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OUTSOURCING: INVOLUNTARY SUICIDE

by Gerry McGovern
Author, New Thinking


Did you ever think you'd see the day when supermarkets would become banks? Well, in Britain anyway, that day has arrived in style. An Irish Times report stated that banking services from the likes of Tesco, Sainsbury and Safeway, "have really taken off," and are genuine competition for the banks.

The article states that financial observers have opined that they, "welcome the decision of the supermarkets to exploit what they see as the shoddy service offered by many banks and to provide, via 24-hour banking with no branches, a simple, if impersonal financial service."

Did the banks not see it coming? Did they not realise that the introduction of the ATM machine put their customers out on the street? Did it never dawn on them that the best way to destroy customer loyalty is to put a customer out in the cold?

For many bank customers today the only interaction they have with a bank is through a machine on the street. It doesn't even have to be a machine that's owned by the bank; it can have a competitors name over it. So, if it's all that mechanistic, if it's all that cold and formalised, why on earth should anyone have any loyalty? Bank bank, supermarket bank, Microsoft bank - it's just a bank in the wall or on your computer screen.

For many years now, companies have been lured by the false promises of information technology. It was all about efficiency, all about cost cutting, all about taking people out of the equation. Of course, the end point was supposed to be more profit.

Unfortunately, technology is not nearly as efficient as it is sold to be. The paperless office and leisure society are absolute jokes - in fact, the opposite has occurred. "60% of annual corporate IT budgets go toward replacement of outdated equipment and increasingly frequent product replacement," according to Stephen Roach of Morgan Stanley.

Outsourcing - creating distance between you and your customer - is one of the computer's greatest achievements. Isn't it wonderful now how you don't have to get directly involved with all that messy sales and support stuff. You just outsource it. It's like a farmer who's an accountant who has outsourced the running of the farm.

Did it never dawn on these outsource fiends that companies are actually supposed to do something? Outsourcing is a bit like cutting your left leg off so that you can save money on food.

In this age of commoditisation, when every car is much the same as every other car, when every product has the same chip inside, one of the few really unique things a company can have is its relationships with its customers. Strong customer relationships are not simply about creating loyal customers. If the staff of your company are constantly talking and relating to your customers, then you have the ultimate market research system. You have your finger on the pulse of the marketplace, and in a world that is changing so rapidly, that's a very important place to have your finger.

Companies today are so short-sighted they're laughable. Bankers are on the inside rubbing their hands that they have saved on staffing costs because the customer is on the outside walking past their door on the way to the supermarket to bank.

Gerry McGovern, New Thinking. All rights reserved.



Gerry McGovern is the author of New Thinking, a weekly column which has received numerous accolades and a book, THE CARING ECONOMY

The Caring Economy
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The Caring Economy, by Gerry McGovern, is published by Blackhall Publishing of 26 Eustace Street, Dublin 2, Ireland. ISBN 1-901657-61-2 Price _27.50 or US$35.95
Email: [email protected]

It is also available in the United States from Irish Books & Media, 1433 East Franklin Avenue, MN, USA 55404-2135. Call toll-free: 1-800-229-3505.

Email Gerry McGovern at [email protected]
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