Outsourcing

CIO Jury: Companies fear offshoring customer backlash

Brand and perception feature high in offshoring decisions...
Whether the talk of consumer backlash against organisations who offshore is more hype than reality it is now an important factor in the overall business case, according to silicon.com's CIO Jury.

Recent research has suggested a consumer backlash could hit firms in the pocket if people switch their custom, so we asked our pool of CIOs if this threat now figures in the overall business equation for offshoring.

In an overwhelming result, 11 of the CIO Jury said it does, with only one dismissing it as a passing phase.

Neil Hammond is IT director at British Sugar and was formerly IT operations director at Thomas Cook when it successfully outsourced some IT projects to India in the late 1990s. He warned: "If service is the main driver then offshoring may not be the answer. If it's cost then it probably will be. The business needs to take a view on what is most important."

The threat of a customer backlash is focused primarily on financial services at the moment and this is not lost on Kevin Lloyd, CTO at Barclays. He said what is sourced offshore, and how it is done in terms of brand and stakeholder reputation, is "hugely important".

Graham Benson, information services director and CIO at Screwfix Direct, said that while offshoring can deliver the process side of call centres it does not effectively deliver the relationship element. "It is not as 'personal' to the offshore contact centre agent as it would, or certainly should be, to a salaried employee."

Both Colin Cobain, IT director at Tesco, and Margaret Smith, director of business information systems at Legal & General, said customer reaction to offshoring is one of a range of factors that always has been considered.

Ted Woodhouse, IT director at Leeds Teaching Hospitals NHS Trust, said customer perceptions matter more than reality when it comes to offshoring. Kevin Fitzpatrick, CTO at Manpower, agreed. "The execution of the transition should be handled very sensitively both to the employees and customers impacted. Doing this well could turn a potentially negative reaction into a positive perception," Fitzpatrick said.

Although Graham Yellowley, director of technology at Tokyo-Mitsubishi bank, said the customer backlash is now a factor, he said it will drop in intensity quite quickly. "The rush to move to offshore centres has given rise to a better understanding of what this provides in the way of 'customer experience' via 'customer touchpoints'," he said, "Companies are now starting to redevelop their approach to offshoring to provide a better customer experience."

The sole voice against the customer backlash theory was JP Rangaswami, global CIO at investment bank Dresdner Kleinwort Wasserstein. "Such backlash is normal and predictable when wage or location arbitrage models are used to defend such decisions, as opposed to war-for-talent models," he said. "What is being challenged from a political and emotional viewpoint is the decision and execution process leading to offshoring, rather than the strategic direction."

Today's CIO Jury was...

Paul Allen, head of IT, Comdirect
Graham Benson, information services director and CIO, Screwfix Direct
Colin Cobain, IT director, Tesco
Kevin Fitzpatrick, CTO, Manpower
Neil Hammond, IT director, British Sugar
Kevin Lloyd, CTO, Barclays
Phil Pavitt, CIO, NTL
JP Rangaswami, Global CIO, Dresdner Kleinwort Wasserstein
Margaret Smith, director of business information systems at Legal & General
Pete Smith, director of IT and telecoms, Inmarsat
Ted Woodhouse, IT director, Leeds Teaching Hospitals NHS Trust
Graham Yellowley, director of technology, Tokyo-Mitsubishi

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