In the U.S., learn the language. Reap the benefits but can't speak the language? Automate Spanish and French for our bordering countries but beyond that? I have had very bad experience dealing with customer service reps from another country. You can't even understand each other some of the time. Ask them where they are from and they mispronounce the name of the city and state. Ask them their name. Fake one given. Very misleading. Our country in the last few years has gone downhill economically--lost jobs, lost homes, medicines unavailable for those who need it, because they cannot afford it, etc. Keep people in jobs in the U.S., and the U.S. will do better economically, hence the world would do better economically. Worldwide recession did not start until after U.S. failed--the trickle effect. 24/7 coverage? Pay people enough, and they will work. Heck, at this point, pay them anything and they will work the off shifts. Some people want the graveyard shifts. Americans working in America who aren't bilingual in certain areas (Texas, for example) can't even get a job at Wal-Mart. Think about it. Outsourcing was our demise.

julia

I agree that stopping the outsourcing would be better for the economy since Japan blamed its problems on outsourcing and temp agencies 2008.

Gail

In our big publishing company, help desk and infrastructure support have been consolidated and outsourced several years ago, with disastrous results. Since then, we have had to deal with extended production-critical outages, with CSRs who don't understand simple technical words that everyone in U.S. knows, and with CSRs whose heavy English accent is no good for any kind of customer support.

Observer

It is of course expected that someone from Nuance Communications, which makes IVR software, would be in favor of automated response systems, which drive their revenue. And of course Nick Sharma would prefer outsourcing to India. What are needed are neutral viewpoints. If customers could get a choice of country (Press 1 for U.S., Press 2 for India), when they call their support line, this would make clear what customers prefer.

Midwest

What kind of cost is there to keep the call center jobs stateside? These departments are not a majority of what company's spend each year, but they are often the most important face of customer interaction a company has. A poor experience in a help call situation can lead to dissatisfaction and a loss of customer loyalty. Why risk the reputation of a company just to save small change on the front end? This is the same thinking that gave away American manufacturing jobs as well as just about everything else the CEO could shove off to prop up stock prices. Enough of this shortsighted strategy that has cost us untold millions of jobs and ended up crippling vast swaths of American consumers. Without a consumer with a decent wage, this country's economy is doomed to a long and intractable recession. Figure it out, Mr. CEO, every additional dime you pay out to your employees feeds the entire system, which ends up floating your company's boat, too.

Nik

As usual, the truth is gray. Outsourcing is mostly about wage arbitrage. It has lead to grave social injustice in the West. About 30% to 40% of the people in outsourced help desks or software development are good but not all. They do provided service as per international standards.

So the truth is selective outsourcing with good training, and spread of wealth globally based on merit. Right now the Indian companies hire fresh college graduates in droves, pay them very little, and pay a select few at the top mint money.

How would the Indian outsourcers feel if illegal Bangladeshi nationals undermined their business at 1/5th their going price in India? They won't like it. Americans are no different.

This is simply digital slavery where the slave traders, the big outsourcers, benefit, and the corporate honchos get big bonuses, but the ordinary American and Indian workers get exploited.

So automation will get rid of the poor low end support with self service. The high end will need well trained and well compensated people globally.

ADS

Well, let's look at it from the point of view of a company. Will an Indian accent be enough for a customer to change the service provider? If so, then outsourcing would have stopped some time ago. Obviously, the customers might be annoyed with this, but it's not enough to offset the cheaper prices and better features that are possible with the savings from this activity.

Personally, I also get irritated with fake American accents by an Indian (I am Indian myself), but if T-mobile and Vodafone can give me good prices, then be it automation or an Indian operator, it won't make a difference.

Outsourcing saves cost and allows companies to grow faster and offer more, which is a real benefit in the long run for the country and the industry.

KM

Ms. Ochinero offers vague reference to the University of Michigan's research on dissatisfaction with outsourcing customer service, but no support for her suggestion (automating).

Thus far, my experience with automated CS (primarily in the form of chat with characters like Ikea's "Anna") has been horrifying. I'd imagine there is no body of research to support it yet, but I imagine that eventually ACSI scores for fully automated CS will be event lower.

PS: Of the list of five reasons to use automated service, two are the same reason (4/5:fast/immediate), 2 are also true of outsourced call centers (1/2), and the third reason makes no sense--"I can do it myself"?

Why can you not call a human being yourself? I don't understand that response.

gb

I really have problems understanding English spoken by those folks. I sometimes can still understand but am not as comfortable as I am speaking with someone in the U.S. I am not racist; I'm just telling the facts.

