IT Policies

Outsourcing, good and bad.


In all walks of life, services are being sold out to private contractors, IT support is outsourced, and customer service is taken out of the country on a regular basis and taken on by call centres in parts of the world where they have probably never seen the products they support nor do they understand the culture of the people who use them.

Our local council outsourced its refuse collection service in a bid to save money. I am bemused how a costly service can be put out to tender to an organisation whose primary role is to make money. I can't see how they can offer a good standard of service for less than the local council can and make money at the same time. IT support that is outsourced becomes just another job for the company taking on the role. They don't have the same level of involvement that a primary supporter would have.

In British National Health hospitals cleaning services have been outsourced to private contractors. In order to make money these companies have to set near impossible work schedules and pay rock bottom wages, as a result the work is often shoddy.

When a company contracts out their help desk support, the first-line first-time fix becomes a thing of the past.

Help desks are often reduced to the level of call takers; the people work from scripts and seldom if ever resolve an issue on the first call. To me, the prime reason for help desks is to get people working again as quickly as possible, in order to keep people productive. The help desk shields the more technical departments from constant interruptions so that they can get things done.

They are also a filter, keeping the trivial and easy to answer questions away from the other departments. I've said before that when I worked the helpdesk we had a first call resolution rate of over 95%. We did the password resets every Monday morning, for those people who had hurriedly changed theirs as they left the building on Friday afternoon, then promptly forgotten them.

We collected all the messages about network problems and passed just one call to the network team, then fended off further questions. Now it seems that every call is logged and passed through so that the network team has to fix the fault then spend the rest of the day closing off all the other tickets, not a great use of anybody’s time.

Yes, outsourcing can save money at a superficial level, but I don't believe that it is an efficient way of solving problems and the hidden costs should be more than enough to persuade the powers that be that they should seriously consider going back to the old ways.

21 comments
Stickymedia
Stickymedia

Outsourcing is both bad and good. Bad if you get the services at a high cost but delivers non-quality output. It is good if the services of the company will cost very little but deliver you the best services at the end of the month!

blarman
blarman

Having worked as an outside contractor, here's my two cents: the ones doing the work have to have a personal interest in doing it right. Every layer between the tech and the customer acts as a barrier - whether it is cultural, managerial, language, etc. I've seen internal IT staff that put up their own roadblocks, and I've seen outsourced help try to overcome obstacles. The best in my opinion for service is an internal staff simply because it removes many of the bureaucratic obstacles that get put in place when you outsource and that never show up on the cost comparison even though they should. A lot of the decision to outsource comes down to hard costs (payroll) vs soft costs (customer satisfaction, service, first-call resolution, etc.). Those who fail to quantify the soft costs usually end up justifying the outsourcing out of their own failure.

reisen55
reisen55

Here is one for the outsourcing books. American LeFrance has declared Chapter 11 bankruptcy and their papers pointed fingers AT IBM and the OUTSOURCED EDP SYSTEM that never worked from the start, and as a result financial data and inventory data were totally scrambled beyond repair. On another continent far far away: IBM has let 700 Indian workers go for providing substandard work. And guess what? The 700 workers DON'T LIKE BEING FIRED!!!! My heart bleeds not.

Tenagra71
Tenagra71

I think we've all had our outsourcing issues. I love where I work now, but in the past, outsourcing to U.S. companies still caused issues. Granted, you have to have vendor partners to get things done, but a simple task such as outsourcing inventory to a parts warehouse went bad in 3 months. it's a tough deal to get right even at home. As for one experience I had, I was just trying to get an RMA on an HP printer that was DOA. Nothing against our friends "over there", but when I cannot understand the person and we result to spelling words, that is tough. But when you have to have them tell you a word that starts with one of the letters in the initial word they were trying to spell because you can't understand the way he pronounces the letter "G", that was brutal. Took 45 minutes to get an RMA done. NO exaggeration. Again, no offense to our fine friends around the planet (many speak better "proper" English than I do), but I prefer to pay $20 more for my printer and get my support from some guy in Texas (or wherever) who actually works for HP. And then there's that whole script thing. That's global...

