Not so long ago, the idea of outsourcing IT managed services meant dealing with a call center in India when things went wrong. But a first-of-its-kind study finds that the table is tilting back toward onshore solutions.
The reasons cited for this shift are several – and we’ll get into them in detail in a moment – but one big factor is what the study, from HfS Research, calls cultural understanding. “Understanding the difference between the Yankees and Red Sox is critical,” the researchers said. “Contextual understanding is key to client satisfaction.”
The HfS study, titled “Around the World and Back Again: Sourcing Services in the USA,” incorporates data from more than 235 enterprise buyers and 270 outsourcing suppliers.
Some of the key findings:
- Onshore workers are better than we thought: Researchers wrote that, while domestic workers have sometimes been characterized as less competitive or under-skilled, companies rate onshore support staff higher at understanding the business, innovation and initiative. “The market is now realizing that the so-called softer skills – communications and contextual awareness – add real value to business and IT services delivery,” they wrote.
- Over time, quality trumps low cost: Respondents indicated that they would sacrifice a portion of cost savings to achieve higher quality. For U.S. delivery, they established a 17 percent threshold for savings as compared with 22 percent for offshore outsourcing.
- Offshore costs are catching up: Foreign labor has gotten more expensive, narrowing the gap with domestic pay and diminishing the allure of lowest-cost, low-quality service.
- Interest is growing in domestic IT managed services help: The study found a quarter of all respondents already get some onshore help, while another quarter are “interested” or “very interested” in sourcing in the United States.
- Clients are more satisfied by U.S.-based staff: This may be the biggest factor. According to the survey, upwards of 70 percent of enterprise respondents called themselves “satisfied” or “very satisfied” with U.S.-based staff in network/server management, IT help desk, applications development and applications maintenance. That’s anywhere from 12 percent to 18 percent happier than they are with non-U.S. based services.
Figures Show Enormous Cultural Gap
The most striking chart in the study shows the perception of U.S.-based and offshore staff on “soft measures.” For example, 82 percent of respondents rate U.S.-based workers high on “cultural and communications skills,” as compared with just 33 percent for offshore staff. On the measure “understands my business” the gap was 88 percent to 43 percent in favor of domestic call centers.
It might be tempting to dismiss such soft factors, but don’t. Beyond the basics of solid IT support – a structured approach to assessing, fixing and proactively monitoring and improving your network – issues such as cultural understanding can make or break the success of your IT outsourcing effort.
The HfS researchers recommended enterprise buyers consider several issues when considering to move outsourcing processes back onshore. Among them:
- Determine what’s important: Where will you trade off cost for key attributes such as better contextual knowledge and communications skills?
- How domestic is the service you’re signing up for? Do they have onshore offices but send much of the work offshore? How is the service actually being delivered? That’s something to get in writing up front.
- Who’s managing the IT staff? It’s important to understand how your supplier will manage onshore delivery. Will onshore staff be managed by leaders who are culturally aware? Will decisions be made offshore?
We covered the process of vetting managed IT services earlier. As the the HfS study shows, call center credibility is not an element to overlook.