The Perceived Impact of Successful Outsourcing on Customer Service Management - Article Analysis Essay

Introduction

Kok Wei Khong's objective in this journal article is to assess and illustrate the perceived impact of outsourcing on customer service management (CSM). Khong has conducted an empirical study to show the divergence between theory and practice in CSM. In the same study, he provides suggestions to corporations on the strategies to achieve an optimum customer service management through skilful outsourcing (Khong, 2005).

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Application of Supply Chain Management Theory Relevant to the Article

The supply chain management theory that is relevant to this article is the Transaction Cost Economics Theory of SCM. The companies must evaluate the feasibility of engaging in all the processes that lead to the making of their final products, or whether to enter into an interfirm collaboration with other firms to enable them to maximise their productivity by spending most of their time cultivating their core competencies and formulating market strategies. This involves initiating and developing a good working relationship with the employees.

Employees must be treated appropriately by providing adequate support and reasonable remuneration deals (Barthelemy, 2003). At the same time the management needs to keep high morale and performance among remaining employees (Barthelemy, 2003). Other factors affecting outsourcing in successful organisations are emphasis on short- and long-term benefits, adequate and objective performance criteria, feedback and control mechanism, effective use of performance incentives and penalties, and flexibility in anticipating change (Khong, 2005).

The mutuality of advantage that comes with the voluntary exchange is assessed. According to Khong, most of the companies that sign this contractual agreement understand the unique demands and objectives of one another. He says, "Successful companies share the same success factors; they have a clear understanding of their core-activities have done adequate research and planning; and most importantly have developed clear objectives, goals and expectations of outsourcing activities (Khong, 2005)."

Background of the Issue

For a long time now, companies have learned to acquire a competitive edge over their rivals by forming strategic alliances with other companies to subcontract them to handle the non-critical operations and processes. This division of responsibilities enables most established corporates to concentrate on their core competencies. The short-term and the long-term benefits that come with this kind of arrangement are manifold, divided into both monetary and non-monetary.

Companies can focus on their core competencies and rely on their outsourcing partners for non-critical processes and operations. The formed strategic alliance can generally create synergy amongst companies that can lead to short and long term benefits. Some benefits are monetary and some are non-monetary (Khong, 2005).

The most significant non-monetary benefit that companies are striving to attain is the customer service management ability. Companies have had problems identifying factors that impede successful outsourcing. One of the biggest mistakes companies have been found to be making is the adoption of tactical against strategic outsourcing. While the tactical approach does not cushion corporations from the implications of the hidden costs, the strategic plan incorporates the effects of the hidden costs and formulates a strategy of containing them. Koki submits thus, "Unsuccessful companies are also those who adopt the tactical rather than strategic approach in dealing with outsourcing. Companies should also take heed of hidden cost and risks that can increase the cost of developing the outsourcing programs (Khong, 2005)."

Over the time, studies have been carried out to examine how to structure a workable customer service management through outsourcing program effectively. In these researches, business modelling experts have figured out the managerial, legal and cultural factors that impede and facilitate successful outsourcing processes that aid CSM. The

Essentially in outsourcing agreements, the relationship between the companies and their partners are based on trust and contracts. So it is essential that the right partners are selected based on criteria like credibility, expertise, and reliability. This will eventually lead to closer ties and relationships (Khong, 2005).

Managerial Implications

According to Khong, for the customer service management to work correctly in any organisation, critical administrative decisions must be made to work in compliance with the demands of the strategy (Khong, 2005). The management team must, therefore, work on coordinating their staffs and the sales representatives to interact with customers in a way that improves the image of the company and its products.

Customers are the driving force of companies striving for success. Survival of these companies depends on their customers. As competition intensifies, customers find themselves relishing the options and alternatives various companies can offer them. If they are not satisfied with the current products or services, they can quickly switch to others (Khong, 2005).

The managers should lay more emphasis on making decisions that will necessitate such resolutions as conducting market research that study trends, customer behaviours, and expectations. Several managerial choices will have to be prepared to achieve successful outsourcing. It takes a complete disruption from the regular operational routine in a company to produce a desirable level of customer service management.The management should embrace new ideas in strategic planning to make the company compete favourably. The study finding shows that 59 percent of the overall corporation's success in CSM is under the direct influence of outsourcing. The 41 percent remainder of the CSM factors rests with the company's internal management. The strategic management skills of the company are therefore significant in propelling it to achieve favourable CSM goals.

Advice for managers would be to embrace adequate planning during all stages of outsourcing by working on a way that would ensure only highly competent employees are involved in the project. Implementing this strategic approach demands that everyone in the team must embrace a team spirit and everyone must be able to pull their weight effectively. For a manager to have proper control of the process, adequate and objective performance indication criteria of the employees should be put in place to enjoy the short-term and the long term benefits of outsourcing. Managers who understand the concept of outsourcing must also demonstrate a nuanced understanding of not only about the benefits of outsourcing, but also its facilitation process and structure. Most of the attempts of outsourcing fall flat from inception because the most of the leaders at the top echelons of decision-making have not laid a proper foundation with supporting structures to make the process work out efficiently.

The managers should have a correctly implemented effective organizational communication to make the flow of information smooth. The flow of communication will be guaranteed if the organisation has invested immensely in the adequate supporting infrastructure. The strategy of implementation and control of a successful outsourcing program is an elaborate activity that calls for active participation and close supervision of the top management. The management must establish a good working relationship between the two companies in contractual agreement to make the process as effortless as possible.

Summary

The empirical study results of this article show that there is a close interlink between successful outsourcing and CSM. From this article, there are necessary measures that companies must take to realise the viability of outsourcing as a strategy to gain a competitive advantage over rivals. Stealthy adoption and skilful implementation of sound market research, market assessment and handling, customer satisfaction and customer relation management are inevitable. Companies must resolve to direct their competencies maximizing on their undelegated critical activities to get the best out of their efforts to outshine the rivals.

References

Khong, K. W. (2005). The Perceived Impact of Successful Outsourcing on Customer Service Mnagement. An International Journal, 402-411.

Libert University. (2014). Supply Chain Management (Custom) 2017. McGraw-Hill/ Create.