reisen55
reisen55

Aon Group outsourced to CSC in 8/2004. Before that, floor level IT support was responsive (users just called US to repair issues and solutions provided within 1-2 hours on most problems). Then came CHEAPER, FASTER, BETTER - JUST CALL BANGALORE, HAVE YOUR WINDOWS PROBLEM FIXED. Result: 140 Floor and service technicians fired. 30 days to get a new computer 90 days to get a new email account 200 servers infected by a worm. Email and server line drop all of the time. ***** Continuum Health Partners outsourced to FCG in 2005. Hospital network, patients LIVES are at stake. Result: Porn, malware, virus infest ever system. Ghosting machines does not help. Server area mismanaged horribly. Data tapes scattered about. 30 Stolen computers out of St. Lukes Hospital. FCG fudged inventory to hide that. And everyone always says it was better before outsourcing came in.

h1t3ch
h1t3ch

I believe that because of companies outsourcing all their tech support, sooner or later Americans will get tired of dealing with language issues, computer incompetence and other related issues that being an IT consultant will be the next boom in our industry.

manish.choudhury
manish.choudhury

I work as an outsourced employee for a American Multinational Corporation. As an outsourced employee - process is everything - innovative thinking is discouraged. It is more important to follow the process - creativity is taboo. I keep breaking the rules and I manage to get things done - but I wonder how many people would choose the hard way. It's easier just to follow the rules and toe the line. The next time you interact with an outsourced employee - probably over the telephone - just remember - that person is just following a rulebook - he or she doesn't have much of a choice. It's not going to matter if these jobs are in the US or in India - the scenario is going to be the same - just follow the rules - read out of a script - follow the process. I think the mindset needs to change - encourage innovation, creativity and initiative. Don???t hide behind a rulebook and expect brilliance.

g0dFather
g0dFather

People need decent jobs to be able to afford the product, but they can't get them if they are all being sent overseas. How does Microsoft, for instance, expect people to be able to afford an Xbox 360 with all the trimmings when they're supporting a family on an $8-$12 per hour wage? Or even worse, with no job at all? How much longer do they think America can go on this way?

Canuckster
Canuckster

When I worked help desk for a major manufacturer, it was mandatory (3 times failed in 1 month meant dismissal) that I offer the caller an extended warranty or product trade-up. Literally I had a caller phone in to say that he was in his car going back to the store to return the piece of junk product he had purchased and wanted us to know that he would never do business with us again and I had to suggest that an extended warranty was an appropriate course of action for him. It was more important to the company that I make the warranty offer than I mollify the retail customer or correct the issue. So when I look at off-shore call centers, yes they are reading from a script and yes they may not be experienced with the product, but that is what the company wants you to have as an experience. They don't especially care if the issue is fixed or even if the customer is happy, they want to make a profit by reducing support costs, not have you call back a second time and sell you on something else. If the help desk happens to resolve the issue then that's a bonus for everyone concerned, except maybe the agent if he forgot to offer you an extended warranty.

boxfiddler
boxfiddler

is a great way to attract attention.

reisen55
reisen55

Executives at Aon continued to employ me as an outside consultant because CSC provided such poor service. The revenge money was sweet indeed.

bfpower
bfpower

That's the two word answer. They make sure people want the Xbox 360, then let those people charge it up. Being able to pay isn't an issue to them - once again, money is the bottom line for the company. I am very positive about people making something of themselves, especially those from countries other than my own or people from low-income childhoods (such as myself). However, I do fear from time to time that the our CEO's desire to save money will overcome the desire to have good customer service (which, I believe, can only be offered by fluent speakers). I have yet to have a good experience with offshore CS/TS, though I really think that language is the main barrier. When someone doesn't know the language enough to understand the problem, they cannot provide customer service. The end user must FEEL that the service provider understands their problem. But as it was said, customer service isn't the issue - cutting costs is.

Canuckster
Canuckster

America is a market to them. Once it is no longer profitable they will be selling in China and India to make their profits. What do they care about "America" except as a marketplace? Who wants to manufacture in "america" when they can do it cheaper elsewhere? Can't entirely blame them though. They do have to satisfy the investors who are their ultimate customers. Think about it, when you invest your retirement income, do you look for a profitable company or for a weak performer? Do you care if your printer is made in "america" or off-shore? Did you ask where the support center was before you bought your PC?

sean.mcnulty
sean.mcnulty

When an outsourcing company comes in to make a bid they are always going to attempt an under bid to convince the non-technical management team to make a decision in their favor. They do this knowing that there is no way they can profit from the base services. Once they have their foot in the door they leverage the "Time and Materials" clause of the contract and begin to add extravigant fees for any request they can. This is why it's so important to know your services and ensure that management knows them as well. You need to know the actual per Helpdesk call cost. Once you have that number you will be able to compare it to vendors in your area that might try to win the business. If you do this proactively then you'll be prepared when the big bad outsourcing wolf starts huffing and puffing. Motorola did not know their costs or all the services involved in handling IT problems and they got outsourced a few years ago. They wrote a contract that did not specify all the services required and the outsource company took them to the cleaners on "Time and Materials". Needless to say, Motorola has moved back to an "in house" IT staff at many of it's locations and learned a very painfull lesson about outsourcing and knowing their services.

