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Monday, March 07, 2005

Even though I have long believed that outsourcing is not always a bad thing, this article illustrates something I have also thought to be true:

Businesses looking to save money by outsourcing customer service functions are risking losing customers and paying even more for the privilege.

Although researchers from Gartner predict the market for outsourcing will grow from $8.4bn in 2004 to $12.2bn in 2007 they say 80 per cent of projects started to save money will fail to do so.

Besides poor management and high staff turnover (reasons mentioned in the article), I maintain that outsourcing to staff that do not understand the problem domain is a killer to any initiative. Thus, at my employer, all of the IT apps, business processes, and data analysis are done in-house. Menial tasks ranging from food vending to rudimentary machine maintenance to lawn care are vended out because such tasks are not business-critical. Thus, once companies figure out this fact (and once customers begin to reflect these values, they will), the trend toward outsourcing is bound to diminish, and some sort of equilibrium will be reached.


.: posted by Dave 3:26 PM

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