The New Low Cost Outsourcing Location: USA?

When I had 4 people in 2 weeks confirm that companies have been shifting calls from Canadian outsourcers back to the US because the US dollar’s slide was making the costs of “near shore” outsourcing too expensive, I suspected something was brewing.  And yesterday, when over 400 people registered for our SSPA Webcast entitled “Onshore vs. Offshore Support: Why Domestic Providers are Winning,” I knew we had hit on a hot topic.

Our SSPA benchmark data shows that no matter how you slice it, satisfaction is higher with onshore service than with offshore service:

Onshore vs. Offshore

And, when you look at the elements of the interactions, the issues become even clearer:

Elements of Interaction

While every element shows a disparity between onshore and offshore, the biggest difference is on Customer Service Skills.  Ten years into the outsourcing boom, every customer can tell you that accent, language and culture issues are at the core of poor satisfaction scores, yet companies still do not invest in the necessary training to overcome this obstacle.  And with the declining dollar making the cost/benefit even more narrow for outsourced support, I doubt we’ll see any big investments for more and better training in the near future.

In yesterday’s webcast (which will be available OnDemand in the next day or so), Citrix Online gave a case study of one of their customers, PlumChoice, a US-based tech support center for consumers and 3rd party support, who is seeing growing business as more companies concerned about the customer experience decide that quality is more important than cost, and are pulling offshore back to North America.  With costs rising for support in India, and relative costs in the US dropping, I expect we will see much more of this in 2008.

When trying to balance cost and quality in making onshore/offshore decisions, here are a few suggestions I provided on the webcast:

  • Right Channeling.  Provide your highest value customers with the best service available; consider making routing decisions based on customer value or service contract level.  Also, we’ve seen companies have success (Semantic is a good example) offshoring text interactions (chat and email) while keeping voice onshore.
  • Train, train, train.  If you offshore voice, invest in language/culture training.  Though high quality boutique outsourcers like e4e have ongoing language and culture training over a period of many months, the average (from some research I’ll be publishing in May) is one week.  Clearly one week isn’t enough.
  • Invest in quality programs. Outsourcing doesn’t resolve you from responsibility for quality and operational excellence, and the SSPA members with the most success using offshore labor have executives and technical experts spending time in their outsource centers. Also, be sure to perform quality monitoring or supervisor silent listening of offshore interactions, even if you are receiving quality reports from the provider.

Have you considered a ‘backshore’ initiative? Are onshore service providers looking more attractive cost-wise?  Please drop me an email or add a comment.  And, as always, thanks for reading!

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21 Comments on “The New Low Cost Outsourcing Location: USA?”

  1. Benjamin Myhre Says:

    I posted a similar item in August at and I still believe it to be true. There are just too many language and social barriers that are difficult to overcome with offshore outsourcing. I believe that insourcing is a very effective way to make American customers happy.

  2. jragsdale Says:

    Hi Benjamin;
    Thanks for the comment. I just read a few of your blog entries–great stuff! You are so right about the language and social barriers. I, like many support managers, originally assumed this was just an accent problem. But it goes much deeper than that. Even beyond language problems like colloquialisms, there are core differences in the way different cultures approach customer service, problem diagnostics, and stress in general. I’m not sure you can ever ‘train’ someone to react differently than they are preprogrammed from birth, but I can guarantee you can’t do it with 5 days of training.

  3. John,

    Another great topic. We have written about the back-to-shore movement for some three years, mostly due to language problems. However, I wanted to highlight something you said that is 100% percent true. The written skills abroad tend to be better than here. You can look into it, but a person trained from another language into English has an advantage over a native speaker when it comes to grammar and spelling.

    It is very interesting that a lot of my clients at Gartner, and I am seeing the same trends continue in my conversations now, kept written language offshore and brought back spoken language. Here comes the interesting part – at least three of them told me recently that the satisfaction scores with quality of service is higher for written interactions (chat and email) that is for spoken.

    My recommendation? Same as yours — if you can do a good job with written channels, by all means look into outsourcing. For spoken, there is no place like home.

    BTW, if you do a good job of implementing email and chat (ask me if you want more details :)), you don’t have to worry about the content, since it will come out of your approved and maintained knowledge-base. You are simply paying for someone to put two and two together and make four, not to figure out what you need to add to two to make four.

  4. jragsdale Says:

    Hey Esteban!
    Thanks for commenting! Excellent point about precise grammar and spelling for your 2nd language. That was the case with my Spanish before I forgot it all. 😉

    When I was working at the JCPenney support center in Atlanta back in the 80’s, we had complaints from store managers on the East and West coasts that they couldn’t understand some of our agents due to Southern accents. I’ve always wondered if we needed accent neutralization training here!


  5. […] New Low Cost Outsourcing Location: USA?  provides some interesting data on customer satisfaction and […]

  6. mrityunjay Says:

    Is there any report on US as a low cost location other than the PwC one?

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  8. anacatherine Says:

    is there any announce in US about this ??

  9. Great topic here, John! I think outsourcing is a big hit nowadays in any business, as they can save a lot of budget by leasing staff. So, It is no suprise that even the USA is getting in the action.

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