ramnet
ramnet

I see very few benefits from outsourcing. Companies who do it regret it fairly quickly thereafter , as they fail to recognize they lose control over their IT environs and are paralyzed by contract inertia which neither saves cost or time and merely gives a 3rd party a job instead of a home grown specialist with a desire to succeed in the country in which they were born. Its extremely sad this business model is flavor of the month .. all we can do is reject the products and services of these parasitic companies. Ken

Bee Jay
Bee Jay

I recently read an article that stated, On average a CEO is paid (at the low end) nearly 800 times what the lowest paid worker in his/her organization earns. Outsourcing and layoffs are not about saving money and showing great performance to the share holders. It's about making the CEO and the shareholders insanely wealthy while the vast majority of our country slides into the sewer. There is no such thing as corporate integrity in this country anymore, just the fast buck regardless of the consequences. No one retires from the company that first hired them, people are lucky to get five years in before they are recycled for a cheaper version of themselves and have to start all over again. It's absurd and it's why I choose to work for a small company who's leadership I respect.

RDSLO
RDSLO

Public Corporations give their customers what they want. If they don't, their stock price goes down and the C level people don't get their bonuses for the quarter. "Customers", the people we sell to or, in house, want cheap. Cheap will come with a price-a lack reliability and support. If we, as a nation, do not figure that out ASAP, we will find ourselves handling the outsourcing...for the Chinese!

Jeff Dray
Jeff Dray

My experiences aren't found in the USA but in good old Blighty.

soulmistress
soulmistress

Sure did help our economy as a third world country but every college graduate works in a call center now, living an abnormal life for we're always awake at night. Yeah, we're receving a higher salary..but our taxes are eating almost half of what we're suppose to get...( more money for corrupt officials to get)I can't be working on a graveyard shift for the rest of my life just because I needed a salary that can sustain my average lifestyle. Regardless of my position, my Degree now is worthless..I'm stuck in this industry that was suppose to make it easier for us to earn money...and this is all I'll be if I want to keep earning an acceptable wage, keep working on a call center..I feel these business people had totally destroyed the balance in the world economy. Feels like working on a modern sweat shop... there aren't really a lot of choices these days...specially for those who just want to make a decent living in a third world country.

reisen55
reisen55

The text of the replies on this one are all on the mark. American Management can perform only THE MOST BASIC ADDITION AND SUBTRACTION metrics when faced with an aggressive outsourcing agreement. Get rid of those overpaid (in US DOLLARS with US COST OF LIVING) employees you have in house. Our superb technical staff in Bangalore (at wages 10% of IN HOUSE STAFF because of LOWER COST OF LIVING in India) can do the SAME JOB for cheaper, faster, better and with NO HEALTH CARE COSTS TOO. 1. The "same" job never happens, quality declines across the board. Productivity loss but that's hard to calculate. 2. Language difficulties are legion. Productivity loss but also hard to calculate. 3. Employee loyalty goes to hell. 4. Procedures and rules replace innovative ideas and thought. Doing something by the book prevails. 5. Outsourcing firms do not have the same vested interests of the CLIENT at hand, they have their own vested interests as an independent company. Outsourcing NEVER effects shareholder value even though it is long thought that it does. It plays well in meetings. If they can get the powerpoint presentation to run on the server because the network drive is no longer mapped. Helpdesk follow scripts, not known issues with an individual network. Being half a world away is worse. Experienced professionals, in-house, are inevitably replaced with kids. One replacement in our department at Aon had a previous career as a PIZZA DELIVERY BOY. NO KIDDING. TRUE.

adrianfoot
adrianfoot

I couldn't agree more Bee, and it is all not good for the shareholders, rich and powerfull at the top either but they can't see it yet. The real price of outsourcing will come when we realise that we have given away the manufacturing blue prints of the West for free, or very little. Somebody with only accountancy data in their head has indeed made a few pennies in a few seconds .. after that their position too will be on the line. Some day soon they will have to pay the real price of outsourcing, and it will not be as good a deal as they thought: penny wise.. pound foolish.