05/01/21

In-house vs Outsourced Technical Service & Support: A Complete Guide

Marc Sanderson

Technical services and aftermarket support capability has become a key competitive battleground for the world’s technology manufacturers. As a result, whether to deliver them with in-house resources or through an outsourced technical service and support contract has become a key strategic decision.

As the criticality of technology solutions and equipment has increased in all walks of life, so customers have come to demand guaranteed capability and performance. It is no longer enough to deliver an exceptional customer experience during the sales processes – it is now expected throughout the entire customer relationship lifecycle.

In-house vs Outsourced Technical Services & Support

The most adaptive and agile technology manufacturers have responded to these challenges by pushing technical service and support capability to the top of the boardroom agenda. Competitors have inevitably been forced to follow suit, moving service and support excellence from a nice-to-have to a must-have.

Read more in our e-Guide >>

 

The Challenges of Service & Support Excellence

Having established technical services as a strategic priority, manufacturers understand (or quickly discover) that support is a specialist function with its own unique set of requirements and difficulties.

First, the infrastructure and resources required to deliver effective service and support are very different from those required by the manufacturing process. Service facilities are typically distributed rather than centralised, for example, with regionally based field engineers and forward stock locations.

The Challenge of Technical Services and Support Excellence

Engineering excellence wouldn’t on the face of it seem to be a problem for technology manufacturers. But for most companies the real challenge is in making good engineers available for technical support, rather than for product development or other core activity.

In addition, while technical excellence might be a core competency of technology manufacturers, service often isn’t. Service excellence demands a distinct blend of culture, systems and skills which can cover everything from call handling software to an unswerving commitment to ‘going the extra mile’ in the resolution of every call.

And last but by no means least, there is the challenge of balancing effectiveness against efficiency This is inevitable whenever an organisation is trying to meet highly variable demand (as service and support often is) with a fixed cost function.

 

In-house vs outsourced: key factors

Given these challenges, it is perhaps no surprise that many if not most technology manufacturers will at some point review the option of outsourcing technical service and support.

When weighing the balance between in-house and outsourced technical service and support, there are two primary factors to assess: the cost benefit analysis; and the strategic / operational advantages and disadvantages.

Aftermarket

A cost analysis will help you determine whether it makes financial sense to keep a process in-house or turn it over to an outsource service provider. At this stage it is vital to remember that an accurate cost analysis is not simply a matter of comparing the current annual cost of running your service to different quotes from outsource providers. You can find a useful checklist to help you make this calculation in our free guide, In or Out? Calculating the cost benefit of in-house vs outsourced technical service provision.

But it is also vital to understand that a cost analysis is far from the complete picture. Even if outsourcing technical services and support wouldn’t reduce your costs (or perhaps even if it might cost you more) it could still be the right thing to do for any number of strategic and operational reasons. Of course the reverse could also be true, with a decision that reduces costs not always be the right on to make.

These strategic and operational factors can include skills, infrastructure, coverage, flexibility and service quality – all of which are fundamental to the delivery of effective technical service and support.

A. In-house technical service & support delivery

The benefits and disadvantages of in-house technical services and support provision are perhaps the most obvious. This is after all the default position for most companies.

Advantages:

  1. Control over operational factors is commonly cited as one of the most important advantages.
  2. Alongside this are the technical advantages which may accrue from deploying in-house engineering expertise, and the benefits arising from close communication and cooperation with other departments.
  3. As well as operational control, in-house provision also offers the tightest level of control over budgets.

Disadvantages:

  1. Meeting variable levels of demand with a fixed cost in-house operation makes it hard to achieve the right balance between quality and efficiency.
  2. Finding, training and retaining specialist service engineers can be hard enough; being able to scale them up and down to maintain both customer experience and profitability can be all but impossible.
  3. The infrastructure and systems required to operate a service function are distinct and different from those required by the manufacturing process. Again, issues of cost and scalability arise.
  4. Just as important to the overall customer experience is a culture of customer service; this will not always be properly embedded or understood within a company built on technology and manufacturing excellence.

technical service challenge

B. Outsourced technical service & support delivery

The benefits of outsourced technical service encompass a range of quality, cost and operational efficiencies.

Advantages:

  1. Scalability is one of the key strengths of an outsourced technical service & support solution. A specialist technical service and support partner will be able to draw on a larger specialist resource pool to meet either cyclical or unexpected peaks in demand.
  2. That larger pool will also give you direct and immediate access to specialist service expertise, with instant national coverage in the territory you wish to support.
  3. As well as being able to set clear service level agreements and tailor the reporting you receive, you will also be freeing your own technical resources to focus on your core research, manufacturing and sales operations.
  4. Service costs will also be shifted from fixed to variable, allowing you to manage them as part of the gross margin.

Disadvantages:

  1. The outsourcing process places a great deal of trust in your outsource provider. This will very much be ‘your brand in their hands’ so your due diligence and preparations will need to be rigorous.
  2. No outsource service will arrive fully prepped and ready to go. No matter how skilled and experienced they are, their engineers and technicians will still need training on your technology.
  3. You will also need to put in place processes to make sure you don’t lose communication between the service team and the rest of the business (which can be vital for feeding frontline experience back into the development of future new products, for example).
  4. Inevitably outsourcing will also introduce new requirements for the monitoring of outcomes. Service levels, other performance indicators and cost will all require careful and effective management.

You can read more about all of these key decision-making factors in our free download, In-house vs Outsourced: Achieving Technical Service & Support Excellence.

 

Inhouse vs Outsourced Technical Service & Support – What’s Right for You

Ultimately of course there is no single correct answer.

Each technology manufacturer will have its own unique situations and requirements. These will be based on commercial and product strategies, resources, existing infrastructure, product lifecycle stage and dozens more variables.

Our free e-guide In-house vs Outsourced: Achieving Technical Service & Support Excellence for Your Business explores these issues in more detail.

Alternatively you can read more about our total and selective outsourcing solutions here, or the many benefits of outsourcing with Qcom.

Or simply get in touch today to discuss in complete confidence your technical service and support requirements.

 

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