[10068]

Okay, here's what I see as the two main truths to business that relate to this phenomenon:

1) Cut costs = increased profit
2) Happy customers = more sales, less churn = increased profit.

Number 1 is pretty obvious. Paying someone in Malaysia, or wherever to take your Dell Tech Support calls for pennies on the dollars saves tones of money! In the U.S. they'd be paid about 10.00-14.00/hour to do the same thing (Yes, I do know that. I've worked many Call Centers)

Number 2, I think, is self-explanatory as well. If you provide a quality service, and support that service with quality customer service that makes the customer enjoy dealing with you as a company, or at the very least trust their decision to choose you -- then they will keep coming back and buying more. Or re-subscribing. Or whatever payment program applies to your product.

Hence the mentioning of churn -- I think it goes without saying that if you piss off your customers, they will go and do their business elsewhere. You don't need an MBA on your wall to know that it's much more expensive to gather new customers than it is to just keep current customers. I believe the figure is 10x? I may be wrong on that, however.


In any case, here's my question -- if everyone is pissed off by Customer Service and Tech Support being provided by some random country that doesn't speak English and haven't received proper training, then why are these companies still continuing this practice? Why is it financially viable?

 

[Kees]

Quote:

Originally Posted by Sduibek /img/forum/go_quote.gif Okay, here's what I see as the two main truths to business that relate to this phenomenon: 1) Cut costs = increased profit 2) Happy customers = more sales, less churn = increased profit. Number 1 is pretty obvious. Paying someone in Malaysia, or wherever to take your Dell Tech Support calls for pennies on the dollars saves tones of money! In the U.S. they'd be paid about 10.00-14.00/hour to do the same thing (Yes, I do know that. I've worked many Call Centers) Number 2, I think, is self-explanatory as well. If you provide a quality service, and support that service with quality customer service that makes the customer enjoy dealing with you as a company, or at the very least trust their decision to choose you -- then they will keep coming back and buying more. Or re-subscribing. Or whatever payment program applies to your product. Hence the mentioning of churn -- I think it goes without saying that if you piss off your customers, they will go and do their business elsewhere. You don't need an MBA on your wall to know that it's much more expensive to gather new customers than it is to just keep current customers. I believe the figure is 10x? I may be wrong on that, however. In any case, here's my question -- if everyone is pissed off by Customer Service and Tech Support being provided by some random country that doesn't speak English and haven't received proper training, then why are these companies still continuing this practice? Why is it financially viable?

It is not financially viable. Certainly not on the longer run.
But companies are often forced by shareholders who want short term profit.

 

[breakfastchef]

The tide is beginning to turn as companies are realizing that customers are less satisfied with the out-of-country call center experience. Dell, for example, brought all small business phone support back to the US a year or so ago. As companies evaluate and measure the effectiveness of using offshore call centers versus profitability, many may bring some or all back home. In response, overseas call centers will be faced with training staff more thoroughly to stem the loss of business. Who knows how it will pan out over the next ten years.

 

[oicdn]

Wallets...a simple example cost somebody here in the US $11 to make. Using the SAME product and same quality printing/embossing/embroidery, I can get it made in the Philippines for $3 SHIPPED. That's a pretty substantial margin. It would be STUPID not to, especially when it's the SAME PRODUCT.

 

[Steggy]

It's why outsourcing is more popular in certain vocations that don't deal directly with customers. But it does piss me off when i need help and can barely understand the guy on the other line

 

[Casca]

Quote:

Originally Posted by oicdn /img/forum/go_quote.gif Wallets...a simple example cost somebody here in the US $11 to make. Using the SAME product and same quality printing/embossing/embroidery, I can get it made in the Philippines for $3 SHIPPED. That's a pretty substantial margin. It would be STUPID not to, especially when it's the SAME PRODUCT.

But what does that have to do with a non-native english speaker, speaking broken english to you in a barely understandable to not understandable at all manner? This is hardly the same product.

 

[devin_mm]

Quote:

Originally Posted by Casca /img/forum/go_quote.gif But what does that have to do with a non-native english speaker, speaking broken english to you in a barely understandable to not understandable at all manner? This is hardly the same product.

There are different types of outsourcing Steggy was referring to the outsourcing of product production not call centers.

 

[Casca]

Quote:

Originally Posted by devin_mm /img/forum/go_quote.gif There are different types of outsourcing Steggy was referring to the outsourcing of product production not call centers.

Yes, but this is what the post is about .....out sourcing of call centers.


Quote:

In any case, here's my question -- if everyone is pissed off by Customer Service and Tech Support being provided by some random country that doesn't speak English and haven't received proper training, then why are these companies still continuing this practice? Why is it financially viable?

Personally, when I call a tech support line, I don't use slangs or make small talk, so the person receiving the call doesn't neccessarily have to be an American. However, when I have to constantly ask the guy/gal to repeat themselves, when I get the general feeling that this person does not understand what I say..but plays it off, it does piss me off. If ther is a competing item with support that actually speaks my language natively and doesn't have me spending 10 minutes just trying to make them understand the simplest of terms, then I have no problems switching up to something else. If customer support leaves me with a bad taste in my mouth, I will find other options. If customer support leaves me feeling like I am in good hands, I will be a return customer. Of course the cost of the item also has to be somewhat competitive, but even if the company with the better support is the higher price, they will still get my bussiness over a lower bid company that pisses me off.

 

[saint.panda]

It works because call centers don't constitute the majority of outsourcing.

As for call centers, see Kees' post.

Edit: Also, most people are probably willing to sacrifice good support in exchange for a cheaper product. Depends on where the cost savings go.

