Offshore outsourcing of customer relationship management: conceptual model and propositions

Customer relationship management (CRM) refers to a firm’s activities for establishing and maintaining relationships with its customers. Outsourcing refers to a firm’s contracting with another firm to perform activities that were erstwhile performed within the firm. The emergence of a low cost, high speed, global communication network and information processing network has enabled an increasing number of firms based in more industrialized market economies to outsource specific elements of their CRM to offshore vendors located in countries with significantly lower labor costs. Building on scholarly insights from multiple literature streams, we present a conceptual model delineating the antecedents and consequences of CRM offshore outsourcing intensity. We also provide a literature overview of the determinants of location choice decision for offshore outsourcing, an issue that is closely linked to the offshore outsourcing decision. The growing trend toward offshore outsourcing of CRM serves to highlight a number of issues that merit careful managerial consideration. In this context, we highlight supply-side versus demand-side effects of CRM offshore outsourcing, the economics of CRM offshore outsourcing versus CRM automation, CRM offshore outsourcing versus CRM offshoring, and the evolution of hierarchical CRM organizations toward market based CRM business systems, and other issues.