Indian

I am an Indian and work in the IT industry, but I am against outsourcing of call centers. It's very difficult for a person from other country to understand the accent properly. Language understanding would be a big problem. It would give a really bad impression to your customer. So outsource everything else, but call centers where there is direct impact on how your customer views you. An automated solution is simply not going to work. You have to understand the customer's problem and then provide solution, which is not possible via automation.

Aarkayne

Looks like we are going to come around a full circle. The shareholders ask CEOs how come their company is not profitable, hence the CEOs go outside the country to find cost benefits (in addition to other things, of course). Now wealth is being created outside; aren't some of the companies reaping in because of a new market thus created? That was the premise behind outsourcing. However what has certainly happened is the displaced worker has not been re-trained or is unwilling to be re-trained. The rehabilitation of the displaced worker has failed miserably, leading to the current problem. If the CEO who gained because of his cost cutting measure had ploughed back some of those profits into doing this instead of taking hefty bonuses, perhaps the situation would have been better. Like someone said earlier, this is a sociological problem that Congress could have addressed better by mandating that all displaced workers be accommodated in an alternate occupation. Are Obama and his advisers listening?

dw

Not sure why a company that has a call center needs or wants to have it in a major city, when they could have it in a minor one and have the same cost benefit (if not more) as going off shore, and less of the down side (language and culture). So if they really wanted to do both in the U.S., they could. But they are like lemmings; one leads the others follow, over a cliff if need be. And it fit the Wall Street mantra. Get rid of those jobs, and pay whoever you have to have (excluding executives or management) as little as possible. And now we see the result of all of this today. They are heading the U.S. to a standard of living as low as possible. And then they need a bailout.

Prithvi

Okay, let's stop outsourcing, but what if as a retaliatory measure India blocks its internal market to U.S. companies? Surely we can buy planes from Airbus instead of Boeing. We can build our own computers, so no need for the IBMs of the world. We also don't want to stuff Big Mac, Pepsi, and Coke. Sounds okay?

Chuck Gaffney

Customer service should be the #1 priority of any business. It advertises itself and it allowed me to build my business without a dime in advertising yet. Sadly, sending your business's top function to India is like putting it under a rug for cheap. E-mail allows me to handle all my customers, and I very rarely use the phone in my company. Hiring a few good people to handle customers online and on the phone in emergencies beats hiring lots of cheap, uninspired overseas workers to do phone tasks that could have easily been done online, and it keeps jobs here.

JMN

Trying to choose between two bad but inexpensive options is exactly why America is being run into the ground. Is there a possibility of providing good quality customer service in the country where the goods are sold? In a country where you need to pay a CEO tens of millions of dollars to drive us off a cliff, we can't cough up $20 an hour to answer the phone? Offshore a few CEOs and they will suddenly understand the problem.

Bipin Agarwal

Quality of customer service from outsource centers is excellent. Given the pressure on the economy, we will and should see lot more of it. Those who are complaining are doing so because of job security and not because of service to the consumer. Employees of the outsource center are not less qualified. That is why IBM now has 100,000 people outside America. Also do not forget that lots of these companies get more then 50% of the their revenue from international business. If anything, we should shut down the large iconic building in the downtown of every large city. No customer ever visits these buildings, and they are just warm seats for the egoistic executives.

John Spens

Prithvi, in fact, India did indeed kick out U.S. corporations in the late 1970s. Did it affect the U.S. in any way? If you wish to buy planes from Airbus, feel free. All you are doing is tying yourself into a single vendor who then could charge you exorbitant rates if he realized that you would only go with Airbus. Most of these fear scenarios are fallacies. By the way, Pepsi, Coke, and Big Mac hire Indian citizens for their Indian operations. They have brought in their capital from the U.S., invested in Indian operations, and invested the profits back in India to avoid corporate taxes. If you wish to kick them out and have your local industry get the capital and the hiring, feel free.

Chris Mitchell

I have been an IT help desk agent and network systems technician for five years, so I can see many sides of this equation. There is a lot of gray area here, and of course I'm looking at it from both the help desk agent perspective and the customer perspective.

Concerning phone automation systems, I can definitely see the advantage from the help desk agent's perspective in not having to take up my time submitting network change requests and changing Outlook address book profiles all day when we have ways for the users to do that themselves on our intranet, 24/7. This frees me up to help someone with real issues (VPN problems, application issues, dead computers, etc). Overall, our need to do low-level tasks (change requests, Outlook address book changes, etc.) has markedly decreased since the implementation of the automated sites for users to do it themselves. At the same time, our customer satisfaction has stayed at high levels, because our automation system is simple, easy to use, and effective, and you don't have to navigate through that menu to get to me, a live human being.

