Question: Outsourcing's Impact On The Channel
What impact will offshore outsourcing and offshore programming likely have on the channel? Is it a concern of yours going forward that the whole economic structure could be turned on end?
Ballmer's Answer: I think there are a few different aspects of what our channel partners do. And I think some of them, some aspects, will be more affected by offshoring than others. If you're giving a customer personal service, you're installing some hardware and some software, you're providing and working in the smaller and [midsize] business space, where you get an owner who really wants to see your face and talk to you, I don't think that part of the channel is going to be very impacted by offshoring. There may be some pressure on labor rates, but I don't think it is going to be dramatically impacted by offshoring. The thing I think will be more impacted is people who want to do custom application-development projects of some size. Now for the smallest businesses, it's probably not an issue. But when you start getting up to [midsize] businesses, there will be an offshoring of development projects much more than there will be infrastructure, development-type activities. I do think that most of the offshoring will first be a phenomenon in large enterprise customers. So the channel partners who serve enterprises are more likely to see issues that they need to deal with before channel partners who serve smaller and [midsize] business. And I think channel partners who do application development are going to have to be most nimble, shall we say, in this regard.
Williams' Response: While I agree with most of Ballmer's points, I do think offshore outsourcing is a concern to small businesses, particularly when solution providers invest the time and effort to build a good customer-service relationship with that client. Developing that level of customer service and personal attention easily goes beyond recommending and installing software and hardware. At this level of personal service, Williams & Associates offers [its] customers the options to purchase service and maintenance warranties, as well as technical-support warranties. It's with these types of extended services, particularly technical support, where offshore outsourcing impacts the customer's purchasing decision. I am concerned that small, locally owned business will likely be impacted by what is ordinarily viewed as a global phenomenon that impacts large conglomerates only. Separately, I feel Microsoft must also address less experienced consumers' understanding of its products. I find that many of my less experienced clients use only 5 to 10 percent of Word's functions. When they learn how to effectively utilize Word's advanced features, they are amazed at how more productively they [can] handle data.
Competition From Offshore Providers
Will offshore outsourcing and offshore programming impact the broad channel? That's a question that many in the partner community are wondering, and not just those who work for global conglomerates that are already being impacted by low-cost, offshore labor rates.
Linda Williams is president of Williams & Associates, a training company based in Richmond, Va. The company provides on-site, personalized training for companies, groups and individuals nationwide. It specializes in many products in the Microsoft software stack, especially Office titles. Although she runs a small, locally owned business, Williams wonders how her company will be impacted by the global phenomenon of shifting work to markets where labor rates are lower than where customers or providers are based. Although some dismiss the thought, Williams does not. Could the service-, maintenance- and technical-support warranties she offers be just as easily fulfilled by companies thousands of miles away? It's already happening.
After working with Microsoft for more than a decade, she's hoping that the company, which accounts for 80 percent of Williams & Associates' desktop-application solutions business, will recognize the time and effort she has invested helping Microsoft customers face-to-face, and not simply give its full blessing to any rival that promises a cheaper price.