Handled in the right manner offshore outsourcing can prove to be of significant advantage to your organisation. True, there are certain disadvantages and risks involved too. However, your establishment should not find it too hard to overcome them, if it goes in for informed decision-making with the aid of an experienced expert. We outline some tips below, which should help you attain the success you have been seeking.
Tip one Choose a Healthy Model
To begin with, figure out the outsourcing requirements of your company. Based upon this, opt for a program that will take care of the organisation’s short-term and long-term objectives. This model should be compatible with your existing business model. Towards this end, you should be aware of its strengths and weaknesses, as well as how successful this program’s applications have proven for other establishments in the past or present. Take into consideration several variables, such as the scope of the program, flexibility in contractual agreements, responsibilities to be undertaken by both parties, etc. Only then, will you be able to set up a reliable and trustworthy link between the offshore vendor and your company?
Two examples of popular offshore models are given below.
Functional outsourcing refers to permitting the offshore vendor to take charge of an entire department, everything associated with a particular aspect of your business, a specific process or an application. Although this kind of an arrangement can prove risky, if you have supreme confidence in your offshore vendor to deliver the goods, you may go for it. You will gain access to high-quality expertise, thereby saving on time, effort and costs. Think carefully before signing the final agreement.
Project outsourcing refers to awarding a particular project to the offshore vendor. The specifications, deadlines, testing methodologies, implementation processes are all drafted clearly before reaching an accord. You might take recourse to a small project, to assess the skills of your new vendor, the small-scale and large-scale risks associated with the pilot project, cost-effectiveness, etc. In turn, the offshore vendor takes the opportunity to highlight his/her level of process maturity. If everything proves satisfactory, you may cement the relationship.
Tip two Work in Collaboration
Admittedly, the onsite and offshore components associated with the completion of a particular task are located in varied time zones. However, this does not mean that teamwork is not possible. Relationships become strengthened, and end goals become even more achievable if the I/you/us are replaced by ‘we.’ For instance, you might wonder, “If we require more data from the user/customer,” instead of, “would you like us to obtain more information from the client.” After all, each member, regardless of geographical location, is a part of the team. All these parts come together to create a marvellous whole, to ensure customer satisfaction. Thus, discard this division of onsite and offshore, and focus only on completion and delivery.
If you are still sceptical, give a thought to how performance might suffer due to the ‘personal touch’ being absent. True, these mutual agreements focus on process-intensive activities, to minimise risks and retain consistency in execution. However, a task reaches successful completion or fails because of the manner in which the human workforce performs. When you permit reasonable lightening of the work atmosphere, it becomes easy to identify personal strengths and weaknesses. Timely advice and rectifications can work wonders on the mindset of a tightly bonded team. In times of difficulties, you will never have to worry about excess motivation, personal sacrifices or loyalty.
Tip three Develop Worthy Partnerships
You will receive plenty of offers from vendors across the globe to enter into a partnership. Some are genuinely concerned about the achievement of your organisational goals via the provision of quality service. They are even aware of the reasons for your outsourcing specific tasks. Pay keen attention to such businesspersons, for you are bound to find the perfect partner amongst this group. Do not be in a hurry to sign contracts with offshore companies that talk only about novel models for attracting newer customers. They are exclusively focused on profits, not on your strategic objectives. If there is no consensus on the most critical aspect of growing a business, you will find yourself changing offshore vendors quite often.
Tip four The Process of Selecting an Offshore Vendor
At the outset, select several offshore vendors who seem capable of fulfilling your establishment’s functional and technical requirements. Set up separate meetings with each one of them. At the meeting, place all your cards on the table; which also means that no information related to the proposal/task should be held back from the vendor. State your goals and objectives for creating an offshore strategy. Wait for each vendor to present a solution. Evaluate the answers based on commitment, corporate values, professionalism, integrity, innovativeness, etc. Although all these qualities are commendable, the offshore company with the most significant problem-solving ability should become your business partner.
Tip five Have Clarity in Objectives
Your establishment’s goals must be extremely well defined in nature. Then again, every objective should be measurable. These objectives will help you in outlining the reasons for linking up with an offshore company. You will be able to explain to everyone concerned, how this kind of a program can increase the business value of your company. When you have clarity, you will have no problems in selecting the best vendor and outsourcing model to work with, awarding projects, assessing risks, etc. In fact, the successes or failures of your strategies may be evaluated within the context of your organisational objectives. You will be able to assess progress, as well as take corrective actions wherever and whenever necessary via measurable goals. These goals are the useful metrics and events for projecting future outsourcing performance. After all, you do not want to waste your resources, money or business opportunities on offshore outsourcing, even a managed effort, if it does not provide intelligent solutions to your trading issues.