However, from the customer point of view, I recently had to call my mortgage company and insurance company to straighten out a snafu, and having to navigate the endless menus, press 1 for this, 2 for that, and so on for 10 minutes before being afforded the opportunity to speak to a live human being (which I knew I had to do when I called) was very frustrating and annoying.

In the past, I have been lost in menus for so long that I actually had to look up the company's main headquarters number and ask the receptionist how to navigate the menu to get to where I needed to be. I am a college educated, intelligent, well spoken man, and the fact that the automation system was that poorly designed is one example of what gives automation systems a bad name and why customers hate them for the most part. I do not like the feeling that a company implemented an automated phone menu system merely to frustrate and aggravate the customer to the point where he or she hangs up and goes away.

I have noticed that companies have recently implemented the "hidden" feature of either saying "agent" or pressing 0 (zero) to speak to a human being upon first calling up without having to navigate endless menus. Umm, am I being dense, or is that a clue that your menu system sucks and that you need to redesign it? If it was well designed and programmed, you wouldn't need that "hidden" feature in the first place.

When I first graduated college, I worked as a help desk agent for a now bankrupt and gone VAR computer manufacturer. Out of 30 or 40 agents in the room I worked in, I was literally the only native English speaking agent that worked there. Everyone else was of Indian decent. Now, their accents ran the gamut from almost nonexistent to the point of barely being able to understand them. All were technically proficient, but I can't tell you how many times I answered the phone, and the customer would say, "Oh, thank God, you speak clear English. I can never understand most of the other guys."

Technical proficiency becomes irrelevant in the face of ineffective or poorly understood communication. I have made it a point to constantly work on my communication skills, both written and verbal, in order to more effectively communicate to other people, and I have been rewarded for my efforts.

I saw a program on one of the cable networks where it sent a white, American male to India to work for a call center there for 30 days (was it on the FX channel?). This guy busted his buns for 30 days, for next to no money, at all hours of the day and night and lived in what Americans would call a hovel.

My issue with outsourcing has nothing to do with the call center agents themselves. My issue is with the executives who implement this solution without thinking it all the way through. They are puppet masters, walking off with all the money on the backs of their employees. Their only concern is the bottom line, the shareholders, and their yearly bonuses. Customer satisfaction seems to have taken a back seat to greed long ago, and outsourcing is merely one facet of this big picture. Don't blame the tech in India who's busting his ass for next to no money to feed his family, just like us "high-and-mighty" Americans do. Blame the executive who hasn't spent enough time and money on training these people, sending them to English class to speak and write clearly, and not paying them enough to get the high quality people that they need to man the call center.

Numbers

It does not matter to me who is at the other end of the phone as long as my problem is solved. So far things have been OK and nothing to complain about. Sadly, as long as workers in the U.S. decline to work for less money and without benefits, outsourcing is going to continue.

Kris

I can never understand those who oppose outsourcing. People, outsourcing is not a function of will; it is a function of costs and comparative advantages. I would never outsource anything if I could get things done cheaper here in the U.S. Also let me say that compared to all other countries, India has undoubtedly the best call center service I have experienced.

logic

Don't even get me started. To say that Indian call centers speak "English" is being very, very charitable. I don't doubt that the people there mean well and try their best, but it just doesn't work.

When possible, people Google for answers to tech support questions.

tiddle

Admittedly, I'm in the IT field and would love to have the higher paid IT jobs stay in this country. It's good for the economy. But truth be told, that's a business decision that has to be made rationally.

Not all jobs (call center or otherwise) should and can be outsourced to offshore, but there are strong arguments for (and against) it.

If it's a technical job (even help desk jobs) and if the person (be it American or Indian or whatever) is capable of handling the job, addressing the technical issues at hand, and can communicate just as well, it shouldn't matter if the person is in Texas or Mumbai or Beijing. But if the job can be handled just as competently in any place by anyone, of course management would want it done as cheaply as possible. If the job requires local knowledge, it would not be a good idea to offshore it, no matter how much can be saved.

My issue, out of numerous experiences working with and managing offshore projects involving technical development, is that oftentimes you would find the offshore developers lack the imagination/creativity and understanding of larger context, hence often delivering projects that are of subpar standards that require further rework or be brought back to the U.S. eventually in entirety. If you consider the headache, efforts, time, and money lost, I'd say that 85% of the time it doesn't save you any money at all.

