Offshore outsourcing is a rapidly
growing practice amidst the fuss about it. Success stories in some companies
who have tried offshore outsourcing have revolutionized other companies to take
a stroke of luck at outsourcing. As in gambling, not everyone is guaranteed to
win the lottery therefore managers are urged to remain neutral and not count on
the success of other companies but to consider that offshore outsourcing might
also have grave outcomes. When offshore
outsourcing for instance fails, effects could tarnish brand image and even
intellectual property (Reilly, 1997).
American Banker, Gallup
(2004) conducted a survey in American and British companies. The survey
revealed that 71% of customers knew about outsourcing to lower cost countries
and many were reluctant in dealing with call centers from foreign countries
with calls about matters quality (Mintel, 2007). These contrasting successes
versus failure experiences shows that shrewd managerial capabilities are
required to ensure success in offshoring because not all firms have the
resources or intellectual capacity of offshore outsourcing. This paper focuses
on the advantages and disadvantages associated with offshore outsourcing.
One disadvantage of offshore outsourcing is customer ethnocentric
attitudes. This is when customers have an inclination towards domestic services
or products as opposed to foreign goods due to the feeling of patriotism
towards one’s own country. Customer ethnocentricity influences and makes sales
of some foreign products difficult. Other than influence sales, ethnocentricity
has an effect on the customers and employees’ viewpoints during multi-cultural
concurrences (Sharma et al., 2008). For most customers especially, the company,
nationality is considered rather than the services they offer. This therefore
means that not all companies can be successful in offshoring in all locations.
Customers especially those who score high in conservatism and patriotism are
more unlikely to have positive views on foreign products. Because of ethnocentricity,
customers rating of the service provided will be exaggerated and interpreted by
mangers to show dissatisfaction.
Another disadvantage is negative perception of service
quality. With call centers adopting offshore outsourcing, service providers
communicate with customers and both of them are of different cultures and
backgrounds. The way the cultures of most consumers are set up, it is difficult
for service providers to set up centers globally. Customers may give negative evaluation of
quality provided by people with unfamiliar cultural setup (Sharma, 2012). Moreover, research conducted in the UK and US
reveal that most customers are reluctant to speak to agents in call centers
that are abroad because they fear their data could be mishandled or prone to cyber-attacks.
That is in addition to the fact that most call service centers do not respond
quickly to customer calls therefore their problems may not be arrested as
compared to local agents.
On the same issue of service quality perception, there may
be communication barrier more so due to different accents hence comprehension
is hindered. This means that consumers and service providers cannot have decent
conversations. To provide quality service, the primary agent is effective
communications. When consumers realize that service providers lack in these
areas they will conclude and express their dissatisfaction with the quality of
service. Woe unto the service provider agents if the customer generally does
not like the idea of offshore outsourcing.
Thirdly, offshore outsourcing could, in a not so positive
way, affect the brand image. The customers’ evaluation of service provided
directly relates to the brand image (Steenkamp, 1990). This is also the case in
most companies dealing with hospitality, tourism and culinary art. Just in same
light, the opposite is relatable; customer satisfaction sugarcoats the brand
image (Mayer et al., 2003). In relation to this, ethnocentric customers and
customers with pessimistic attitudes towards offshore outsourcing, give a bad
image about the brand in question. It is therefore important for companies to
consider these three factors before they have to try outsourcing.
Shifting on the other side of the coin, it would be unwise
to blindside the fact that offshore outsourcing can offer benefits as well. To
begin with, offshore outsourcing in upscale line of gourmet snack foods can
increase availability of skilled labor at reduced costs. This is important
because this is a competitive industry whose strategy would be to offer
products which are unique and inexpensive. The ability to choose from a more
skilled workforce gives room for innovative ideas to spring up and this keeps
the company’s competition very alive. Therefore, it would be shrewd to set eyes
on offshore countries if you are looking for cut cost and a wide range of
talent to choose from.
Secondly, offshore outsourcing can offer the benefit of
universities especially culinary art schools and entrepreneurial schools can be
beneficial for such a company as this. Technical colleges and universities in
host countries can have scholars in related fields graduating and who can offer
services different to what is available locally. In such a field with
competition, it is essential that you have skilled professionals and a staff
that can handle entrepreneurial tasks especially in terms of sales of snack
foods and marketing. Other than providing professional you can hire, these
universities can offer training for the offshore service providers whenever
necessary. Depending on the place you intend on setting offshore call service,
this is very important aspect to consider.
Thirdly, offshore outsourcing
ensures a steady flow of operation. Other than providing quality services, a
company must ensure that it does so in a very short time. to ensure steady flow
of profits, the company needs to utilize the varying time zones to save on time
used to produce gourmets. Such a strategy is effective in ensuring efficiency
and it also keeps company agents on toes because of the necessary competition
within the company. When such a strategy is involved in outsourcing of snack
foods, profit margins will rise promisingly.
Most companies nowadays utilize the different time zones to ensure all round
production of goods especially if local call centers temporarily close especially
during night hours.
conclusion, it is important to note that whatever determines a company’s
success or failure in offshore outsourcing is the management. Outsourcing is
profitable yet risky venture and a manger has to be sober and shrewd in pointing
out key factors that could spring them to success. It is however important to
note that the key areas to consider before you get to offshore outsourcing are:
customer ethnocentricity, company’s competition in the location, availability
of skilled labor and assurance that customers will receive efficient services
to build trust.
Offshore outsourcing could turn out
nasty and mostly the brand image is jeopardized. Dell Computers for example had
to return its call center that was in India back to North America as a result
of rise in complaints from customers that Indian service agents relied on
scripted responses and there was lack of skilled computer technicians to solve
technical faults. One factor that contributed to this was that Indian call centers
were of a lower class, since they were perceived to handle tiny issues, as
compared to those in the UK who had to deal with complex issues.
Focusing on the success stories, Ford shifted a lot of its
computer-aided design and manufacturing, call center and application
programming units to locations in India. This operation helped to reduce cost
by close to $30 million per annum.