Offshoring: A Failed Experiment in CX? Time To Do the Math


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A friend of mine works for an offshore outsourcing company and recently said to me that he thought that offshoring of customer care/support was a failed experiment. His comment came just after I had a frustrating offshore experience of my own with my bank.

I was looking at my banking activity online and noticed that one of my children’s accounts had been charged a fee incorrectly. At that moment, I was filled with dread. I had used web chat for help from my bank before, as well as dialed in to their help line. I have been connected to offshore customer care centers in countries such as India, the Philippines, and Guatemala.

The difference between US and inexpensive “off-shored” customer service is obvious. Yes, I can tell on chat if someone is not US-based. Language use is often inappropriate and outside of US norms. Differences in language make receiving help complicated and frustrating.

I have often asked to confirm where the CX support person is based both on the phone and online. I always find it interesting that customer service representatives introduce themselves with common (or even outdated) American names. “Hi, this is Henry, or Fred, or Patricia.” Yeah right!  To me, these obviously fake names reek of the company trying to fool me.

Invariably, when I am “helped” by one of these offshore agents, it takes much longer to resolve my problem than it would if I were helped by someone who spoke my language better and thus could understand my question better. Offshore representatives often don’t understand what I am saying and don’t understand customer expectations. I end up needing to make multiple contacts and/or the issue does not get resolved to my satisfaction.

Instead of subjecting myself again to the offshore support to get the help I needed, I called the branch and spoke to the personal banker that I have worked with to open my accounts. The end result of the experience, though, was my realization that I need to find a new bank. If I dread trying to get support, I’m in the wrong place.

Back to my friend’s comment about offshoring of customer support being a failed experiment. Offshoring is not new, and it is being implemented by big, sophisticated companies. Have they not weighed the costs and benefits of offshoring CX?  I am sure they have. However, I believe that they have not gotten the equation right. I think they have omitted a number of costs.

At a time when almost all companies are saying that they want to differentiate on the experience of their customers, we should all understand that our brand and perceptions of it are heavily shaped by the experience of our customers. So, I would challenge senior executives to consider some additional costs that may stem from their CX offshoring decisions:

  1. Lost customers
  2. Less positive advocacy
  3. More negative advocacy
  4. Diminished impact of advertising spend
  5. Missed opportunities for relationship expansion
  6. Use of higher-cost channels as substitutes
  7. Volume of escalations

I’m sure there are even more costs or unintended consequences.

The math of customer service offshoring is not super hard to get started. While it takes some work on the part of companies to gather appropriate business data, data scientists can bring together company business data with CX measurement data of different types. These financial linkage efforts can be complex or simple and straightforward, depending on the company’s situation and objectives.

The issue of crossing silos is often one of the biggest challenges for companies in providing an excellent customer experience. Operations teams need to share data with the CX team, and vice versa. Companies need to realize that in a world where companies are differentiating on the customer experience, the core asset of the company is its customers. They need to focus on providing an exceptional customer experience, and weigh the costs of making decisions considering only siloed financial data. Many companies still have a ways to go to organize around their customers, despite the lip service paid.

The value of customer experience needs to become a center-of-the-plate item for Senior Management. The value that customers return to any company will be in direct proportion to the value they feel they get from using its products and services.

Is offshoring of CX a failed experiment? Do reduced costs from offshored customer service compensate for the risk of decreasing customer satisfaction and loyalty? I have my suspicions, but I can’t speak for all situations. My recommendation is to better identify the components of the equation and then do the math.

Republished with author's permission from original post.

Michael Allenson
Michael is Founder of CXDriven. Formerly he was Principal CX Transformation Consultant at MaritzCX where he led a global team that consulted with clients on how to better leverage their customer experience management programs to drive business success. A frequent writer and presenter, Michael is passionate about helping companies leverage customer intelligence to take action that creates lasting customer relationships and sustainable improvements in growth and profitability. Over a 20+ year career, he has consulted with numerous Fortune 500 companies and their leadership teams on how to uncover superior insights and turn them into action. Prior to his role at MaritzCX, Michael was a Senior Consultant for Maritz Research, Technomic, Diamond Management and Technology Consultants and Leo J. Shapiro and Associates.


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