The more important ramification for the U.S. workers though, is that the junior level workers are getting harder to get the experience necessary for them to grow, since we the senior management have moved all the projects and work overseas; and when the projects have to be brought back to the U.S., we need experienced people to work them. For the country as a whole, we are shortchanging a whole generation of young people who find it harder to get into the field on a reasonable salary.

Companies are there to generate profits. They would not and cannot care about the long term efforts of education in this (and other) countries. If capitalism is allowed a free rein, you would see America going down in the long term since those basic societal needs like education will fall further behind our counterparts in Asia. Government has to have a role to play.

Mike

I worked for Microsoft in their support division.

As long as Microsoft had direct and absolute control over us (when we were employed by Keane), things were as great as they could be for employees and customers. Once Convergys, a "call center" company, took over, things became intolerable.

With Keane, we had at least two computers at our desks: one for business (log calls/access databases/etcetera), one to "use," and a "break-me" (one to try to emulate problems with). When I left Convergys, I had one.

When work/jobs were sent to India, we found that for all the training they were given, they did not experience technology as us "geeks" stateside did: creating/building, rebuilding/reconfiguring, experimenting/hacking--all book-learning, no practical application of theory and philosophy.

Sometimes, moving a particular type of work because the labor is cheaper is not what's best when there are other considerations that should not be ignored.

Larson

Over the last eight years we have seen record corporate profits. Most of that profit has been used to buy back stock (look where that got them) or pay off snotty Ivy League executives. Of course it's a bad idea, just another way an executive can get a Christmas bonus.

Call Center Consumer's Right to Know Act, put forth by Rep. Jason Altmire (D-Pa.), requires that the disclosure come at the beginning of the call. It also applies to centers in the U.S.

JS

My job has been outsourced along with hundreds of my coworkers'. Some of the jobs involved "help desk" positions. Most of the companies (that I am aware of) are American-created corporations. Why should someone else in a different country hold jobs that were created here? We as a nation already have enough of our jobs gone to other countries. Most of the foreigners do not understand our way of life, not to mention our methods of operation. I will not speak to a foreign person concerning any business questions. What about the security of my personal information? I do not need to make it any more accessible than it probably already is. Foreign countries can and some will take our information and use it for their own plans. Outsourcing is one of the economy problems facing us as a nation this moment in time. Enough outsourcing for any reason. We need our jobs here on American soil.

Guwahati

People from any Third World country are not service-oriented by nature.

I live in India and have experiences with call center operators of vendors like Airtel (GSM), Reliance(GSM), Sify(ISP), etc. that would put anyone to shame. Can you imagine a call center employee calling you back with abusive remarks after you complain about their poor service to the concerned company (Sify) person?

Airtel call center employees have the habit of keeping the phone down within a few seconds or pick it up and not answering it or misbehaving.

I, being an Indian, hate to call up any help numbers and rather would do everything online than talk to another Indian call center employee.

Sally

My company's bad experiences with the outsourced support centers of our vendors was the major factor in deciding to keep our own customer support on sight. In the case of our document management software, they recently switched to a foreign call center and the situation is now so bad we are looking into the possibility of an expensive capital outlay to scrap it and get a new system altogether. The new workers have almost no knowledge of the company's software, a tenuous grasp of English, and no desire to go beyond their standard response book to solve problems. When I go to professional meetings and seminars I tell people about the company's horrible service anytime it comes up. I hope they calculated the economic cost of lost future business when they made the decision to outsource.

Rick Levandowski

One hallmark of U.S. business is the customer is always right. Torque off a customer and he'll tell 25; satisfy him and he'll tell at least 10.

dm92

If I can identify that a company has their help desk overseas, I will purposely not deal with that vendor. It is annoying. Stop with the overseas outsourcing already, and hire some people here.

GR

Boundaries have been created for a purpose. Stating the world is flat and globalization is good seems good in theory. The reality check is a proof of the economy's being affected adversely by outsourcing. Americans have sacrificed their resources to feed other countries.

me

I won't support offshoring. I have cancelled all my bank accounts and use a local credit union for my checking. And my brokerage is Scottrade. Whenever I need someone on the phone, I always get through to someone local. Offshoring is anti-American anyway. It's good for a corporatacracy, and that's it. Hopefully, Barack Obama begins to close those tax incentives for jobs sent overseas and, as he promised, taxes them up the wazoo for each job in India, China, or the Philippines.

