Let’s talk about offshoring

A couple of things have piqued my interest in offshoring this week, the first being that Fonterra is going to ditch Datacom in favour of either Tata or HCL, both massive multi-nationals. The other, related to an experience when dealing with Vodafone’s new offshore-based wholesale provisioning team which did not go well.

Off the bat, so there is no chance of me being called a hypocrite, let me tell you who is based where within Lightwire. We have 2 staff in Australia, 3 in Manila, and 35 or so in NZ (split between Wellington, Hamilton and Tauranga). That means that about 87% of our staff are NZ based.

The thing is, in my view, there is no issue with good staff members being based wherever they want/need to be. However, issues arise when whole departments are moved offshore and people are bound by rigid processes due to their complete lack of a wider understanding of the business model and customer requirements.

The three staff we have in Manila are a key part of our team, they help us follow the clock and I have personally worked with two of them for over 6 years now. But, if Lightwire suddenly took all of our support and provisioning positions and placed them in the hands of an outsourced organisation, it would be impossible to retain the culture we have created or the service levels that define us.

Going back to Fonterra, it is easy to understand why they are seeking to cut costs, recent poor results demand it, but the move may well have a wider impact on the Managed Service Providers (MSPs) in New Zealand.

Either more local businesses are going to be forced to follow suit in a race cut costs, or MSP’s are going to need to maintain and justify prices purely on the basis of offering a premium service.

We have seen the same in the telco space. The big players move vast numbers of positions overseas, customers then complain about the poor service and support they receive, but the telcos making these moves have the biggest marketing budgets and lowest price points.  Customers are then left to make a decision; spend a bit more at a level that allows a telco (let’s say Lightwire) to retain a high performing, largely NZ based support team, or pay as little as possible and take it on the chin when service is awful.

It is a double-edged sword. On the one hand, Lightwire does miss out on a fair number of SME sales by being more expensive than Spark and/or Vodafone on baseline UFB offers. The flipside is that we are far more price competitive and capable in the mid-market and enterprise space.

A less tangible cost of taking positions offshore is the good staff you lose locally that just can’t take the grief they begin receiving from angry customers. The good staff go first as they are the most employable and have opportunities elsewhere, the ones that are left just add to the issues faced by remaining customers.

A suggestion to finish off with…

What if we, the NZ telecommunications industry, had a policy of voluntarily disclosing where our staff/contractors were based in order to give potential clients a fair idea of what they were in for at sign up?

In our industry we have to be transparent and careful to not over promise when it comes to broadband speed, why aren’t we more transparent about who we are employing and where? After all, decades of experience strongly suggests it has a direct impact on service levels.

Brendan Ritchie

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