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London (pte035/04.03.2005/15:00) - Eight in ten organisations that outsource their customer service and call centres will fail to achieve targets for cost savings, according to analyst company Gartner. As Computer Weekly http://www.computerweekly.com reports, 60 per cent of organisations that outsource parts of the customer-facing process over the next three years will see customers switch to rivals and find hidden costs that outweigh any potential savings they derive from outsourcing.
"Our research shows there are significant risks associated with outsourcing customer service," said Alexa Bona, research director at Gartner http://www.gartner.com . "Historically, outsourcing has been seen as a way to reduce costs by getting others in cheaper locations, or with greater economies of scale, to own the processes that are not core to the business. Companies are encountering problems because they don't approach this strategically. They usually lack information to make meaningful cost/benefit analysis and often focus on inappropriate or unmeasureable service levels and cost metrics," he added.
According to Gartner, successful outsourcing can achieve cost savings of between 25 to 30 per cent. However, Bona warned that a poorly managed outsourcing deal can reduce the quality of the customer experience, dilute the brand values of the company and fail to deliver cost savings. Bona added that most companies neglect to manage the customer service experience sufficiently and often lock the organisation into long-term outsourcing contracts without conducting appropriate pilot testing.
To ensure successful customer service outsourcing, Gartner recommends that companies create a customer-facing process. It said that businesses should judge the supplier based on customer satisfaction or other quality metrics to measure and motivate outsourcers rather than "operational metrics" such as the number of calls handled by the supplier. The analyst firm also added that users should not underestimate the management time required to make an outsourcing relationship work. The company predicts that the worldwide market for customer service outsourcing is set to grow from 4.4 billion pounds in 2004 to 6.4 billion pounds in 2007.
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