Canadian outsourcing satisfaction rates plummet

Also read and comment on another IDC Survey: Business managers spend a quarter of their time on IT

An increasing number of Canadian IT companies are displeased with their outsourcing vendors, according to an IDC Canada survey released last week.

IDC Canada did an outsourcing satisfaction survey in 2004, with this recent survey revisiting similar indicators such as the number of referrals and contract renewals.

Mark Schrutt, IDC Canada’s research manager for outsourcing services, said, “Business satisfied with their outsourcers dropped from 50 per cent to 33 per cent.”

Relationship management satisfaction went from 71 per cent to 54 per cent, while contract management satisfaction drooped as well. Said Schrutt: “ Every element had a 15 to 20 per cent drop.”

He attributes this drop in satisfaction to the rising expectation of companies who use outsourcers. “Clients are expecting more now, with better returns and strong value,” said Schrutt. “The vendors are trying to meet them, but they’re having a challenge.”

These boosted expectations have been brought about by companies’ experience with outsourcers — primarily, their struggles with flexibility. Schrutt said that businesses are having to deal with changing technology, costs (hardware is cheaper, but software and services are more expensive), and the role of IT in the business, and outsourcers are having a tough time keeping up.

According to John Simke, president of the Toronto-based Centre for Outsourcing Research and Education, many outsourcers are guilty of trying to force clients into a template, or telling them what to do instead of working with them.

But the customers are striking back. Simke said, “What we’re dealing with now is the savvy client. They’re far more demanding, so the level of satisfaction has gone down,” he said.

Service needs to be worked on, according to Schrutt, who said, “Vendors need to meet the business and technology needs, and work together in a cooperative and flexible approach.”

Schrutt also found that there was a marked discrepancy between the vendors’ and the companies’ impressions of the services rendered, with many vendors placing customer satisfaction in the 80 to 90 per cent range. “Vendors measure how well they do, not how the relationship is doing, studying things like service delivery, account management, and practices and processes,” he said.

Also troublesome to clients is who conducts the customer satisfaction surveys: account managers or sales staff. Said Schrutt: “Customers don’t feel comfortable providing this information to the vendor.” Even third-party surveys don’t work, as, said Schrutt, customers think that the Canadian outsourcer customer market is small enough that the vendors would be able to identify them.

Schrutt stressed the importance of stopping these problems before they need to be tallied by working more closely with their clients to nurture the relationship, rather than just document the service.

This is also the responsibility of the client, said Simke. Historically, he said, clients have often been content to leave relationship management to the outsourcer, and didn’t bother to develop enough of a knowledge base about outsourcing to contribute usefully to the relationship. But this is changing. Said Simke: “On the client side now, they’re putting some pretty senior executives, with a business orientation, in charge of outsourcing. They know how to go toe-to-toe at a business level, not at a technical level, which is relatively straight-forward.”

This, combined with an already more-competitive market characterized by shorter and less lucrative contracts, should be the necessary push to bring customer satisfaction back up to par in the next three or so years, according to both Schrutt and Simke. “Vendors will see that need for flexibility, and will adapt to the businesses,” said Schrutt.

Also read and comment on another IDC survey: Business managers spend a quarter of their time on IT

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