Does Offshoring Impact Customer Satisfaction?

While researchers have noted the increase in offshoring IT and business processes since the 2000 timeframe, there is limited work on the implications of offshoring for firms and consumers. This research begins to address these implications by studying the relationship between offshoring and customer satisfaction, expressed through the American Customer Satisfaction IndexTM tracked by the National Quality Research Center. We analyze panel data of 68 firms and business units from 1997-2004, and find that offshoring is associated with an increase in both perceived value and perceived quality, the two key components of customer satisfaction. We also find that the positive relationship between offshoring and customer satisfaction is mediated by both perceived value and perceived quality. This indicates that as firms engage in offshoring IT and business processes, firms simultaneously increase the value and quality of their goods and services.