Dell: to Hell and Back Again? - The Efficiency Challenge
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In its efforts to be faster and more efficient at producing its product Dell was able to slash its production costs to bare-bone levels. As its ability to produce its product for less and less and the competition presented by other manufacturers increased, Dell continued to grow and grow. Based on its increased production levels, Dell quickly and unequivocally became a dominant force in the computer industry, capturing phenomenal levels of market share. It is because of this efficiency and performance that Dell attracted millions and millions of dollars of private investment.
With the influx of private investment, the stakes to maintain its position on the top of the computer food chain grew steeper. A company based on efficiency has only so much room to improve before certain standards have to be reduced, or eliminated, in order to slash costs even further. With a product that requires unparalleled after-sale technical support, and the sheer number of computer systems Dell was producing every day, the company required a significant investment in call-centers and technical support agents.
The first step taken to reduce the costs of providing this after-sale support was the use of third-party agencies to provide the site, personnel, and training to accommodate Dell's growing need for support agents. With the use of third party agencies Dell was able to reduce its costs further because it no longer needed to deal with the day to day operations of maintaining a call center, and the beginning of a trend of outsourcing started.
The next step to reduce costs was the outsourcing of these same services beyond American borders into the wild northern landscape of Canada. With a strong American dollar the costs of operating a call center were even less than in the United States, and a large amount of Dell technical support went to the Great White North. Soon thereafter India began to become noticed as a virtually untapped technical heaven where a single American dollar could be stretched even further. These changes made demanding investors very happy and, on paper, everything looked great in the world of Dell.
However, the reality was decidedly different. Consumer confidence in having their technical support issues resolved to their satisfaction in an expedient manner was eroding as fast as Dell profits were increasing. Long hold times, constant transfers, and a lack of customer satisfaction with both the product and the service began to slowly chip away at Dell's sales.
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