SV Nagappa

I would rather live with outsourcing as my experience has been mixed where some have provided exceptional service and others have provided average service. Automation is the worst especially by telecoms as they do not provide any opportunity to discuss the problem, and as different people have different accents, it does not seem to get it. However, what clearly needs to happen is Americans need to be able to take a pay cut in the case of the company profits falling due to facts other than its making, for example, up to 20% maximum and should be able to get their pay back if the company starts to make profits. Is America ready for this? Western democracies have such a rigid pay system that does not match the market economy that it believes in. People keep asking for pay rises instead of tightening their belts and keeping their jobs.

Dario A

This is the type of issue that cannot be answered naively with a yes or no. It is one of those "it depends" answers. If you simply consider outsourcing on the overly simplistic calculation of reducing head count in your organization, you are guaranteed to be doing this wrong.

Whether to outsource or not your help desk depends on: the type of business you are in, the type of help desk application requirements, workflow, ability of your entire organization to adapt, the specific outsourcing vendor you pick, etc., etc. Yes for some, probably not for most. The whole outsourcing business processes movement still has a lot of development to undergo.

Ron Mepwith

My experiences with outsourced service have all been negative. Who likes to try getting help from someone who can't speak understandable English, and who doesn't deliver any help? Companies that use such groups ought to be put out of business by consumers who refuse to buy their products. I suspect that some CEOs use such groups just so that they don't have to provide real service.

Marco

Almost every time I have contacted customer service or sales that was being responded to by personnel [in India], I found myself dissatisfied by the service I received.

auspicious

Well, for better or worse, customer service is going to come from abroad. If it is India today, tomorrow it will be another cheaper destination country out there.

Stopping outsourcing may not be such a good idea. Business is a two-way street. Even though outsourcing dollars go out of the U.S., a lot more come in from around the world in terms of technical services that the U.S. delivers. Look at the data from Commerce Department, and maybe it can throw a better light on the whole picture.

Protectionism will not bring prosperity in the long run but will kill competency. The mantra of globalization that the U.S. taught to rest of the world is still good, and anything against it will come back to bite us.

Yes, outsourcing means pain, sometimes bad customer service, but that can be used to make call centers overseas to compete with one another not just with respect to cost but better training and more skillful staff.

Ultimately companies can use saved dollars to put to another use, raise the skill of people at home here in U.S., and bring prosperity

Rick

My experience with outsourcing has been terrible. I worked for a company that had internal support, but outsourced to a company in India. The people would have to call tech support (India), put a ticket in, and then I would look at the ticket (in house) and go and fix their computer. What a waste of money, and the people in India had no clue how the systems worked in the place I worked, which made it harder to get the correct support someone needed.

I don't know about anyone else, but I can hardly understand what someone is saying in India. Let's bring our companies back to the United States, and maybe it will help boost our economy. Let's not boost everyone else. We need a boost here in the good old U.S.A.

indra

Outsourcing is on its way to extinction. Cultural norms cannot be taught. This along with competence-related issues is leading to customers spending two to three times more than they would otherwise. Who is paying for those lost man hours now?

Besides, even if, say, outsourcing saves the U.S. company 20% to 25% in the customer service, but each dollar spent on native U.S. customer service would mean:
1. 25 cents would go to U.S. Treasury, which needs money badly
2. 30% to 40% would go to real estate as new hires feel secure enough to buy real estate, bolstering a much bettered sector.
3. 25% consumed locally adding to U.S. GDP, 75% of which is consumption..

Outsourcing never make long-term sense, and it will be extinct inevitably.

willetta carter

I cannot stand when I call a company, and the person on the other side of the phone does not understand what I am telling them, you can only tell they are reading from a book, and it seems they can never deliver any sort of help. They only know how to repeat the same thing over and over again. I just hope one day this outsourcing will backfire on the company who does it.

A Successful

I spent 35 years in tech sales and sales management. The customer interface is the most crucial component of a successful organization. You can spend millions on design, manufacturing, quality control, advertising, etc. But make it difficult for your customers to communicate with a competent person when they have a problem and you will eventually put yourself out of business. CEOs should call their own companies and discuss a problem or situation with the call centers. Be honest, if you are frustrated, angry, etc., then think how your customers feel. Remember, most studies state that companies spend approximately $300 to acquire a new customer. Why chase away existing ones to save $10 (average cost of a customer inquiry)?

