FatCow Shuns Trend Toward Offshoring

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FatCow Shuns Trend Toward Offshoring
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Jeff Sanford, theWHIR.com
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May 5, 2004 — (WEB HOST INDUSTRY REVIEW) — This past February, when US economists engaged in their monthly speculation
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about the upcoming employment stats, they seemed to be in general agreement
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the numbers would be strong.
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And why not? The economy was growing out of its post-bubble bust and the
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historical pattern for economic recovery has been new job creation at a
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rate of 250,000 during a recovery.
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But when the report finally appeared jaws dropped: it indicated that just
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21,000 new jobs had been created, this in an economy of over 300 million
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people, and far less than the 125,000 expected.
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As the alarm was raised over the possibility that some new job-killing
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malady was stalking the US economy fingers pointed quickly to offshore
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outsourcing-the practice of hiring English-speaking Pakistani and Indian
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nationals to do work at a fraction of the price as that demanded by North
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Americans.
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A furious national debate has followed, with many big-name technology CEOs
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talking up the practice, arguing that the future competitiveness of
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US-based corporations depends on their ability to compete on the price of
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labor against foreign rivals.
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But while that is certainly a concern, another tech CEO, Jackie Fewell of Albuquerque-based hosting firm FatCow Hosting (fatcow.com), recently weighed into the
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offshoring debate with an interesting and practical argument of her own -
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offshoring vital services such as customer contact will ultimately
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disadvantage a company by severing the most direct link management has to
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its customers.
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“One of the most fundamental aspects of FatCow and its success is the high
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value we place on our interaction with our customers. The idea of turning
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that over and putting it in someone else’s hands is incomprehensible to
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us,” says Fewell.
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More than fifty percent of sales at FatCow come from referrals, which
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suggests that customer service is one of the company’s most effective
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branding irons. FatCow would have to spend more on other marketing areas to make up
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for the decline in sales through other channels, giving lie to the argument
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that offshoring always saves money.
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“In the short term, outsourcing may cut operating costs and create revenue,
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but I’m not sure it ultimately produces the savings you’re looking for,”
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says Fewell. “In our business we get feedback from our customers on an hour
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to hour basis. To remove ourselves from that interaction would just be very
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unhealthy for us.”
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But couldn’t the outsourcer be contracted to perform that kind of work as
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well? Perhaps, says Peter Zeismann, a vice president with FatCow, but it
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would be almost impossible to describe and request (let alone put a price
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on) the sort of specific menu of services FatCow is talking about.
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“These are ultimately intangibles,” says Zeismann, “so there is no way to
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actually expect an outsourcing firm to provide those cultural
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communications. For instance if we get hit with virus X we have to have
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immediate communication with our customer service reps. If we’re twelve,
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fourteen hours behind how can we expect an outsource firm to do that?”
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Fewell, agrees, “I think it would lose something in the translation, and I
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don’t mean that literally, I just don’t think you would get the same level
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of commitment and response. I don’t think someone in another company can
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care as much as we care about something we work hard to produce every day.”
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The importance of the sales and customer service at FatCow is reflected in
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the physical layout of the company, which places the customer service team
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in the center of the building. That focus on customer service has resulted
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in a dedicated clientele. Along with the strong stream of referrals, FatCow
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has developed a strong tradition of communication-not only did a recent
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customer satisfaction survey come back with a 98 percent rating, but a good
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portion of the responses came back within twelve hours.
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“I think it was because we took time develop that relationship,” says
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Fewell. “We have an advantage over our competitors because of our
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commitment to keeping it under the roof and close to us. I’d rather cut
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money in other areas because it’s a good investment.”
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