Outsourcing Errors

NextStage keeps hearing about Republican hopeful Mitt Romney’s outsourcing jobs when he led Bain Capital. Whether he did or not is still a question (see What was Romney’s role at Bain during outsourcing?). But the talk did cause us to wonder what happens when outsourcing occurs.

Whither Innovation?

Andrew Robinson writes in the journal Nature that local innovation is stifled when countries outsource jobs. Specifically what’s stifled is the need and desire to solve simple problems. It may be cheaper to outsource call centers, for example, but then no one spends any time solving the problems that result in the need for call centers.

Level 1 technical support for most modern conveniences — everything from software to mobiles to automobiles to long distance carries to medical analysis — is typically outsourced. Any business owner or manager understands the need for this. Level 1 support can usually handle the greatest number of customer concerns (high double digits). Level 2 support is only needed for 1-5% of customer concerns and Level 3 for tenths if not hundredths of a percent of customer support calls.

Level 1 call centers handle issues so mundane they typically work from a script. It’s that simple and rote.

But admins, personal assistants and secretaries have long known that if you want a problem solved, make sure the boss has to deal with the problem and usually only once is enough to get the problem solved. Industry is rife with examples of minor problems that were never solved until the boss had to deal with it. One of my favorites involves a boss who wanted to print out an email and learned first hand that the printer had a problem.

The printer had had problems for a few months but when the boss ran into the problem, it was fixed in a day.

So it goes with solving mundane and trivial tech problems. Unless someone with authority and budget needs a solution, it’s not solved. Call centers are cheap but they don’t solve the underlying problems that need to be addressed. Yes, some companies pay attention to call center reports but there’s a big difference between a thousand reports of customer frustration and one, personal, hair-pulling episode with an email client.

Here’s another example of problems being solved when they bother the boss: Movie theaters need to post and inform patrons when a movie actually starts as oppose to when the advertising starts. Such was not always the case and theater goers were infuriated by this for years.

But one day an US Senator decided to go see a movie. Legislation changing the posted start times from advertising to actual movie was filed within weeks. It might even have been days…

Whither Identity?

Shehzad Nadeem, an US based sociologist, has studied how hosting outsourcing centers affects India, “a top outsourcing destination for many Western companies”, in Dead Ringers: How Outsourcing is Changing the Way Indians Understand Themselves and it’s not good.

India has a large population of English-speaking, highly educated talent but that talent isn’t serving India’s best interests because they’re in call centers answering phones rather than working directly to improve India’s own technology base.

Outsourcing may bring a broad technology infrastructure but India’s poverty remains, and between training to speak and think “western” and the time-difference between India and the countries it’s call centers serve, call center employees don’t have much energy left at the end of the day.

Another challenge is that western education often creates western “wants” that cause their own socio-economic conflicts. Two years ago more Indians had cell phones than had modern sanitation by a factor of 3:2.

Whither Diversity?

Whether outsourcing goes to India, Canada or eastern Europe, any time the educated majority of a country is given one specific task and that task isn’t country of origin related, cultural diversity suffers. Nova Scotia based call centers serving the US can draw on a shared language and a much greater shared history than India or eastern European call centers can. Canadians can still be Canadians while serving US businesses. Not so with emerging nations.

The requirement to perform, to make the numbers, requires language skills and cultural knowledge that often replace nationalistic self-concepts and self-identities. The end result is that locally directed productivity suffers because the focus is now on “over there” instead of “right here”.

Summary

Did or didn’t Romney outsource jobs? That history will ultimately be written by the victors, probably.

Is outsourcing good for host or sourcing country? Probably not in the long run. Although economically attractive in the short term, sourcing countries lose the impetus to solve low-level problems and host countries lose internal diversity and wide-spread public growth.

Technology may be the great equalizer but only if what’s being equaled are themselves equal.


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