The performance implications of outsourcing customer support to service providers in emerging versus established economies

N. Raassens, S.H.K. Wuyts, I. Geyskens

Research output: Contribution to journalArticleScientificpeer-review

22 Citations (Scopus)

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.
Original languageEnglish
Pages (from-to)280-292
JournalInternational Journal of Research in Marketing
Volume31
Issue number3
Early online date11 Mar 2014
DOIs
Publication statusPublished - Sep 2014

Keywords

  • outsourcing
  • customer support
  • offshore
  • emerging markets
  • event study

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