Outsourcing all or part of a company's customer service operation has the potential to lower costs, better focus in-house resources, and even improve customer relationships - but entrusting customers to an outside vendor also creates a service "Gap" that can jeopardize those customer relationships. Effective outsourcing means eliminating the service gap by intelligently and actively managing outsourcing relationships.

You also wind up with a happier customer, even though the customer is doing your work for you. That's because the customer typically feels that he or she is getting more timely and accurate service.

Examples

Federal Express has scored heavily with an Internet-based system that lets customers track a package through all the intermediate steps as it goes from sender to receiver. Holiday Inn and Hilton have won over customers with a system that helps users locate a hotel, check availability, and make a reservation.