Tuesday, March 22, 2005

Call centre outsourcing does not work, says Gartner

"Many customer service call centres that have been outsourced to third-party suppliers are under-performing", according to a new report by analyst firm Gartner.

Of the organisations that outsource their customer service and call centres - including the IT systems - 80% will fail to achieve their targets for costs savings.

In addition, 60% of organisations that outsource parts of their customer-facing processes over the next three years will see customers switch to rivals and find hidden costs that outweigh any potential savings they derive from outsourcing.

According to Gartner, successful outsourcing can achieve cost savings of between 25% to 30%. However, poorly managed outsourcing deals can reduce the quality of the customer experience, dilute the brand values of the company and fail to deliver cost savings.

Most companies fail to manage the customer service experience sufficiently and often lock the organisation into long-term outsourcing contracts without conducting appropriate pilot testing.

To ensure successful customer service outsourcing, Gartner recommends that companies create customer-facing processes. It said businesses should judge the supplier based on customer satisfaction or other quality metrics to measure and motivate outsourcers, rather than "operational metrics" such as the number of calls handled by the supplier.

Users should also not underestimate the management time required to make an outsourcing relationship or contract work. The analyst firm has predicted that the worldwide market for customer service outsourcing is set to grow from £4.4bn in 2004 to £6.4bn in 2007.

3 Comments:

Anonymous Tapan Mukerji said...

Gartner's comment is absolutely true for any outsourcing process par se.

The main question is to correctly evolve the customer facing model, since there is no generic model and it needs to come out of the company's culture and specifics of the project.

4:20 AM  
Blogger Bhumika Ghimire said...

Reminds me of the Dell experience.They had to cancel some of the customer calls outsourcing after all the complaints they received.
Companies need to remember that outsourcing is not a perfect solution to all the problems the comapany is facing in terms of customer statisfaction, sales volume, profit, operations and business expansion.

10:14 PM  
Blogger Sri said...

I agree with the Gartner comment but I am developing a system which is in the process which could change the outsourcing cost saving ratios.
It will take time. Also outsourcing is just in the stage of infancy. It will take time to reach the level of expectations which west is having.
But I can see India leading the outsourcing world in some years.

11:40 AM  

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