American-Made Customer Care
In the land of the free and the brave, a country where there is an average of 634,000 people who immigrate to the United States each year, some of who are looking for work opportunities, it is curious why American companies take work offshore. This is a disservice to companies, customers and the U.S. alike. It is also an ineffectual way to budget costs, despite what has been previously thought.
Historically, organizations saw an allure in offshoring manufacturing and/or contact center operations for several reasons1:
1. Cost efficiency
2. Labor arbitrage
3. Quality offshore outsourcers
While on the surface these motives drove companies to what seemed like a logical decision, with further scrutiny of offshoring came the idea that it was not the best option. In fact, it is far from it. Outside of the easily identifiable factors—political instability, culture and language barriers, security risks, and loss of control—offshoring has underlying, disconcerting qualities for business operations.
Steep Learning Curve
With an integral portion of a company’s operations overseas, organizations are creating disconnects between the manufacturing and development units. This in turn creates a competitive disadvantage whereby new developments in operations are not communicated to offshore workers for weeks at a time. Beyond the lags in communication are high turnover rates in foreign countries, and the lack of standardized learning and development centers inside these facilities2.
The fact is this: offshoring operations are not cost efficient3. There are costs associated with:
· Executives continuously travelling to offshore facilities
· High turnover rates and bringing in new workers
· Translation barriers
· Managing an offshore contract
· Ramping up
· Transition periods
· Cultural Costs
The lack of cultural and language commonalities manifests in customers as negative sentiment. The inability to solve challenges and/or waiting an extended period of time to receive a product strains the customer experience. As a result, customers look for alternatives to your product or service to complete the job. Customer turnover is also costly. Ian Kingwill writes in What is the Cost of Customer Acquisition vs Customer Retention? that, “5% of a company’s business comes from existing customers, and it costs five times as much to attract a new customer than to keep an existing one satisfied4.”
Companies That Got It Right
Born locally, raised locally. That’s the new motto. While there are companies that continue to offshore, there are also businesses—big and small—that understand the value of on shoring and promoting job growth at home.
· Verizon – Choosing to bring its service operations stateside, the telecom giant has “consolidated 1,500 finance operations staff into two U.S. service centers over the past two years5.”
· Farmers & Foragers – Similar to Chipotle’s “farm to table” mentality, Farmers and Foragers, a Vermont-based, flourishing food truck company created a “farm-to-truck” business model, sourcing all of its food and products locally, helping maintain jobs in the United States.
Choosing to keep your customer service stateside does not have to break the bank, nor do you need to build an expensive call center to reap the benefits of the American workforce. Customer satisfaction means retaining customers, which, as always, means a better bottom line.
1. Chris Previtt. “Shortage of Skilled Workers Primary Reason for Offshoring Jobs.” Duke University. Accessed on July 7, 2015. https://today.duke.edu/2011/01/offshoring.html
2. Thomas Roemer. “Why it’s Time to Bring Manufacturing Back Home to the U.S.” Forbes. February 2, 2015. http://www.forbes.com/sites/forbesleadershipforum/2015/02/02/why-its-time-to-bring-manufacturing-back-home-to-the-u-s/
3. Stephanie Overby. “The Hidden Costs of Offshore Outsourcing.” CIO Magazine. Accessed on July 9, 2015. http://www.cio.com/article/2442089/offshoring/the-hidden-costs-of-offshore-outsourcing.html
4. Ian Kingwill. “What is the Cost of Customer Acquisition vs Customer Retention?” LinkedIn Publishing. March 3, 2015. https://www.linkedin.com/pulse/what-cost-customer-acquisition-vs-retention-ian-kingwill
5. Nathan Eddy. “U.S. Cities Look More Attractive Than Offshoring, Study Finds” http://www.eweek.com/small-business/u.s.-cities-look-more-attractive-than-offshoring.html