Cost of outsourced work

For last few years outsourcing work is routinely adopted by companies to reduce costs. Now a days we see various non-core activities like after sales service, salary payments, marketing activities, claim processing, event management, house-keeping, physical security of premises and so on - are routinely handled by outside agencies. While cost reduction may be true in short run - there is a cost that a company pays for outsourcing its activities.

For example, look at the quality of service provided by outsourced agencies for After Sales Service. Is there any credible proof that outsourced agencies can offer to its customers that their customer's are served well and are happy with their service? I doubt.

Take this instance of a leading software product vendor who routinely outsources its Dealer Incentive scheme management to third parties.  Yesterday we learnt about a dealer scheme from this vendor's newsletter and clicked on the link to register for the same. And we got a Google advisory saying:

Site is listed as suspicious - visiting this web site may harm your computer.
Part of this site was listed for suspicious activity 1 time(s) over the past 90 days.
What happened when Google visited this site?
Of the 2 pages we tested on the site over the past 90 days, 2 page(s) resulted in malicious software being downloaded and installed without user consent. The last time Google visited this site was on 2010-03-13, and the last time suspicious content was found on this site was on 2010-03-13.
Malicious software is hosted on 2 domain(s), including ,

I brought this to the notice of the Agency who was administering this scheme with copy to Partner Account Manager of the software vendor. In about 1 hour I got a telephone call from the Agency - a girl told me not worry - as we were pre-registered for the scheme!! When I asked her about Free Malware given out to the dealers upon registration - she feigned ignorance and said she will check up. There is no response from software vendor yet.

Few days back I had written to the same vendor's Senior Manager asking him if any quality checks are in place to ensure that all dealers are informed about the "schemes" launched by them and agency informs and distributes the incentives in time? After a reminder I got a email saying all distributors are advised to include my email id in all their communications to dealers! I asked him why have I not received the Incentive after 10 weeks of scheme closure - I've yet to receive any reply. Of course, I did not ask him about the schemes - which we did not know about - and lost out on incentives in this period of  4 to 5 months.

Take another example, recently we got cheque of more than Rs.1,00,000/- from one of customer through their outsourced agency - a bank - who makes payment to vendors on behalf of this party. Can you believe that this payment was already made to us few months back - as an advance payment after deducting TDS? When we pointed this out to the customer they asked for the cheque back by courier. Not a word of appreciation or complaint! Is this a routine? I believe so. Else how can you explain customer behaviour as noticed by us?

Believe me, this incident is not an isolated incident. We see about 1 or 2 incidents every year like this and return the cheques.

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