Let’s start with this 30 second video that will explain the context behind the title of the post before we start talking about the details of it.

Offshoring Vs. on-shoring customer service has been a decade long debate (if not longer) and there are very strong opinions on the both the camps (i.e. offshore and onshore) as to why it makes sense to host “all” the support operations in offshore or onshore but none are factually supported or often it is perceived to be supported by some statistically insignificant internal customer satisfaction data that may or may not be relevant to the macro market dynamics.

I don’t have a strong opinion on either offshore or onshore but rather what makes business sense and what will help retain customer base, reduce customer churn, increase the net promoters and transforms your customer service to be a competitive advantage.

Let’s take a look at a few interesting examples;

For folks who strongly believe that just by hosting all your customer service operations onshore will make your customer satisfaction better, Comcast is an example. I personally have not experienced Comcast call centers but going based on some of the resources online like the one below, on-shoring your customer service as a standalone strategy is not going to give you a competitive advantage.(http://www.forbes.com/sites/kenkam/2015/02/03/comcast-can-bad-customer-service-be-good-business/)

On the other hand, Apple transitioned out all of their live channel support operations from Bangalore (India) in 2006-07 due to service quality. Apple now hosts all of North America live support onshore. We all know about the high quality apple care support and apple feels strongly that moving away from offshore live support played a key role in that. (http://www.bloomberg.com/bw/stories/2006-06-18/india-why-apple-walked-away). AT&T followed a similar strategy to apple as well for their key business segments. (http://arstechnica.com/business/2006/09/7826/). Delta Airlines is another one & the list continues.

Vonage (http://www.vonage.com) on the other hand, has pleasantly surprised me every time I have called them in the last 3-4 years (I guess I have contacted them thrice so far), their offshore support personnel have impressed me with their ‘go above & beyond attitude’ and I got through to an offshore agent every time I have contacted them.

The general hypothesis from the onshore believers; “An in-market, native speaking, on-shore agent can relate to the customers more, than an offshore agent who is distanced from customer’s culture and helps in improving customer service and satisfaction.”

My personal opinion is that; The hypothesis varies from industry to industry and one cannot generalize. For a cable provider it might not make a difference whether you host the support onshore or off-shore as long you get the training, processes, staff & leadership hiring right. At the same time, for businesses that require consulting solutions (eg: financial management, investment, business improvement consulting etc.) makes sense to be hosted onshore as it requires a significant closeness and understanding of customer’s culture, market and users to gain customer’s confidence and trust.

While I disagree with the general onshore hypothesis, I do very strongly believe that an in-market employee’s ability to understand customer’s culture, market and closeness can never be matched by an average offshore employee. (We are talking about the entire population here, there might be top 5%-10% offshore employees who will be exceptions)

While the decade long debate continues, there are four factors I believe organizations need to factor in while deciding whether offshore, onshore or a hybrid model makes sense for their customer service ecosystem:

1. Quantify the “real” impact: Do not use your internal customer satisfaction measure as the only source of truth to decide your offshore or onshore strategy. There are high chances you will get it wrong. Utilize meaningful customer retention measures to quantify the lasting impact post the customer service interaction. Customer spending trend post support, churn rate of your customer base that contacted support, repeat caller%, etc are example measures that you need to consider comparing your offshore Vs. onshore centers
2. Know your specific industry segment, don’t generalize: Don’t fall for the general “industry trends” trap, know your specific industry segment. Example: If you are in advertising, know and understand what the advertising industry trends are and what the advertising industry customers prefer rather than looking at an overall general market trends.
3. Make a customer centric decision, not cost centric: Cost is indeed a key factor while offshoring but too many organizations have made cost based offshoring to take a brand hit. Utilize offshore employee base for the flexibility they offer in terms of 24/7 support, weekend support, abundant engineering talent pool etc and not just to reduce cost. Else there are high chances, you will join “the club” of poor outsourcers.
4. Test the waters: Be it moving offshore volume to onshore, onshore volume to offshore or trying to build a hybrid model, conduct market analysis, do a VOC study, assess long term impact, utilize customer churn, retention and spend trends as key measures to decide your offshore or onshore question to get it right as much as possible.

And above all, its about constantly keeping a close watch on what your customers are saying, what the competition is doing, how the market dynamics are revolving and adjusting your overall customer service service tactics accordingly rather than relying on your internal metrics to drive your strategy.

About the Author: For more information, contact Balakarthik Venkataramanan at vbkarthik123@yahoo.com. LinkedIn Profile: https://www.linkedin.com/in/balakarthikv.