Showing posts with label Legal Outsourcing. Show all posts
Showing posts with label Legal Outsourcing. Show all posts

Friday, August 1, 2008

How Offshore Outsourcing Affects Customer Satisfaction

The outsourcing of customer service to offshore providers has gotten a lot of bad press in the U.S., with reports citing language problems and the exporting of jobs. But, despite the potential for such reports to alienate consumers, this offshoring continues to grow, driven mainly by the lower labor costs overseas.

Are companies that send customer service abroad making a mistake? It's hard to answer that question without knowing offshoring's actual impact on customer satisfaction.

Our research indicates the effect in most cases is significantly negative -- but similar to the effect of outsourcing customer service domestically. That suggests companies shouldn't necessarily forgo the savings they can reap from offshoring. But if they're going to do it, they'd better do it right.

Negative Numbers

We analyzed the offshoring and outsourcing activities of 150 North American companies and business units from 1998 to 2006. 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 declines were roughly the same whether companies outsourced customer service domestically or overseas.

ACSI scores tend to move in the same direction as companies' share prices. Based on the historical data showing that connection, the average ACSI decline we found at companies outsourcing customer service is associated with a drop of roughly 1% to 5% in a company's market capitalization, depending on what industry the company is in.

That's a steep price to pay. But there are ways to make outsourced customer service more palatable to customers or to mitigate its negative effects, and in some respects that may be easier to do with offshoring. And there are offshoring alternatives that can save a company money without damaging its relationship with its customers.

An important step companies can take to improve the quality of outsourced customer service is to ensure that the provider has all the information necessary to help the customer and full authority to do so. Sometimes, because a company wants to protect information about its customers, the customer-service provider isn't given complete customer histories and profiles. Or the provider's authority to resolve complaints is limited; for instance, the provider may not be permitted to grant credits to customers. Companies need to weigh their concerns about information security and financial control against the damage that such arrangements can do to customer satisfaction.

Tapping Technology

Companies can also make customer service more effective by taking advantage of the technological innovations that some providers offer, and here there may sometimes be an advantage in offshoring. That's because some foreign outsourcing providers have offerings their domestic counterparts can't match in terms of technologies that help guide customer service by recognizing patterns in consumer behavior.

One way to mitigate the damage from outsourcing customer service is to invest the money the company saves to improve the quality of the company's products or services, or to cut prices, rather than simply pocket the savings as extra profit. Our findings suggest that this isn't happening in most cases. Among the companies we studied that had outsourced customer service, there was no increase in the perceived-value component of their overall customer-satisfaction score: Their customers didn't feel that they were getting any more for their money than they did before the company started outsourcing.

Here again there may be an advantage in offshoring. If a company can save more by sending customer service overseas, it will have more opportunity to devote at least some of that money to upgrading its business.

In addition to considering whether or not to offshore customer service, companies should consider whether back-office functions such as information technology may be suitable for offshoring. Our study found that back-office offshoring had no effect on overall customer satisfaction. So the savings a company garners this way aren't offset by dissatisfaction among customers.


source:- online.wsj.com/

Saturday, April 12, 2008

Indian IT company plans big in Michigan

US based outsourcing firm Integreon, which has a presence in India, is on the lookout for acquisitions here. Investment banking sources said the company is in talks with domestic knowledge process outsourcing KPO and business process outsourcing BPO firms and at least two small buyouts for a total of USD50 million are likely to be sealed during the current calendar year.

Further, the company plans to double its India headcount from the current 1,500 in the next three years.

On the cards is another outsourcing centre in Mumbais Goregaon area with a capacity of 1,000 seats.

It currently has three centres in the country two in Mumbai and one in Gurgaon.

Liam Brown, president and CEO of Integreon in the US, said, We want to grow our business in India due to the tremendous growth potential. We are actively in talks with a few firms for inorganic growth, too, and will be able to provide details once things are finalised.

Integreons keenness to grow in India is understandable given that the country accounts for almost 60 percent of its sales.

Analysts said Integreon has to grow inorganically to consolidate its expertise in the areas of KPO and legal process outsourcing LPO, and tap the sectors and customers to a greater extent. India is a preferred destination for LPO because of the huge difference in the wage rates here and those prevalent in the US and the UK.

Earlier, in July 2005, Integreon had acquired Brahmy Solutions, a UKbased, highend analytics company. It also acquired a part of the LPO business of New Yorkbased BPO major Bowne, which provides financial publishing that year. In April 2003, Integreon acquired Contentscape, a company specialising in web content design and development.

Source : offshoringtimes.com