Customers have a love/hate relationship with IT outsourcing providers

HPE, Oracle and IBM’s outsourcing customers are much more likely to recommend them, but many other IT service providers underperform in delivering a good customer experience.

customer experience
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HPE Outsourcing once again garnered the highest Net Promoter (NPS) score among IT service providers according to a 2016 analysis of NPS scores among corporate technology vendors recently published by the Temkin Group. However, its merger with CSC could shakes its customer experience standing.

A company’s NPS is considered a measure of customer loyalty and has been proven by some to be a leading indicator of corporate growth. Customers are asked to rank the likelihood they would recommend a brand to a friend or colleague on a scale of 1-10. Those who answer 9 or 10 are considered promoters: loyal enthusiasts who will keep buying and refer others the company, thereby fueling growth. Respondents who answer 7 or 8 are considered passive customers: satisfied, but unenthusiastic and vulnerable to competitive offerings. Those who answer between 0 and 6 are detractors: unhappy customers who can damage a brand and impede growth with their negative word of mouth.

The NPS is a straightforward calculation achieved by subtracting the percentage of detractors from the percentage of promoters, ranging range from -100 (all detractors) to 100 (all promoters).

The top 10, the bottom 10

For the last five years, the Temkin Group has tracked NPS metrics for 62 major technology vendors. Of the IT services and outsourcing vendors on the list, only HPE (with an NPS score of 56), Oracle’s services business (50), and IBM (45) cracked the top 10. Oracle appeared much lower at number 23 in the Temkin Group rankings last year. The top IT vendor overall was IBM SPSS (Big Blue’s analytics software unit), which scored a 61.

A number of IT service providers landed in the bottom 10 of technology vendors, including ACS, Accenture, ADP outsourcing, CSC, Infosys, CapGemini, and Cognizant (which was last on the list with an NPS of -10). Accenture took the biggest tumble from No. 9 last year to No. 31 this year. Conversely, Wipro climbed in the customer experience rankings from No. 60 up to No. 34.

“Outsourcers/IT service providers tend to land near the top or the bottom of the NPS ratings,” explains Bruce Temkin, managing partner of the Temkin Group. “These tend to be very significant relationships, so they can lead to a lot of referrals (if they go well) or many complaints (if things don't go so well).”

The technology vendor group overall earned a slightly lower average NPS score this year after a significant increase in 2015. But the dip was too slight to signify any negative trend. “Most of these large tech vendors are focusing on improving customer experience, so I would expect these to be improving over the longer-term,” Temkin says.

[ Related: HPE CIO tackles tough 'spin merge' with CSC ]

HPE’s plans to spin off its IT services business and merge it with much lower NPS-scorer CSC could negatively impact customer sentiment of the combined company. “These types of mergers can often hurt customer experience, which leads to lower Net Promoter Scores,” Temkin says. “As companies come together, there's a tendency to become very internally focused, and lose sight of customers.”

[ Related: How IT outsourcing customers should prepare for HPE-CSC ]

Much will depend on whether customer experience is a critical component of the integration activities. “If the merger team puts customer experience first—and if they tap into what seems to be working well at HPE—then they can create an even stronger company for customers,” says Temkin. “To make this happen, they need to have some very explicit customer experience goals as part of the merger objectives.”

This story, "Customers have a love/hate relationship with IT outsourcing providers" was originally published by CIO.

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