If you go back two decades the business press was constantly full of stories about outsourcing – offshoring in particular. Every management guru was repeating their theories of ‘core competence’, based on a 1990 Harvard Business Review article titled ‘The Core Competence of the Corporation’ by CK Prahalad and Gary Hamel.
You probably remember the broad argument of core competence theory. It says that a company should only focus on those tasks or functions that add value. So a computer manufacturer should focus time and management attention on making the best possible computers. Business functions such as payroll, catering, and security can all be outsourced to specialist suppliers. It’s a waste of time to be focus on these non-core activities when your team could be improving product design.
Offshoring became an attractive strategy because offshore companies could offer specific expertise at a much lower cost than locally hired resource. This was when India boomed. I can remember working at the ITPB tech park in Bengaluru in the nineties when it was surrounded by open countryside. Today, the city has consumed it entirely.
Now all these strategies are commonplace. Nobody needs to be told that it’s smart to hire experts and global value chains are normal. Outsourcing became so normalised that most companies and business journals (including this one) dropped the word and started talking about sourcing or managed services.
In Customer Experience (CX), where I focus most of my attention, outsourcing has not just become normalised, it has become essential. Only the largest and most technologically competent company could maintain an internal CX team today. Customers demand 24/7 support across multiple channels such as social media, email, chat, and the phone. They expect a personalised experience that requires expertise in Artificial Intelligence, Robotic Process Automation, and other emerging technologies. Oh, and you had better understand Big Data analysis too. All this expertise is just too much to manage in-house so CX outsourcing is the norm.
I’d struggle to name any major company that doesn’t have a relationship with one of the big CX service companies. But there is one type of company that usually doesn’t have much experience outsourcing their customer service function and it’s time that the CX experts starting focusing their attention on them.
Startups. Young, innovative, fast-growing companies that build everything in-house and then struggle to keep their customers happy when they hit a stratospheric growth cycle.
Take a look at the financial services industry. Financial technology, better known as fintech, is creating a wave of new companies with global ambitions. They don’t need to worry about legacy technologies or ancient branch networks, they just build a service around the needs of the customer and launch it on the app store.
When most of these young companies start out the founders, maybe with a small team, will handle customer enquiries personally. However as they start growing it always becomes clear that a professional is needed or the customer service will become so haphazard that it drives customers away.
The problem is that many of the CX experts look traditional, boring, and obsessed with contact centre metrics – if your service is app-based then who cares about phone calls anyway? They lack the agility to work with startups and why would global companies with hundreds of thousands of employees want to work with a startup?
Last year, Forbes magazine published a list of the top 50 fintechs worth watching. It runs from Acorns to Transferwise and there are many other familiar names in the list. Some of these companies will be working with CX experts because they are already mature enough to need that help, but I’m sure that some of the younger companies will be looking around right now and wondering how a contact centre company that works with traditional banks and retailers can service their customers.
It’s up to the CX community. The opportunities are out there. The first big player that can demonstrate they have expertise helping startups to grow their customer service function AND can guide them through the outsourcing process smoothly should hit pay dirt as every fast growing company overrun with customer calls asks them for help. I have seen a few examples of this, but it’s rare so I believe the opportunity still exists. Who is going to answer the startup call?