Rama Bijapurkar raises a valid point when she warns that we need to look at outsourcing less as a way to cut costs and focus instead on how best can  we use it to enhance the brand experience (ET, 8 May). Ideally, there should be no contradiction between the two.

There is no reason why outsourcing should not be able to cut costs and enhance brand experience. Except that we don’t live in an ideal world. In a second best world, where companies have to prioritise, the vast majority are more concerned (rightly) with cutting costs than with ‘enhancing brand experience’.

Outsourcing offers a way of achieving the first without necessarily hampering the second. There are two reasons for this. Cutting costs enables companies to focus on delivering more value to their customers; value in terms of better products, more choice and so on, all of which go to enhance the brand experience.

This is the reason why, over the years, more and more companies have begun to outsource all but their most core functions. Much like the rethinking on free market capitalism, there is now a great deal of rethinking on the value of brands (except at the very high end) and how much they contribute to company bottom lines. In a prolonged and deep economic downturn of the kind the world is now experiencing, it is debatable how much brand names per se influence spending decisions.

Two, there is no reason why outsourced services should necessarily be inferior to those performed in-house. On the contrary, a system of strict quality checks and regular feedback about disgruntled customers, along with the higher specialisation that outsourcing makes possible, should improve the brand experience.

Examples abound: Infosys, TCS, Wipro and a host of other niche IT service providers being prime instances of companies that have built their entire business model on developing and honing outsourced business to a fine art. The fundamental rule in any principal-agency relationship (of which outsourcing is one example) is that the principal is responsible for the actions of her agent. It is only when companies lose sight of this that outsourcing can hurt their brand; not otherwise!