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Comment by protomyth | Hacker News Reader

"though around 120 of those jobs in customer service will be replaced through outsourcing."

Hiring a cheap call center in some other country I suppose.

If you had your savings in this company as a shareholder, and if you knew that the company could survive and maybe prosper (unlikely in case of LS) by reducing its cost of customer service by outsourcing it, then would you not support this move?

This is not very different from when you decided to buy a decent quality product made in China when you could have bought a slightly better quality product made in USA for 2X or 3X the price. I'm obviously guessing here to be more dramatic, but the point is true in general.

Cost has always been a major factor in many decisions we make as individuals or organizations. And for a company (which has fiduciary duty to its shareholders), cost is definitely a more important factor than being able to hire Americans.

If you have savings in this company as a shareholder, you're going to lose your savings. The only people who will make money at this point are the VCs, who by law can't have their "savings" invested in the company. If you're not a VC holding shares at the company you're going to be wiped out via dilution or multipliers in the event of an exit, and god forbid they raise MORE money, because the terms on that deal are going to be pretty rough.

Even if the company manages to turn itself around, older existing shares will probably be wiped out just due to dilution in retaining its executives and share-backed loans, or, again, if it has to raise more money, terms on new money.

Whether a shareholder will get any returns in Living Social is not what I'm talking about. As a company, their job is to do whatever they legally can to protect (and grow) a shareholder's investment. If hiring Americans goes against that, then they should not hire Americans.

I was just responding to the first part of your post, specifically around a shareholder had their savings invested in the company. Management has a legal responsibility to do what's best for the company, yes, but that often is at odds with an investor who got in before the company turned sour.

If hiring Americans goes against that, maybe they shouldn't be in business.

Thus causing even fewer Americans to have jobs. Perfect demonstration of why protectionism is such a terrible idea.

Or, allowing someone who is better at it to take their place, giving more Americans jobs.

There's no legal concept of that oft-asserted “fiduciary duty to maximize shareholder profits” and for a very good reason: it's almost never clear what the correct decision is until afterwards.

In this case, what are the odds that an overseas call center would cost more than anticipated (often the case), lower the quality of service and thus the company's reputation, or actually be enough to stop the downwards spiral rather than just signaling that you're in a low value-add commodity business?

> what are the odds that an overseas call center would cost more than anticipated (often the case), lower the quality of service and thus the company's reputation, or actually be enough to stop the downwards spiral rather than just signaling that you're in a low value-add commodity business?

I would imagine that a company as large as LS would have used some analysis and external/internal data to estimate the overall costs of such a move (which would include the cost of lower quality of service etc). And they must have still found the move cost-effective.

It's slightly insulting to LS employees to think that they would know less about the cost-effectiveness of this move than us. Moreover, this move seems drastic. When you're making such drastic moves, you're likely doing so to be able to survive. In such cases, lower quality of customer service and poor signals etc take a back seat.

The argument isn't that LS management knows less but rather that they're trying to balance multiple demands. An investor's interests end when they cash out, so it's very common for CEOs to face pressure to make decisions which are likely to be profitable in the short-term, but unless they're planning to leave at the same time rhey have to consider the risks to long-term sustainability. Things like customer support and R&D are classic targets for that because they tend to involve many jobs which don't directly generate revenue, and the negative effects often aren't visible for years but the savings show up in the next quarterly report.

Sorry, this is not getting at the core of your assertion, but what do you mean by:

> There's no legal concept of the oft-asserted “fiduciary duty"

... I can assure you that "fiduciary duty" is very much a legal concept.

Sorry, yes, that could have been more precise. There's a common trope that executives have a fiduciary duty to maximize shareholder value, but that's not actually written into any sort of law for the reasons I mentioned — business is all about judgement calls trying to balance risks and trying to balance short and long-term prospects. I'll edit that to clarify.

That doesn't mean that cost shouldn't be considered, only that there's no support for the assertion that “cost is definitely a more important factor” because reasonable people can quite legitimately come to different conclusions. I might think the overseas call center is reasonable, you might think that you'll be able to offer a better customer experience by keeping it in-house or with staff who work for you rather than contractors, etc. and only time will tell how true those predictions are.

Err...I am guessing you have never been involved shareholder derivative lawsuit against the board then...happens all the time in M&A.

http://www.pennstatelawreview.org/116/3/116%20Penn%20St.%20L...

https://en.wikipedia.org/wiki/Revlon,_Inc._v._MacAndrews_%26....

That's a specialized edge-case and both of your links make the same point that I was making as the default rule for normal operations. There is usually considerable deference to business judgement but when a company is being sold you have an unusually simple situation where the timeframe is fixed and the value is precise. Notice how the situation is recognized as different from the normal operations we were talking about:

> Accordingly, the board's actions are evaluated in a different frame of reference. In such a context, that conduct can not be judicially reviewed pursuant to the traditional business judgment rule, but instead will be scrutinized for reasonableness in relation to this discrete obligation.

