Sonata Notes: Should You Outsource Field Service, or Train Your Own Technicians?
The shortage of skilled field service technicians is a major challenge for capital equipment and infrastructure companies. While sales are growing, experienced baby boomers are retiring, the military is producing fewer engineers, and trade school enrollment isn’t growing fast enough to keep up with demand. Taken together, the widening gap between sales and staffing results in massive service backlogs.
Faced with these challenges, many equipment manufacturers are turning to outsourcing companies to fill the gap. But while outsourcing offers a tempting quick fix for skilled labor shortages, does it make sense for manufacturers to entrust their products and client relationships to a third party?
The answer, as always, is “it depends.”
In some ways, a capital equipment manufacturer outsourcing field service is no different than a hospital outsourcing its radiology services or a software company outsourcing mobile app development. Outsourcing can instantly add skilled workers to your team, allow you to scale up and down according to demand, and save your company the stress of finding last-minute replacements when a worker gets sick or quits.
However, outsourcing comes at a price. All agencies need to make a profit beyond what they pay technicians – which means hiring lower cost (and presumably lower quality) staff and/or charging manufacturers a hefty markup. Over time, this can lead to customer dissatisfaction or cause manufacturers to miss out on a potentially lucrative field service revenue stream,
Beyond that, while you can try offering incentives for cross-selling, it’s unlikely that outsourced technicians will be as motivated to promote your other products as someone trying to build a career in your company. And then there is the risk of a third-party service provider leaking your trade secrets to competitors in your niche, despite any NDAs or no-compete agreements. So, in the final analysis, does it make sense to outsource? That’s a judgment call only your executive team can make.
Outsourcing could be a variable solution if:
You are desperately behind on installations and service appointments, and need a temporary solution to workforce shortages ASAP.
The demand for installation and maintenance fluctuates significantly from month to month, to a point where you risk being overstaffed.
The skills required vary drastically from one service call to the next (e.g., some calls require software skills while others require mechanical or electrical skills), making it difficult to maintain an in-house team with the full range of capabilities.
The service requirements for your products are not very different from your competitors’, meaning a technician with general knowledge of the product category should be able to learn your product line extremely quickly.
However, outsourcing field service might be a bad idea if:
You expect field service to be a significant revenue stream, and you don’t want to reduce your profit margin by paying a markup for outsourced technicians.
The demand for service is consistent and/or growing, making it more cost-effective to grow your in-house team than rely on third parties.
You expect field service technicians to cross-sell products and recommend upgrades.
Your products and/or service approach are unique, to a point where someone with general experience couldn’t simply step in and immediately perform to your standards.
You want to prevent competitors from reverse engineering your products or discovering your trade secrets.
In short, while outsourcing can quickly address gaps in your field technician workforce, developing a strong in-house team is a strategic investment for companies looking to grow. And it doesn’t have to be all-or nothing: you can use outsourcing companies as a temporary fix while building up your own recruiting pipeline and training programs.