Tip six Be Realistic
It is all too easy to go overboard with goal setting, thanks to an aggressive mindset. Do cover as many sheets as you want with all kinds of short-term and long-term objectives for the year. However, do not forget to revisit these goals regularly. For instance, you may have worked out grand strategies to save on costs on IT labour by at least 40% and above. Can you be 100% certain that all these strategies will work? Your enterprise may be just a couple of years old. You are bound to have incurred extra costs on communicating with your offshore vendor, completing infrastructure, overheads, etc. In fact, there may be hidden expenses that you had never imagined would occur. Therefore, be satisfied with humbler savings during the initial years. Be realistic about the returns on your initial investment. Give your company and offshore strategies time to ‘mature’ in the marketplace.
Tip seven Give Importance to Cost Effectiveness
As mentioned above, hidden costs associated with offshore outsourcing can come as a tremendous surprise. They may range from a small 15% to a whopping 60%, or even more. It is extremely imperative to develop appropriate approaches to balancing costs or minimising them. Your senior executives may also pressurise you to outsource those tasks, which demand costly skilled labour.
What kind of hidden expenses can you expect?
First, the process of finding a dependable offshore vendor having an intelligent team of people to complete your tasks is a time-consuming and expensive one.
Once the vendor has been selected, you will have to take up the tedious task of transferring knowledge, responsibilities and processes via people and technology.
Then again, you may have to downsize existing staff and replace it with new personnel. Training takes time, effort and money.
You will even have to go in for cultural training if you wish to avoid loads of rework through language and cultural misunderstandings.
All pilot projects are supposed to be tools for learning. In case, there are changes in management during this process; you will have to start all over again.
Establishment of novel communication systems, improving infrastructure and maintaining it, installing extra servers and adding to existing layers in the management arena, are going to cost you a pretty penny.
You cannot even expect to relax after a particular contract has been seen through. However, you will have to spend on maintaining it too.
Thus, the best way to balance your expenses is to avoid disseminating overhead costs amongst individual projects. Instead, centralise the maximum portion of your overhead costs. This way, even if one project suffers, the rest will be safe. Above all, team morale will not be disturbed.
Tip eight Keep Track of your Progress
Do keep an attentive eye on your expenditure and savings. In case, the advantages do not seem to be as high as you expected them to be, work out strategies to improve performance. On the other hand, if offshore outsourcing has yielded extraordinary and unexpectedly marvellous results, ensure that your ‘top’ people know about it. In fact, every success may be counted as a best practice. Keep learning!
Sometimes, a complete offshore strategy, or just parts of it, may succeed or fail. You will be able to comprehend only when you have meaningful measurements in place for measuring successes and failures. Go in for some reliable scorecard metrics, which will help you to regulate the objectives of the foreign assignment, define them and audit the reports when they are sent in. Oh yes, do not forget to let the offshore vendor have full knowledge of these metrics. Consult an experienced statistician to establish these metrics, before sharing them. Ensure that they are kept simple and not too complicated.
Tip Nine Study your Risks
Do not be vague about the potential risks associated with each offshore task/strategy. Instead, focus on actual disasters that might take place. What could be the impact of each, on your project? Ensure that you have a mitigation plan in place for every potential risk. Do keep the plans updated always. It would help to prioritise the potential dangers. Keen monitoring should help you to recognise the onset of a risky situation. Ensure that the senior executives are kept updated so that they might take corrective actions immediately.
It will not hurt to engage in brainstorming sessions involving front-line developers, stakeholders, senior management, etc., occasionally. When so many minds come together, it will be easier to define a potential risk, categorise it and award its impact a brief description. The investment of time on such an exercise is well worth it! Think about it. When you can predict the probability of a particular risk materialising and its supposed impact on your offshore strategy, you will be in a better position to prepare your team for containing the risk’s impact should it suddenly appear.
Do bear in mind that specific risk factors cannot be controlled. These include economic downturns, geopolitical instability in a particular region, and so on.
Tip Ten Build your Relationship Gradually
Right, everyone wants to move forward as rapidly as possible in this jet age. Let your top executives know that managed offshore outsourcing can succeed only if it is allowed to proceed slowly and gradually. For instance, you would be unrealistic to expect high returns on the pilot project itself. After all, if you are testing the offshore vendor, he/she is testing you too. It is essential to building a long-lasting and reliable friendship so that both of you accrue benefits from future projects. Therefore, start with a small plan, wherein everything is outlined very clearly.
It is not sufficient for the offshore vendor to offer commitment; even your establishment must do the same. This commitment must begin at the top level, before proceeding downwards. Note that you are building a new relationship. You have to take a firm resolve to work your way through cultural differences, business relationships at all levels, competing interests and the implementation of a novel outsourcing model.
To conclude, managed offshore outsourcing is a relevant option to be considered in this age of globalisation and enhancements in technological developments. If the practice cannot be implemented on a large scale, you may go in for a targeted strategy. This should suffice to fulfil diverse demands in the global marketplace.