Best not to talk in absolutes then, Mr. "'There's no legal concept of that oft-asserted "fiduciary duty to maximize shareholder profits'"

lol at M&A is a "specialized edge-case".

I hope the jobs stay here. I worked in an IT call center during my time in college in Northern California. I was hourly, but everyone earned around 45-55k which is way cheaper than what they were paying for the same employee in the Bay Area. We were able to drive down for on site training and we all speak English without accents. Really made me believe more companies need to try outsourcing to college towns and rural cities.

You realize that you can cut those salaries by 75% by outsourcing them, right? It's really a simple equation of how much you stand to lose from customers having to deal with foreign call center employees vs how much you save. How many people ever have to deal with LS support in the first place, and then, over an issue that is not relatively easy to handle? I bet this was a very easy decision to make.

Agree - I worked in a call center for several years and it paid the bills, and improved 'soft skills' while letting me develop more technical knowledge on the side. Since I wasn't standing on my feet all day making sandwiches or waiting tables, I could come home after solving problems for angry people all day (thankfully I worked for a place that gave their support people the ability to actually resolve the problems), I would still have the energy and mindspace to be able to work on side projects and learn on my own time.

As much as companies try to automate things, I really hope that localized support makes a comeback.

Ive had both a call center job and a job making sandwiches all day while teaching myself programming on the side. I progressed way further during the sandwich-making years. It was hard to come home after being on a computer all day dealing with real problems (call center) and sit down to program, whereas after working in a restaurant I was physically exhausted but desperate for a cognitive outlet.

To clarify - the stress of the restaurant job was as much the lack of a distinct schedule combined with minimum wage pay as it was the physical work of the job. The call center gave me a regular 8-6 window, full time work at double the minimum wage at the time.

I agree, but do you realize you were being paid 15x the salary of call center workers in India.

15x the quality too without the language barrier and if OP was trainable.

eh, unless you are hiring your buddy who lives in india, there are usually a lot of other not so obvious costs involved. unless you know someone who is working from home, you usually go through middlemen who take a pretty big cut. And part of that is doing business in other places is weird and different from doing business here in America.

All that aside, wages in India aren't 1/15th of what they are in the less economically developed parts of the USA, at least not for reliable people capable of working remote for American companies.

It depends a lot what you are after as well. Do you want someone who is able to rigidly enact a customer service manual and is hopefully understandable on the phone to your customers? Or do you want someone who is easily understandable and is able to make complex decisions based on individual customers cases?

There is going to be a pretty big difference in cost between the 2.

Also in our limited experience hiring in India you are going to want to pay a bit of a premium if you want low turnover.

but those things are both true in America, too. My point was just that the minimum bar for "can work with Americans remotely" puts your Indian labor way above 1/10th what you'd pay for the same thing in low labor cost parts of the US. From what I've seen, a 2x savings is... optimistic.

I'm just trying to make the point that this myth that you can get someone who speaks English and has enough knowledge of American customs to deal with customer support for under $1/hr is just a myth.

So what? Would you rather have the company scale and have a chance to do well or let it fail given their current cost structure. Think long term. If the company does well, they will hire more Americans workers in roles which do require more application and intellect.

I actually think customer service require more skills than it may appear straight away - you have to learn to make angry people like you, or at least think they have been treated fairly.

And I have never seen a successful startup that didn't listen to its users - which you can't do if the people who are supposed to talk with them are in a different continent and don't understand the language really well.

So by definition you have never seen a successful startup with offshore support?

I agree. Customer Service needs to be an equal partner on the team with Sales and Development. Growth is great, but it means nothing if you're bleeding yourself dry by not serving those customers you're obtaining.

I think its a bit disingenuous to phrase that part like they are just "replacing" those jobs locally. They are lost to the local community, and will never come back. Plus, I wouldn't expect the same level of service (change in stake and incentive), and there is now another possible data breach target.

Companies come and go. It's a fact of life. And it's a lot better that way than keeping crappy companies around because they provide jobs. Source: I lived in Italy for 15 years.

> require more application and intellect

What? Customer service requires intellect, a lot .

> Would you rather have the company scale and have a chance to do well or let it fail given their current cost structure.

I bet there are other options too.

Tech startups are a pretty lousy plan for general job growth considering they tend to employ far fewer people, relative to their revenue, than most businesses.

If their new plan (restaurant discounts linked to credit cards) is going to go anywhere, it's going to take a TON of sales staff cold-calling resturants all across the country. Unless they are content to just go with national franchises.

Unfortunately, this is the perception that ensures customer service experiences stay horrible. It actually takes a lot of skill (including and especially personal skills) to satisfy an angry customer. If you can do it you'll win a loyal customer. But most people don't bother.

Think of it as an easy way to differentiate your own company, by offering quality customer service.

> If the company does well, they will hire more Americans workers in roles which do require more application and intellect.

Leaving aside the implication that customer service doesn't require either application or intellect, why would they do this if their experience teaches them that outsourcing gets the job done at a fraction of the cost?

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