Outsourcing customer service may seem like a bargain, but it can cost you some of your most valuable clients

With consumers enjoying more choice than ever before, evidence is growing that great service is essential for long-term customer retention. To cite just one example, a recent survey of pension policyholders in the United Kingdom found that 75 percent would leave their current provider if they experienced bad customer service.

Meanwhile, the current enthusiasm for outsourcing call centers, IT support, and other 'noncore' service functions isn't delighting anyone. Two-thirds of the companies that responded to a survey by InformationWeek reported either no change or a worsening in customer satisfaction as a result of business-process outsourcing