Heather K

Companies regularly have customers speak with American call center workers when placing orders. Once the customer owns the product, the message is clear: "You're on your own. And we don't give a damn how much time you waste getting technical support after the sale." Perhaps someone should conduct research on the amount of money lost when customers spend double the amount of time trying to convey their concerns to "Arthur" in India.

Grant

I am a vice president of technology with a large corporation that fell for the outsourcing hype. Ironically, it has cost the company greatly more than if we would have kept our labor in-house. I feel greatly for the good workers we had to let go.

NRK

Grant is correct, the lost productivity due to language, and my techs' having to ask for a native English speaker is horrendous. Techs cost $50 an hour-plus with benefits and overhead making a wasted half hour even once a month expensive, especially when the help desk is just reading a script. Hell, send me a flow chart and instruction, and I can do the script myself. For the software/hardware vendor, it is less expensive but not for the end user. The vendors are just transferring the cost to the end user.

Grant

In my companies' case, we moved several call centers overseas. The costs associated with setting up new call centers (hiring, training, finding buildings, migrating systems, managing, monitoring, etc.) was astronomical. And this is not to mention extreme customer dissatisfaction. It is my firm belief, had we kept our U.S. call centers and focused on managing them more efficiently, we would have saved more than three times what outsourcing cost. But outsourcing was the fad at the time, and that is what many on senior staff were for. Incidentally, our experience with outsourcing software development was just as negative.

Michael

I remember calling HP in the early nineties for support on an HP Omnibook. The support was U.S.-based and great. We kept buying HP Omnibooks until they stopped making them. Somehow I felt like I had a friendly lifeline that I could rely on.

That episode aside, my main point is this: I think it depends on the competence, all-round education, and culture involved. I have called support and ended up dealing with people in Canada or Ireland, and the experience has been stellar. I once even got someone in France, and that was good, too.

If you get a one-trick pony, or someone who can only follow a script (or the company forces them to follow a lame script) or someone who can't establish a good rapport with you, I don't think it is going to be a good experience. And I have experienced these types of people in North America as well. So it's not so much that outsourcing is a bad thing. The key thing is who you staff the support center with.

Aside: Whoever Dell had some time ago, it wasn't very good. But it has gotten better recently.

Katja

My experience with outsourced CSRs is that they only follow a script. U.S.-based CSRs tend to be more innovative in solving difficult problems. They aren't afraid to dig in and find out what you are really dealing with.

And not outsourcing keeps jobs at home. Who do American companies think is going to buy this stuff if Americans are unemployed?

Bill

One day I came in to work and my password expired. I called IT. The person that came over to my desk to help me sat 45 feet away. However, he did not help me until three hours after my call that first went to India, where they had to spend too much time with me getting specifics, writing up tickets, then taking forever to call the guy that helped me. Now that's what I call savings.

RS

I have a hearing problem and even with aids and speaker phone, find it almost impossible to understand techs in another country.

Nitin

In the discussion and the comments that I have read above, I believe that we are confusing between two words with different meanings.

The pro-argument talks about "offshoring," while the Con argument talks about "outsourcing."

In layman's terms:

Offshoring: Moving parts of the business that may or may not be your core-competency to other parts of the world.

Outsourcing: Moving of all the non-core-competency part of the business to one or multiple vendors specializing in those part of the business.

Raamatupidamine

I’ve always wondered if it’s possible to outsource outsourcing, which means that you hire some company to deal with your outsourcing issues.

Nevertheless, outsourcing anything that customers can connect to is a dumb, dumb thing to do.

Bob

Outsourcing sends a signal from any company to its customers. We don't care about you, we really don't. We hardly care about our employees or company. We only care about us at the top. And as the self-service Christmas tree paint store said, "Go flock yourself."

Fred Jensen

Check out www.contacthelp.com. That site has saved me countless hours. It will give the direct number and exact steps for reaching a live person at a lot of companies.

Amy

I'm not sure who did the research on this article. I'd say in my experience it's horribly inaccurate. What happened to real customer service? Some form of automation is good, but I always have problems with the systems that ask you to speak your answer--what a pain.

And I am tired of speaking to robots in India. I'm not in India. I'm in the United States. Can I speak to someone who speaks English please?

Maybe I'm just venting, because I just got off the phone and it was a horrible experience. I understand the cost savings, but what about keeping your customer base and high customer satisfaction ratings? We just lost half a million jobs last month. India? Seriously, we need to invest here.

Reynaldo Lugtu

Can outsourcing be stopped?

