I recently saw a startling story on CBS' "60 Minutes." It was a piece about outsourcing, not manufacturing jobs, but service sector jobs. Companies such as Delta Airlines, IBM, Hewlett Packard and Dell Computer use India to answer customer and technical service questions.
According to the "60 Minutes" report, the average savings to companies who move customer and technical support service to India is 30 to 50% per year. Call center employees in India earn an average of $3,000 to $5,000 per year, at least five times less than their U.S. counterparts.
On the surface, there seems to be little problem with such outsourcing. A capitalist would argue that, in a truly global economy, wherever the best price can be found is the place to locate the business. But, before manufacturers and suppliers rush to relocate their support centers overseas, several issues must be considered.
What is the degree of technical difficulty of incoming calls? If your average customer service agent is handling calls about operating a consumer electronics device, it doesn't matter where that call is answered. Just as there are some low-end manufacturing jobs that can be done anywhere and it makes sense do them where it is cheapest, there are technical support questions that can be answered anywhere.
However, support that requires the analytical skill that only an engineer involved with the product's design or manufacture can answer can't be outsourced. Imagine a call about the measurement uncertainty contribution or calibration of a gage being handled by a technical support person 5,000 miles away from the company who makes and sells the gage. Imagine a call about the operation of a heart valve answered in a country where that level of engineering expertise doesn't exist. In such instances, the manufacturer needs to maintain control over its support service.
What type of information do you collect on your customer? "60 Minutes" pointed out how next year an estimated 200,000 U.S. income tax returns will be prepared in India. It unnerves me that confidential data, including incomes, social security numbers, etc., are being sent to a third-party company outside the United States. If the data you collect on customers doesn't include anything that can be construed as confidential information, outsourcing customer and technical service could prove viable. But, if you are collecting data on manufacturing or operating processes, details of product use, etc., be prepared to keep your support in-house. Your customer may trust you, but that might evaporate if the confidential information he shared with you during the proposal process or early period after the sale is now in the hand of a third-party with whom he has no relationship.
Your customers and shareholders may not object to outsourcing manufacturing operations, as long as quality and sales are not affected. Use the same degree of caution before turning your customer and technical support over to a third party, or you might be the one who is "outsourced."
What do you think of this trend to outsource customer and technical service? Let me know at email@example.com.