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Offshoring vs onshoring: prioritising customer focus in business operations

Offshoring vs onshoring: prioritising customer focus in business operations

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With costs continuing to rise and every business looking to optimise their operations in an ever-growing competitive landscape, many consider offshoring aspects of their business. Customer support is usually one of the first departments to be offshored, saving the business time and money but at what expense to their customers? Richard Sampson, Chief Revenue Officer at Tax Systems, weighs up the pros and cons of both approaches and emphasises that the human side of business should be the most important and, for that reason, onshoring will always be his style.

At a time when every penny counts and operational optimisation is an ongoing priority, businesses are continuing to grapple with the offshoring versus onshoring conundrum. In particular, customer service departments are often the first to be catapulted across borders in an effort to save costs. However, while financially appealing, this strategy can create a chasm between a business and its most critical stakeholder: the customer.

Fundamentally, offshoring is a business-centric strategy, focusing primarily on cost efficiency and operational streamlining. While these are vital aspects of any business model, they must be balanced against the imperatives of customer satisfaction and loyalty. Get it wrong, however, and a whole range of other mission-critical issues are at stake, from customer experience and service levels to organisational reputation and damage to the bottom-line.

In this context, a drive for efficiency can, in time, take a business in the opposite direction and, in the most severe circumstances, force leaders to make a U-turn and bring these roles back onshore, adding significant additional costs.

Out of sight, out of mind?

Service offshoring and onshoring are analogous to the broader concepts of outsourcing and in-house management, and many would argue that going down that route is not just a logistical choice but reveals deeper insight into company ethos.

Proponents of the onshore model will often say that a business opting to keep customer service teams located in a home market is making a clear statement: the customer is at the core of its operations, and the costs associated with this approach are an investment rather than an overhead.

To a certain extent, the trend to offshore service functions was inevitable, particularly given the rise of technology-led processes and infrastructure, which have revolutionised support systems, offering various avenues for customer interaction. But, one of the main problems with offshoring is that it can lead to a disconnect, not only in language, but in understanding and addressing region-specific needs.

For instance, we are yet to reach the stage of technological sophistication where customer-facing bots can effectively handle the range of situations and requirements that experienced human professionals can manage. These increasingly sophisticated tools can make a significant contribution to overall efficiency, but there is a long way to go before customers will give up on their preference for human interaction for certain issues, or at least the option of it if tech-led channels fail.
A poor experience not only tarnishes customer perception but can also lead to increased customer and revenue attrition. These issues are not only immediately evident in financial metrics, they also significantly influence long-term revenue and market positioning. Furthermore, offshoring customer service can dilute a company’s brand identity, while employees deeply invested in the company’s mission are more likely to deliver service that aligns with its values. Customer feedback, vital for business evolution, risks being overlooked or ignored in an offshore set-up, hindering the company’s ability to adapt and grow based on customer insights.

Maintaining customer loyalty and trust in challenging times

As companies navigate rising operational and supply costs, justifying valid price increases become critical as customers are looking to make savings at the same time. In these circumstances, while it may be tempting to go down the offshore route, a robust, in-house customer support team can be instrumental in communicating the need to raise prices to customers, playing a key role in maintaining customer loyalty and maintaining trust, while also giving them the service continuity many are looking for.

When the emphasis is on providing the most effective customer service and experience, the choice between digital and human support should reside with the customer. Today, however, as automated systems and AI-led interaction channels become more prevalent, the availability of human interaction, especially in times of need, has become more of a rarity.

Yet, as many customers will testify, more often than not, it is the human touch that defines a customer’s perception of a company’s value. Moreover, servicing a geographically diverse clientele demands an intimate understanding of regional nuances, languages and cultural sensibilities – aspects best managed in-house.

The balancing act required to ensure no one falls overboard

While offshoring might present an attractive short-term financial reprieve, it risks undermining the very foundation of customer loyalty and satisfaction. Businesses must weigh these factors carefully, recognising that their approach to customer service is not just an operational decision but a strategic one, deeply connected with their brand identity and long-term success. Prioritising onshoring for customer-focused operations might not only be a financially sound decision in the long run, but also a testament to the company’s commitment to its customers.

Moreover, given the enormous interest from all sectors of the economy in the wider implementation of advanced AI technologies, these issues are likely to remain a major topic of discussion for every organisation focused on the optimisation and effectiveness of customer service. In the same way that some businesses have been damaged by a wholesale switch to offshore customer service, it’s entirely possible brands will encounter similar challenges as they embrace AI.

Ultimately, many aspects of customer service remain ideally suited to augment human skillsets and experience that deliver the kind of empathy customers value so highly. Failing to strike the right balance will see more organisations needing to correct their service strategies to regain customer trust and loyalty. Those who get it right, in contrast, will be ideally placed to meet the needs of customers in the short- and long-term.

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