A primer on why customer service is so bad

Based on my “I’m sorry” post several people have asked why customer service is outsourced to India and is so bad. To be fair, the two are not related due to anything inherently inferior about the capabilities of Indian people. Sufficiently talented customer service people in the U.S. have a high school education (usually), would rather do something else (often) and get paid between $15 and $25/hr depending on where they live.

Several years ago, leading companies found they could outsource this work to college educated people in India who loved the job (and not wishing they could do something else) and worked for a small fraction of what their less-educated and “not happy in the job” U.S. counterparts were paid.

This was a win-win for the companies. They paid less and got more. As did their customers. However, over the years, because most companies don’t really value customer service other than as a slogan, more companies outsourced customer service to “India” and the supply of talent was less than the demand. Labor rates went up and the talent pool did not meet the demand. So, now, companies get materially less than they were getting even from their U.S. talent pool, but they still pay less for it.

However, as labor rates in India have increased, the differential has dropped. But, until customer care matters, companies will continue to outsource to low-cost countries and not worry about the value they provide … or don’t provide.

Mitch

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