Customer Focus Is Key to Ingram Micro's Outsourcing Success
This is a good sign. A better one would be evidence from company executives that they are delivering on their promise not to allow any degradation of service. But should that happen, Ingram Micro executives must be willing to acknowledge problems and tell customers how they would fix them.
During the recent VentureTech Network invitational the company held in Atlanta, top Ingram Micro executives detailed how the outsourcing plan will work and how they expect to avoid any degradation of service.
It was, of course, in Ingram Micro's best interest to reassure the 300-plus VARs at the event. What was striking was its willingness to share certain details of the plan even before disclosure of the outsourcing company the distributor will use. For instance, Keith Bradley, president of Ingram Micro North America, said that any job functions requiring telephone contact with VARs are going to the Philippines, while backroom transactional jobs will be outsourced to India. In this case, telephone contact involves basic technical support and inquiries on e-commerce transactions.
Bradley also said the distributor is not rushing to move the jobs overseas and will, instead, run parallel operations with the outsourcing company before pulling the switch. It will take nine months before that happens, he said.
By and large, the VARs and vendors who attended the invitational said they are confident the outsourcing plan will not disrupt service.
"The smartest thing they've done is they put the right timetable in place," said John Linton, vice president of the solution provider channel at printer maker Lexmark International Inc. Linton echoed other attendees' sentiments by adding he understands Ingram Micro's need to lower costs through outsourcing.
So sympathetic were some VARs to the outsourcing initiative that a handful even suggested the distributor share its experience with them after the transition in case they ever need to offshore any of their own business functions.
The VentureTech members' sympathetic reaction is indicative of the relationship they have with Ingram Micro. They hold an elite status within the vast community of VARs and integrators that sources product from Ingram Micro, the world's largest IT distributor.
Still, these VARs and integrators are anything but shy. In the past they've called the distributor on the carpet when things didn't go well. And if the outsourcing move causes any disruptions, they will demand satisfaction.
Ingram Micro executives were adamant they have learned from the mistakes of other companies that tried outsourcing, which is why they are taking their time to do it right.
There have been mistakes aplenty. Consider the report released by Deloitte Consulting last week saying that 25 percent of the companies that outsourced business functions overseas brought them back inside. Forty-four percent of the 25 large companies Deloitte studied said outsourcing produced no savings at all.
And 70 percent said their outsourcing experience has been so negative that they are exercising far greater caution when dealing with outsourcers.
As the report shows, outsourcing has a less-than-stellar track record. But this doesn't mean it can't be done right.
A common complaint from people who have had their support calls routed to India is that the person answering the phone appears to be reading from a script and may be hard to understand. Americans are an impatient lot, and miscommunication during a support call can cause intense frustration.
Bradley said Ingram Micro is tackling this potential problem by moving the functions that require phone contact to the Philippines, where he says folks answering the phones don't sound scripted.
That Ingram Micro management has anticipated the potential pitfalls bodes well for its outsourcing plan.
Also encouraging are the company's promises that it plans to invest money it saves through outsourcing back into the business. Greg Spierkel, the Ingram Micro co-president who soon will take over as chief executive, told The Channel Insider that Ingram Micro is a progressive company that has never shied away from change. And if it must continue to innovate, it has to have the ability to invest in the necessary resources.
That is a significant point. Cutting costs is important, but if a company is doing it only to boost profit with no intention of investing back into its infrastructure, it may make some new friends on Wall Street but risks losing customers. And losing customers may well lead to a falling-out with Wall Street, anyway.
Spierkel and the rest of the Ingram Micro management team are cognizant of the challenge that lay ahead. They understand that the support they have received from customers on the outsourcing plan is not unconditional. They will have to continue earning that support by executing properly and ensuring customer service never falls below unacceptable levels.