 

[mbriant]

Lower costs are the main reason companies outsource. The financial savings go beyond simply hourly wages however. Benefits such as vacation pay, employment insurance, stat holidays, sick days, severence pay, overtime pay, medical, perfect working conditions (workplace safety laws for example) etc., also factor into the cost of an employee and unfortunately ( or fortunately depending how you look at it) these additional costs make outsourcing to a country with less benefits and lower safety standards, even more attractive. Combine this with lower real estate costs and lower corporate and municipal taxes in many foreign countries, and the financial savings get even bigger.

Another reason might be work ethic. Employees in some other countries are often less likely to take frivolous time off ( to go to a ball game, go hunting, fishing, golfing) , slack off during the day, be hungover at work, go on strike, or give their employer a general hard time for that matter. So basically, productivity is often better in "less liberal" corporate environments which again translates into financial gain.

The sad thing is that the gains workers in some countries ( U.S., Canada, most of Europe, etc.) have made in wages, benefits, holidays, and general working conditions, are pricing them out of the market in most industries.

Of course this isn't always the case, but never-the-less, it often is.

 

[gloco]

Personally, I despise Outsourcing since I'm in Technologies.

Dealing with departments that have been outsourced to India is an incredibly frustrating experience when the customers come back to me to complain regarding the lack of English-speaking skills on the part of the outsourced parties, typically in India.

Outsourcing might save money for shareholders, which is fine and dandy, but when it adversely impacts your employees ability to work it winds up costing more money to fix the problems. Kinda like slapping a band aid instead of in-housing when outsourcing doesn't work. I've seen it happen time and time again.

Lastly, as mbriant pointed out, outsourcing has effectively halted any gains made in the IT field in terms of salary and has scaled back the importance of being an IT professional (why bother hiring an American citizen for 80k, when I can ship in an Indian IT worker with similar training for less than half that salary). The field itself is overpopulated with every mom, dad and foreign worker seeking a IT position (I've seen it through first hand experience repeatedly). By paying this employee less than an American citizen, Corporations are effectively created a lower middle class. Imagine living on 40k in New York City...

As for work ethic...I disagee with mbriants assessment. I find American workers to be far more aggressive and willing to go the extra mile to get the job done, at least in my field.

As a side note: Worse off is the fact that the laptops we've been receiving lately have been of an inferior quality for several months now, machines built in China and Mexico. Again, costing more money to repair and ship defective machines and components back to the vendor.

 

[Cankin]

Quote:

Originally Posted by gloco /img/forum/go_quote.gif Personally, I despise Outsourcing since I'm in Technologies. Dealing with departments that have been outsourced to India is an incredibly frustrating experience when the customers come back to me to complain regarding the lack of English-speaking skills on the part of the outsourced parties, typically in India. Outsourcing might save money for shareholders, which is fine and dandy, but when it adversely impacts your employees ability to work it winds up costing more money to fix the problems. Kinda like slapping a band aid instead of in-housing when outsourcing doesn't work. I've seen it happen time and time again. Lastly, as mbriant pointed out, outsourcing has effectively halted any gains made in the IT field in terms of salary and has scaled back the importance of being an IT professional (why bother hiring an American citizen for 80k, when I can ship in an Indian IT worker with similar training for less than half that salary). The field itself is overpopulated with every mom, dad and foreign worker seeking a IT position (I've seen it through first hand experience repeatedly). By paying this employee less than an American citizen, Corporations are effectively created a lower middle class. Imagine living on 40k in New York City... As for work ethic...I disagee with mbriants assessment. I find American workers to be far more aggressive and willing to go the extra mile to get the job done, at least in my field. As a side note: Worse off is the fact that the laptops we've been receiving lately have been of an inferior quality for several months now, machines built in China and Mexico. Again, costing more money to repair and ship defective machines and components back to the vendor.

You've worked with extraordinary American workers.

 

[gloco]

Quote:

Originally Posted by Cankin /img/forum/go_quote.gif You've worked with extraordinary American workers.

I have. Some of these technicians are nuts, one guy routinely stays past midnight to stay ahead with his work. It's a pretty well-known fact that Americans work more and harder than their European counterparts.

Why Europeans Work Less Than Americans - Forbes.com

If you think Americans are "lazy" or take more "frivolous time off" look at Europeans who practically take off in droves during the summer months (remember the heat wave a few years back in Europe that killed thousands of elderly? The people were up in arms because so many doctors were on vacation during the summer where its expected for people to be off in large numbers). Meanwhile, we're slaving away in America...why do Americans often become city employees? Because that's one of the few employers left in this country that offer medical benefits, wage increments, PTO and retirement plans. Thanks to outsourcing; the few(er) get rich, the rest of us get the shaft.

 

[mbriant]

Quote:

It's a pretty well-known fact that Americans work more and harder than their European counterparts.

Perhaps, but I don't think there are many North American jobs being outsourced to Europe.

Not everyone measures quality of life solely by income level. I have a good friend who's a Master electrician and has for his entire career refused to work holidays or weekends ... turning down the chance to make double and sometimes triple time on his already high hourly wage .... because his family and free time is more important to him. I wasn't passing judgement by mentioning work ethic, just making a somewhat stereotypical observation which like your mention of European workers vs. American workers, I believe to be correct .... in many cases but not all.

Anyway, this thread has the potential to becoming insulting to someone, and/or political .... so let's not go there...me included.

 

[gloco]

Gotcha, I'm not looking to stir trouble, just to offer clarifications and sources that outsourcing is a bad thing when American jobs are being lost.

Look to Ireland for outsourced American jobs where many credit card companies have set up shop (as well as computer manufacturers). Remember that economic boom that started in Ireland in the 1990's?

Celtic Countries.com - Ireland's economic miracle: What is "The Celtic Tiger"?