Does It Help or Hurt to Outsource Customer Facing CRM activities?

What is it about?

Outsourcing of customer facing CRM activities is quite common. We show that firms might actually erode market value when outsourcing certain kinds of CRM activities. The benefits of CRM outsourcing depends on how the customer-facing activities impact agency costs and customer satisfaction.

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Why is it important?

Although firms spend inordinate amounts of resources in identifying outsourcing vendors and negotiating prices, little attention is devoted to which processes should be outsourced and which should be performed in house. We find that firms that outsource post-sales CRM and have strong IT capabilities tend to gain the most from CRM outsourcing