The customer value is central. Lessons on Backsourcing.
In recent years, more and more companies are returning their outsourced services to their country of origin. The often cost-driven outsourcing projects turned out to be much less successful than previously hoped.
The outsourcing processes that started in the 1980s, with the aim of saving costs and focusing on the core business, are all being rolled back. American companies in particular are massively reclaiming their outsourced services from Asia and Africa. This mainly concerns services such as call centers and IT outsourcing, but partly also production activities.
One of the reasons companies are backsourcing is the widening difference in salaries. With the economic growth of the Asian tigers, the level of prosperity and salary level is also increasing. Then other cost aspects, such as efficiency, will play a greater role in the total trade-off. The call and development centers in Africa and Asia often appear to be inefficient and it proves difficult to raise this to a higher level. This is based on the nature of the product or service. Explaining health insurance policies is already difficult for Dutch employees. For someone from India it is completely incomprehensible, because they are completely unfamiliar with these kinds of services from their own society. As a result, many mistakes are made, the customer is not properly informed, so that a lot of rework takes place in the entire process.
Another aspect is the annoyance with customers when they get on the phone with employees who, because of their accent, are difficult to understand. In America, many customers complain about the difficult-to-understand English-Indian accent of call-center employees. Image damage and declining customers are increasingly troubling companies.
Customers who are helped by Dutch employees feel taken more seriously and the handling of complaints is faster and more error-free than with outsourcing. As a result, fewer call center employees are required, making the cost aspect virtually negligible.
The backsourcing wave clearly underlines that the position between company and customer has changed significantly in a few decades. Previously, the cost aspect was a decisive factor in outsourcing. Nowadays, the customer is more demanding when it comes to the soft issues such as customer focus and customer friendliness.
Another point is that outsourcing processes are often based on too rudimentary decision grounds. Looking purely at the total wage costs, does not show which other things play under the ‘hood’, which do have a significant influence on the overall performance of the organization. A call center can be cheaper per FTE, but if due to a lack of knowledge and expertise, much more FTE is required, you will eventually buy a cat in a bag.
It has not escaped little notice that the customer has become more critical and demanding. However, there are still many companies that overweight the cost aspect and are therefore in trouble. They are confronted with increasing customer dissatisfaction, and are firmly confronted with it via social media. The result is significant image damage and customers running away.
Companies should also become increasingly aware of their position within society. The days when companies operated as an “independent” entity in society are now over. As an organization, you are not only judged on the quality of your product or service, or your social media activities. The critical customer is increasingly looking at what your organization means for society: Is your product sustainable, does the income of your organization relate to the social value that is assigned to it, do you conduct a transparent and social policy and how is your organization and salary structure.
The time of products and services has definitely come to an end due to digitization and social media. Citizens take their society to your organization and your organization is inextricably linked to that society. Society as a stakeholder has claimed its place on your balance score card.