(Published in the BusinessMirror under the Mirror Image column, Nov. 11, 2008)

Now that President-elect Barack Obama will be inaugurated on January 20, 2009, many are holding their breath, especially the business-process outsourcing companies in India, the Philippines and others, as to how he can turn around the outsourcing of jobs from the United States. In debates and on the road, Obama repeatedly said that if elected, he would discourage companies from “shipping jobs overseas” by taking away tax breaks, or by giving benefit to those corporations that keep jobs domestically.

“We can keep giving tax breaks to companies that ship jobs overseas, or we can give tax benefits to companies that invest right here in New Hampshire,” Senator Obama said at a joint appearance with Sen. Hillary Clinton in Unity, New Hampshire.

According to CIO magazine, economists and legal advisers contacted about those comments said they are unaware of any specific tax breaks aimed at offshoring or outsourcing tech jobs. Instead, they said, Obama may be targeting broader tax-deferment strategies, such as the ability of multinational firms to avoid taxes on profits by moving money overseas.

But can corporate tax policy alone really do much in stopping the offshoring of US jobs? Some analysts don’t believe so. “Any plans for a Tax Code change are like trying to plug a hole in a leaky dam with your finger—to believe the US government Tax Code promotes outsourcing is a major misconception of the fiery debate around outsourcing offshore,” according to Joe Greco, director of California State University-Fullerton’s Center for the Study of Emerging Markets. Also, according to a Computerworld report, Nielsen Co., the media company known for audience measurement, has given up tens of thousands of dollars in local tax breaks this year after signing up with an outsourcing provider based in India.

Back in 2004, John Kerry was, likewise, criticized for using the same tax-policy argument against offshoring. Factcheck.org, a political-analyst group, pointed out that taxes “are a very small part” of companies’ decisions to move jobs offshore. Those at a 2005 Brookings Institution summit on trade also said taxes had little to do with outsourcing. In addition, Joel Slemrod, a tax expert at the University of Michigan’s business school, said that, “For those who see [offshoring] as a problem, this is not a solution.”

And so US companies continue to outsource. One glaring reason is the huge cost differential between the United States and offshore providers. A programmer can be hired in China for $12 an hour while the same goes for $56 in the United States. Depending on the skill and location of the offshore vendor, the international wage ratio can reach 100:1 as corporations outsource to where they can reduce costs and maximize profits. Experts predict that the significant cost differential between the United States and other countries will continue for 30 years.

Although cost reduction is the major reason US companies do offshoring, there are a number of others why firms do it. According to a 2004 Outsourcing World Summit report, of the Western firms that do offshoring, 9 percent want to gain access to skills and 3 percent require innovation from the outsourcing vendor, and the number is growing. And why not? China and India graduate a combined half a million engineers and scientists a year, versus 60,000 in the United States; India and the Philippines are already recognized globally as the hotbed of information-technology innovation and creativity in the areas of programming, animation and design.

Many of the outsourcing professionals and executives in India and the Philippines are not bothered by the pronouncements of Obama during the campaign. Outsourcing will continue to flourish in the coming years as corporations find ways to stay competitive. As India’s Finance Minister P. Chidambaram commented, “Once Obama is in office, he will realize that it is an interconnected world, and countries have to work together.”

---------------
Reynaldo C. Lugtu Jr. teaches management and marketing courses in the MBA program of De La Salle Uiniversity Graduate School of Business. http://rlugtu.blogspot.com.>

Jayanth Paraki

Much of the debate concerning outsourcing will fade away in the following weeks and months, and daily life will return to "as usual."

As a regular reader of BusinessWeek and editor-in-chief with a science publishing company in the USA, I am aghast at the fact that an Indian IT company is occupying headlines in almost all the major media in the world for the wrong reasons.

The Indian IT industry ought to move from a sense of unbridled and self-proclaimed might and strength to a more sensible down to earth "honesty is the best policy" approach. In the case of Satyam it is obvious the company did not feel honesty pays dividends.

Jon

I called Microsoft's help desk at 7 p.m. EST in 2007 and was connected to an Indian technician. After six hours on the phone with this tech and his "mentor"--they (not me) finally gave up. I called the following day at 11a.m. and was connected to a U.S.-based tech, and the same problem was solved within 15 minutes. It turned out it was a simple problem.

Lesson learned #1: Computer software written in the U.S. is a U.S. cultural and U.S.-English based "second language." Obviously, U.S. English is the second language of this tech and his mentor. The software is a third language they were struggling to interpret with their less than fluent "second language."

