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Economy Outsourcing 2004

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#21 Palisades


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Posted 30 April 2004 - 04:23 AM

As many of you have had the misfortune of experiencing, one common target for outsourcing is technical support. The reason companies like Dell do it is because they make an incredibly low margin on each computer they sell. IIRC, if one in fifty people made a call for technical support, they would end up losing money. However, even though outsourcing helps them maintain competitive prices and compete for market share now, they may end up hurting themselves in the long run when dissatisfied customers switch to other companies ... who also probably will have outsourced technical support.

Companies would do well to heed the blindingly obvious lesson Hewlett Packard got pounded into them – if a company makes its customers happy, they’ll return and buy more of its products. On the other hand, unhappy customers go away and cost a lot of money to get back. A common figure is that boosting customer retention by 5% can increase profits by 25-85%.
"When the Fed is the bartender everybody drinks until they fall down." —Paul McCulley

"In truth, 'too big to fail' is not the worst thing we should fear – our financial institutions are now on their way to becoming 'too big to save'." —Simon Johnson

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