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Outsourcing Central


Planning Offshoring

 
  • Plan before you Outsource
Outsourcing is not new to the world, and initially, companies used this as a tool when faced with scarcity of resources locally. Subsequently, outsourcing became the definitive tool to enhance productivity and performance levels to become competitive in the marketplace. In the late 90’s, what started as investments going into internet and telecommunication networks worldwide to bring countries and people much closer, actually paved the way for another revolution. Outsourcing was replaced by offshore outsourcing and with the rapid spread of the Internet and drastic fall in telecommunication costs it became much easier to procure services from an offshore destination - with minimal management.

Today offshore outsourcing can be termed as the third version of an outsourcing strategy. Some even term it as global sourcing where services are procured not from one but more than one offshore destination. Today, global sourcing is not a fashionable phenomenon but a business necessity to become competitive and productive in the marketplace.

Albeit outsourcing is a proven strategy, it can fail if you do not plan it thoroughly. There is no short route to reaping the true benefits of offshore outsourcing, and without doubt, it requires thinking, planning and execution.

We have identified a few key steps to take, before you outsource

Step by step approach
How and what to plan
Identify your objectives
  • If cost savings is the only objective, then outsource all labor intensive and non-core functions. Be aggressive, identify work, set targets for provider and then outsource.

  • If access to a bigger resource pool is also the objective, then always plan with a long term view. Select a provider with a long term vision. Be aggressive but selective in deciding on a provider.
Opt for management buy-in
  • Outsourcing is a change which is bound to be resisted as employees will naturally feel insecure thus giving way to rumors. Senior management needs to be proactive in resting rumors and realigning employees to larger company goals.

  • At the same time, the management needs to be patient and should not expect cost savings overnight. It is not just savings but increased flexibility and scalability, thatshould be the yardstick to measure success in the offshore outsourcing strategy.
Identify work to outsource
  • For immediate short term cost savings always outsource non-core labor intensive work.

  • To ensure zero failure always outsource work which is less dependent on knowledge transfer and people.

  • Always start by outsourcing easy and non core functions and then follow up with more complex work going offshore so that the provider gets time to pick up the pace.

  • Also try to start outsourcing work that requires gradually increasing local team / lead / time involvement
Search & Select provider
  • For short term cost savings, it is imperative to focus on a provider that operates at lower billing rates and has the resources available.

  • For a long term outsourcing strategy, it becomes equally important to focus on experience, references, people quality and work ethics of the service provider.

  • For long term outsourcing strategy selection of offshore destination becomes equally important. Study and compare the time overlap, political stability, resource availability, and cultural compatibility of the offshore country.

  • Search, shortlist and select a provider company by visiting them and never forget to take a customer reference.

  • Always visit the offshore company and try to meet as many people as you can from each rank to analyze the work culture of the country and provider company.
Prepare company for change
  • When going in for short term outsourcing, educate in house team honestly about the strategy so they do not feel insecure.

  • When outsourcing is your long term strategy, it is imperative that you align employees to company goals.

  • Outsourcing is a change which will be resisted and will lead to rumors. Thus, senior management should be proactive in resting all rumors.

  • Treat the supplier as part of your extended organization and not merely as a contractor. Encourage your project teams to interact and familiarize themselves with supplier teams. This will close cultural gaps and lead to better working relationships.
Start operational readiness
  • Upgrade your network and security policies before you start giving access to your network and servers to the offshore outsourced team.

  • Upgrade your internet and telecommunication backbone to enable smooth and reliable communication between your team and the offshore team.

  • Study the preparedness of the provider company to enable reliable and smooth communication with your onshore team.
Start the engagement small
  • If you have time it is always recommended to start with a pilot whereby not only do you assess the provider company but you also prepare yourself for the changed working environment.

  • Never outsource complex and core technology functions immediately, but always start outsourcing with easy, labor intensive and non core functions.
On success, scale to maximize
  • If possible, always start with what the provider company does very well and slowly outsource more complex functions, thus giving the provider, the time to adjust.

  • When successful with the outsourcing strategy, do not hesitate to maximize the opportunity.

  • Economies of scale always work well and will always help in attracting more competitive rates from an offshore provider company.
 
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