Three-part methodology to formulate your offshoring strategies;
1. Keep Your Core Tight
Outsource low-priority works while keeping the high-priority process in-house. However, the critical works must be carefully considered. Thus, your first step should be to prioritize the process based on the value it will create for the clients and to the company.
Your executives should know the importance of this, but they may not know the way to factor them into determining about offshoring. Well, a simple way of doing this could be answering one question that is how important is the process in comparison with others in building value for the company? Though, the answer will vary from business to business and sometimes industries, by the end you are likely to come to a definite decision.
2. Find the Elephant in the Room
Risk analysis is critical to offshoring. Look systematically at the process to find and then eliminate the operational risk and structural risk, if any, to ensure smooth operation.
Companies can lower their operational risk by;
- Codifying the work. While documenting
the works for the employees, state the different issues that can be faced and
stipulate the responses for each. For example; if a financial institution draws
up rules regarding their consumer loans, they should have stipulated measures
to resolve exceptions arising out of the same. This way one can even outsource
even the most complex tasks such as equity research.
- Using appropriate metrics to analyze the quality of processes. Most businesses fail to develop efficient metrics, especially when they are outsourcing for the first time. This is why they do not understand whether the providers have executed better than their employees. Therefore, businesses must create better metrics to measure the quality of both offshore and in-house processes.
Structural risk;
This occurs when vendors do not invest in training the employees or hire professionals who aren’t enough qualified as the agents. For example; when signing contracts, the vendor may tell you that they will hire people with postgraduate degrees. But as the business grows, they may staff the projects with managers who may have a master’s degree, but not necessarily in the specific field that your outsourced project will need. And thus the quality of service falls. In such a situation you have no choice but to bear the entire training cost to speed up the process.
So, you see there’s nothing to assume that the vendors will act to maximize both your and their interest. Instead, you must put your company’s supervisors at work to monitor your vendors work and ensure best practices.
3. Have Your Cake and Eat It, Too
Determine the locations for the offshore process and the organizational forms like joint venture who can examine the process risks. When picking the organizational forms businesses trade off the authority and quality with the profits from the vendor’s offered specialization. In such a scenario, when offshoring has led to a more hybrid form of organization, it is more agreeable to work adopt sense-and-respond methodology instead of command-and-control.
In a hybrid business ecosystem, it is more expected from the companies to specify the quality of services while working closely with the vendors to ensure high quality. And today when technology enables almost everything, real time exchange of information is no big deal. Since offshoring isn’t only about companies crossing geographical boundaries, but also redrawing organizational boundaries to cater to a collaborative knowledge, and, expertise, attaining an extended or hybrid organization can prove to be cost-effective.
To sum up, though it may sound a bit cliché, businesses must treat offshore processes as indispensable, it is only then one can reap all the benefits.
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