Does it depend on the industry? The company? The staff at the other end?

Is it working for the consumer???

Discuss (lights touchpaper and retires)

If the clients clearly state their service expectations of the outsourcer in the contract, measure it and apply sanctions when the standards are not met then the customer will benefit from outsourcing as innovation will be the driver to profit maximisation.

Clearly it is setting those expectations that is key to this. Unscrupulous outsourcers would exploit loopholes to maximise profit, it is incumbent on the client to make sure the contract signed dictates quality standards and other expectations.

Julian's hit the nail on the head.

All outsourcers want to turn a profit. That's OK: we're capitalists and everything has a commercial aspect (just as .. was telling me yesterday).

This is what can make or break an outsourced function.

Sometimes the outsourcer works hard to find efficiencies in the operation in order to increase margin. This is good for all involved.

Sometimes they cut corners - and this is very bad. The only way you can protect against this is by ensuring that the contract & SLA's are comprehensive.

Unfortunately this doesn't always happen. Sometimes the people who are dealing with the contracts don't know enough about what they're doing - or worse still it's left up to the outsourcer themselves.

The truth is that an internal call centre should be the cheapest and most efficient way to run the customer communication function, but this never proves to be the case.

Maintaining an in-house operation has hidden (well not really) long term costs. The biggest is Pensions, outsourcing reduces the impact on the client of this long term funding issue.

For the Government Civil Service pensions area major headache because us the punters have to underwrite Government pensions with our taxes. Outsourcing Government work not only sees private sector innovation and working practices reduce cost but it also starts to transition the pension issue into the private sector for new entrants which will have a positive impact long term on taxation.

I heard a presentation at a conference last year where an Outsourced IT company described how it changed the relationship with its clients. Previously it tried to negotiate hard on the contract and SLAs and would bill per problem. I.e. every time a client employee called with an IT problem the company would bill them. But that didn't encourage the Outsourced IT company to cut the number of problems because the more problems the more revenue. But the consequence was that because all they really did was mop up the problems without fixing the leak, the clients hated them, because their only contact with them was to complain.

So the Outsourced IT company decided to change the way it operated. It negotiated a fixed fee per employee with a new client, an airline, and it instituted a program of analysing demand and trying to get to the root cause of problems.

For example, they foudn that 25% of calls were coming from the ticketing desks of the airline who had constant problems with their ticket printers. If the printer stopped working, no tickets, delays, irrate airline customers, annoyed staff etc. So the Outsourced IT company spotted this because it analysed the calls coming in and the necessary fixes. It went round and at its own cost, replaced all the printers and trained the airline staff to clean and maintain them. The printer problem calls stopped almost immediately. The Outsourced IT company made more margin on its fixed fee because it took fewer calls and sent out fewer engineers. The airline saved money since it didn't have so many problems to call in for and its customers were happier since they were delayed less.

Everyone wins. But only because the Outsourced IT company took its eyes off contracts and SLAs and focused on delivering value to its customer.

Originall posted by Julian Dixon. If the clients clearly state their service expectations of the outsourcer in the contract, measure it and apply sanctions when the standards are not met then the customer will benefit from outsourcing as innovation will be the driver to profit maximisation.

Clearly it is setting those expectations that is key to this. Unscrupulous outsourcers would exploit loopholes to maximise profit, it is incumbent on the client to make sure the contract signed dictates quality standards and other expectations. End.

Julian, what you fail to recognise is that the outsourcer has to make the proposition financially attractive ahead of any commercial arrangements around KPI penalties!
As the commercial shcedules are constructed, any 'chancers' would be weeded out. If there were companies who employed this tactic they would soon b found out and the likelihood of them repeating this 'scam' would be very unlikely!

If you care to look at the company I work for you would know I work for a sizable outsourcer with contracts across the UK, Europe and USA.

No outsourcer would get anywhere unless the financial case was advantageous to both parties.

My point was that some can use the terms of the contract to exploit the commercial element and improve profit at the expense of service provided. The challenge therefore is on the client to ensure the contract is watertight, clearly stating expected service and performance standards.

Your point here "If you care to look at the company I work for you would know I work for a sizable outsourcer with contracts across the UK, Europe and USA.

No outsourcer would get anywhere unless the financial case was advantageous to both parties.

My point was that some can use the terms of the contract to exploit the commercial element and improve profit at the expense of service provided. The challenge therefore is on the client to ensure the contract is watertight, clearly stating expected service and performance standards." Is exactly the point I made when responded to you!

If you care to look at the company I work for you would know I work for a sizable outsourcer with contracts across the UK, Europe and USA

It might help the discussion if you told us who you worked for?

would be my guess...

What makes you say that Justin?

Vernon was quoting back my own post, we dont know who he works for, I work for Vertex.

Maybe we are talking the same line, but I was reacting to the "what you fail to realise" line, was a red rag to the bull type comment.

yes....yes we do....

I'll get to it... give me a few days until I can find some time to spend looking into adding a quote feature.

John

Thanks John,

you do that and ill even do that membership thingy.

Whilst you're waiting for John to complete the quote function/feature (and therefore waiting to do the membership "thing") you could do this instead...

Tell your friends about CCV using this page here and you'll help the community grow:
Invite page

We're keeping track of how many people join: perhaps we'll make it into a competition like the Celebdaq...

I see lots of reference to contracts and the business's perspective but does no one have any data on customers? That was really the general thrust of my question and I am concerned that responses thusfar have not addressed this point - the newspapers seem to appreciate this factor more than we do!

Sorry to use that word again, but it depends on the type of 'contract'.

For some outsourced work we are just an extension or overflow to an existing in house operation, the quality of service is therefore unlikely to be any better than that provided in house but certainly no lower. It could be argued if the client tried to contain the additional workload in house it could end up with a poorer customer service if it cant get enough agents to meet the peak demand.

For transformational contracts then the basis for outsourcing is about a step change in performance (at an agreed cost), here again the level of service to the customer could be seamless from old but the outsourcer is acting more efficiently and therefore saving costs thereby benefitting the client at no cost to the customer.

Finally there is the transformational contract that also includes an improvement in service. We see this a lot in local government with the setting up of central helplines linked to a callcentre with multiskilled agents able to deal with multiple topics without transferring calls from one department to another.

General improvements to end to end processes is another area where outsourcers can make a difference to customer service whether that be implementing new technology or just breaking down barriers to performance.

General improvements to end to end processes is another area where outsourcers can make a difference to customer service whether that be implementing new technology or just breaking down barriers to performance.


Does that mean that the whole process, end-to-end is outsourced. Or are you just talking about the call centre?

If the former, I can see that you can do that and I applaud it. But if you are just outsourcing the contact centre part and the core business stays with the client then it must be even harder to do end-to-end process improvement.

I would be interested to hear more about that.