The Business Case for Onshoring Technology Support Services

By Special Guest
Jim Larkin, Director of Pursuit Strategy and Innovation for Technology Support Services, Randstad Technologies
April 13, 2016

The question of onshoring or offshoring technology support services is an increasingly tough decision faced by many of today’s CIOs. While many companies prefer native support from a cultural perspective, offshoring IT services has been a trend in recent years due to budget constraints and pressure to reduce the overall cost of IT support. But many companies that decide to go offshore, typically for financial reasons, are faced with a difficult transition that often times won’t outweigh the saved costs incurred from offshoring.

Cultural and language barriers that come with offshoring IT support can result in frustrated users who don’t get what they need. Many outsourcers promise to work with language coaches for overseas workers to neutralize an accent, but when users call for support, the experience may vary. Language barriers can result in longer problem resolution timelines and unhappy users, and sometimes can lead to a company rethinking their offshore strategy when faced with internal pressures from end users to move back onshore.

The Decision to Onshore: What to Consider

Deciding whether to onshore or offshore depends on what a company is hoping to achieve. Performance and risk are especially important to consider. If a business is looking for a lower cost model and cultural and language barriers do not inhibit performance, offshoring IT support makes sense. Of course, this depends on the type of support services needed. For instance, non-voice support services for lower level support including password resets is well suited to an offshore model. However, highly technical troubleshooting issues that are off-script are made all the more difficult for end users to comprehend when a language or cultural barrier is added, and thus may be better handled onshore.

Each company must also consider where it is as a business and what the culture is like internally. If there is a company emphasis on cultural continuity, oversight, security and stability, then onshoring is likely the best fit.

A company’s industry should also be considered. For instance, financial companies have many more regulations around data, making compliance in the U.S. much simpler to achieve than overseas. Financial institutions also have customers who are concerned with transaction speeds and security and thus more receptive to native support. With larger budgets and an ability to focus more on performance and quality rather than costs, not to mention HIPAA constraints, some health care providers and life sciences companies also have a more favorable environment for onshoring. 

The Pros of Onshoring

  • Proximity. One of the greatest benefits of onshoring is proximity. When clients decide to move operations overseas but aren’t committed to quarterly or at least annual travel to that location to check on operations, it can pose a problem. If IT operations are based in the U.S., it makes it much easier for companies to monitor and review operations by avoiding extended travel times when visiting managing service centers, thereby ensuring that business is running smoothly.
  • Shrinking Gaps in Labor Costs. Traditionally, offshoring support services was seen as a foolproof way to cut costs and save money. But the diminishing labor costs between onshoring and offshoring no longer make this such a clear-cut decision. While there’s no doubt that going offshore does generate labor savings, there are other costs to be considered such as transition, oversight, and travel, which make onshore costs increasingly competitive. Businesses need to look at the entire picture when considering cost savings.
  • State Tax Incentives. Such stimulants often make keeping IT operations in the U.S. an even more attractive option for many companies.
  • Increased Customer Satisfaction Rates. When U.S. customers call someone overseas for IT technical support, the problem resolution timeline can be long due to differences in native language and even cultural experience. Thus, higher customer satisfaction generally occurs when support is offered onshore.
  • Greater Visibility. When support services are offshore, companies have a more difficult time maintaining control and visibility over finance operations and processes. There can also arise more difficulties of communication barriers when explaining business goals, strategies and processes.

Deciding where to locate your support services team should not be taken lightly. The biggest reason that companies go with an offshore model typically involves financial reasons, but it can often prove to be a tough transition. An offshore model incurs the costs of transitioning operations overseas, oversight, travel, and dealing with user perception—when adding up all the soft costs, there are often costs that you can’t quantify. At the end of the day, businesses should closely evaluate what they are really saving with an onshore versus offshore model. Whatever decision is made, businesses should keep in mind that costs are high should they later decide to transition to a different model.

About the Author

Jim Larkin joined Randstad Technologies in June 2015 and is currently serving as Director of Pursuit Strategy and Innovation for Technology Support Services. He has more than 20 years of experience, most recently as Global Director of Service Management at Unisys Corporation. Prior to joining Randstad Technologies, Jim supported over 100 global accounts with over 500 delivery staff around the world, holding responsibility for P&L of more than $250 million in North America.

Edited by Peter Bernstein

Related Articles

Mist Applies AI to Improve Wi-Fi

By: Paula Bernier    11/9/2017

Mist has created an AI-driven wireless platform that puts the user and his or mobile device at the heart of the wireless network. Combining machine le…

Read More

International Tech Innovation Growing, Says Consumer Technology Association

By: Doug Mohney    11/8/2017

The Consumer Technology Association (CTA) is best known for the world's largest trade event, but the organization's reach is growing far beyond the CE…

Read More

Broadcom Makes Unsolicited $130B Bid for Qualcomm

By: Paula Bernier    11/6/2017

In what could result in the biggest tech deal in history, semiconductor company Broadcom has made an offer to buy Qualcomm for a whopping $130 billion…

Read More

How Google's 'Moonshot' Could Benefit Industrial Markets

By: Kayla Matthews    10/30/2017

The term "moonshot" encapsulates the spirit of technological achievement: an accomplishment so ambitious, so improbable, that it's equivalent to sendi…

Read More

After Cisco/Broadsoft, Who's Next for M&A?

By: Doug Mohney    10/27/2017

Cisco's trail of acquisition tears over the decades includes the Flip video camera, Cerent, Scientific Atlantic, Linksys, and a couple of others. The …

Read More