Corporate Strategy

Offshoring Quintessentials

Off-shoring, a channel to reduce costs. If that is the only benefit you can relate offshoring to then you are here for a paradigm shift. Because you maybe under-utilizing the offshoring capabilities.

Here I lay a framework to aid in 1) analysis of how well are you utilizing the offshore capabilities and 2)  securing the leftover value add benefits that can yet be realized.

Offshoring as a setup can be categorized under four major components vis. Goal, Governance, Engagements and Communication.

Capture

Goal

Goals are the set of primary objectives that lay the foundation for the decision to offshore.

Cost Reduction – This is the primary reason firms follow the practice of basing some of its processes or services overseas, so as to take advantage of lower costs.

24×7 – Firms which need to function 24×7 also partake in off-shoring to take advantage of different time zones and continuous delivery models.

Talent Pool – The difference in currency rates across various countries allow the utilization of not so costly pool of highly skilled individuals, further providing firms with the skilled labor they seek at the prices they can afford.

Governance

Governance is the set of control principles, guidelines and measures via which offshoring is lead and managed across shores.

Flat – Flatter the governance structure better the transparency across stakeholders (both leadership and resources at client and service provider) and better the communication. And an holistic RACI across all engaged shores ensures timely escalations and appropriate proactive or otherwise reactive measures.

Business/Process Area – Management and Teams carved out based on business/process areas under the umbrella of programs, projects or maintenance assignments instead of a few huge pools of resources.

Physical Presence – Physical presence is of utmost necessity across all shores. These could be a few week visits to a permanent deployment for the duration of assignments.

Engagements

These are the typical tasks offshored by a firm. They are based on the client business requirement alignment to the best of service provider capabilities.

Run The Business – These are tasks which have established standardized processes and can be executed without any guidance based on the processes in place. Offshoring hits this from the perspective of plethora of resources.

Infrastructure Management – These are the infrastructure maintenance and modernization projects. Offshoring hits this from the perspective of talented pool of resources.

Business Process – These are the business process operations which require 24×7 services and can be offshored to avail the opportunity established by time zone differences. Offshoring hits this from the perspective of continuous business availability.

Communication

Communication plays a critical role in offshoring as there are differences ranging from culture to native language influences. Moreover, for the success of deliveries communication across stakeholders needs to be transparent, clear and effective i.e. valuing time constraints.

Multi-Channel – The communication channels available should be leveraged from email, telephone to video conferencing. Apart from these the communication should be many to many based on needs. There should be point of contacts however a direct communication is preferred over a relayed message ensuring the effective delivery of the assignment objectives. A many to many also ensures clarity of expectations across stakeholders.

Frequent – Communication frequency shouldn’t be limited to assignment and delivery times rather it should be an ongoing activity to ensure the timeliness, address any emerging concerns, brainstorm hurdles and enhance the entire process.

Established – The underlying personnel communication nuances must be accepted and understood by all parties as they collaborate for bigger good. The communication differences arising from geographical, cultural and political arenas are to be learned to gain better camaraderie and support across teams. Moreover, a reality check is necessary on the expectations to not land in a paralyses of blame game.

Conclusion

If a firm is focused only on one goal off the three against each four components shared then they are missing out on the surplus sitting on the table. It is in the best interest of both parties to utilize more than one goal across all four components and consume the underutilized surplus. In short, economically it makes sense.

Finally, off-shoring isn’t a turnkey solution that is implemented and it starts delivering on expected results come day one. It is a process, a relationship that is enhanced by continuous learning and continuous improvement.

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