Lesson learned #2: How does Microsoft measure six hours of non-productivity compared to 15 minutes of productivity? How does Microsoft measure customer satisfaction? Help desks should never be outsourced to India or anyplace else.

LooseTalk

I believe American companies are making a mistake by outsourcing. They may think cheaper. But they don't think about their brand's value and name.

It may give you profit for a short period of time. But in the long run you lose your international brand value and name. Don't forget it. Any good businesspeople won't make that mistake.

Example: PriceWaterhouseCooper.

Dawn

Outsourcing = job losses = unemployed Americans = no one to buy the crap that was being outsourced in the first place = company goes under = America goes into recession.
Pretty simple really.

Amanda Geheb

If you are in charge of deciding whether your company is going to outsource anything, whether it is customer service or IT related, you should definitely check out the articles and news about the comments made by India's Prime Minister. The Indian work force is increasingly demanding higher wages. It seems like pretty soon, Indian workers will be demanding the same amount of pay that American workers are lucky to be paid. If you outsource, you are not only a traitor to the United States of America but also not wise to the global economy and how it works. I think that it is wonderful if the U. S. can help other countries, but not at the expense of our own people. We need to take care of ourselves as best we can so that we can help others. Being greedy doesn't help. By the way, I believe that traitors should be punished by death. My family, friends, and associates do not buy products/services from companies known to outsource jobs. (We don't want to be traitors either.)

Sincerely,
Amanda

P.S. Thanks to those greedy company (mis)managers who outsource American jobs, we are experiencing the second Great Depression. Now there aren't many Americans who can afford to be consumers. Let's just hope those same idiots don't start WWIII.

American

It almost seems Americans are donating their jobs to India. The effect is compounding rapidly and we will lose jobs at higher rate, later on. The customers are ultimately paying for the service, and they should decide if they want their call going overseas. A message to get a choice of country (Press 1 for U.S., Press 2 for India), when you call their support line would make it clear what customers prefer.

Let’s stop doing business with companies that outsource our jobs to India. To keep our American pride, this outsourcing must stop.

Tony S

It is the greedy American that has caused all this crap. They need to have pride in their country by keeping it strong and not weakening it by outsourcing our jobs.

Rico Papagrande

As an American IT pro who has had to take over thousands of support calls from Indian agents who couldn't handle the task, I can tell you first hand that Americans overwhelmingly say they cannot understand Indians, (Indian accent. In one case, the customer would rather have support from a company security guard rather than India--customers pleaded and begged on virtually every call not to be transferred back to India. Almost incredibly, many customers say they get rudeness. The con writer above (with silly obfuscations like "As such..") is dreaming.

Unfortunately US corporate execs are sucked into the oldest sales trick in the book: Appeal to the prospect's greed motivation.
I urge all patiotic americans who read this to contact their senators, congressional representatives, and the president via the following link to demand an end to outsourcing:

http://www.usa.gov/Contact/Elected.shtml

It's a simple and patriotic duty. Remember, US corporations only outsource because it is legal, and it is only legal because we the people have not stopped it. So, lets kill outsourcing now--you know what to do! God Bless America.

bj

I just want to pinpoint one thing here; if we compare techs/agents in the US with that or agents overseas, the only difference is the accent. As far as being technical is concerned, I can say, we are far better compared to those onshore. Our surveys will defend my claim. Aside from that, escalation groups/departments for accounts are placed overseas first and not in the US

Rico Papagrannde

Thousands of personally handled cases back my claim of offshore incompetence: Unfortunately the fox telling you he is best suited to guard your chickens has zero credibility.

Rico Papagrannde

BJ's remarks above only pinpoint the type of arrogance and factual incompetence common in outsourced operations, which Americans neither want nor deserve.

Again, I urge all Americans who read this to contact their senators, congressional representatives, and the president via the following link to demand they stop outsourcing now by making it illegal. Here's the link, it's quick and simple and the jobs you help save will impact you directly, and of course will impact BJ too.

http://www.usa.gov/Contact/Elected.shtml

VMorris

The only benefit of outsourcing is to a company's bottom line. There is absolutely no benefit to the consumer or to the US worker. They both get screwed in the end while the corporations laugh all the way to the bank.

Join the Debate

 

Participate More!

Please send us your ideas for new Debate Room topics. If you're an academic, association officer, or other industry expert and would like to write a Debate Room essay, send us a query. Questions? See the

BW Mall - Sponsored Links

Buy a link now!