The performance implications of outsourcing customer support to service providers in emerging versus established economies
Raassens,N. Wuyts,S.H.K. Geyskens,I.
Raassens,N.
Wuyts,S.H.K.
Geyskens,I.
Abstract
Recent discussions in the business press query the contribution of customer-support outsourcing to firm performance. Despite the controversy surrounding its performance implications, customer-support outsourcing is still on the rise, especially to emerging markets. Against this backdrop, we study under which conditions customer-support outsourcing to providers from emerging versus established economies is more versus less successful. Our performance measure is the stock-market reaction around the outsourcing announcement date. While the stock market reacts, on average, more favorably when customer-support is outsourced to providers located in emerging markets as opposed to established economies, approximately 50% of the outsourcing firms in our sample experience negative abnormal returns. We find that the shareholder-value implications of customer-support outsourcing to emerging versus established economies are contingent on the nature of the customer support that is being outsourced and on the nature of the outsourcing firm. Customer-support outsourcing to emerging markets is less beneficial for services that are characterized by personal customer contact and high knowledge embeddedness than for customer-support services that involve impersonal customer contact and are low on knowledge embeddedness. Firms higher in marketing resource intensity and larger firms benefit more from outsourcing customer-support services to emerging markets than firms lower in marketing resource intensity and smaller firms.
Description
Date
2014-09
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Volume Title
Publisher
Research Projects
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Keywords
outsourcing, customer support, offshore, emerging markets, event study
Citation
Raassens, N, Wuyts, S H K & Geyskens, I 2014, 'The performance implications of outsourcing customer support to service providers in emerging versus established economies', International Journal of Research in Marketing, vol. 31, no. 3, pp. 280-292. https://doi.org/10.1016/j.ijresmar.2014.01.002