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Well now, there's a thing. A group of professors working with the national Quality Research Center at the University of Michigan has come to the none-too-startling conclusion that that offshore outsourcing hurts customer service ratings!

Based on a study of the outsourcing activity of 150 firms between 1998 and 2006, the good professors reckon that offshore outsourcing of front office functions like customer service leads to a significant decrease in customer satisfaction based on the American Consumer Satisfaction Index (ACSI). The average ACSI decline from taking front office operations offshore was a drop of 1% to 5% of a company’s market cap.

“We find that offshoring front office functions is associated with a decrease in customer satisfaction,” they report. “While offshoring back office functions is not associated with a change in customer satisfaction, it is associated with an increase in customer loyalty."

But hang on, it seems that outsourcing customer service onshore also leads to a similar decrease. “Additional analysis shows that front office offshoring and onshore front office outsourcing are both associated with a similar decrease in perceived quality, one of the primary determinants of customer satisfaction,” admit the boffins. “Neither front office offshoring nor back office offshoring are associated with an increase in perceived value, another primary determinant of customer satisfaction, despite the fact that offshoring enables firms to reduce costs.”

Could it be that the real lesson here is that companies need to think long and hard before letting any third party handle their customer interaction?

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