Offshoring is as “Local” as Politics

As easy as it is to get swept up in the “offshore” side of global services, true success comes from paying closer attention to what’s happening “locally”

by Michael Corbett

Global Services

As easy as it is to get swept up in the “offshore” side of global services, true success comes from paying closer attention to what’s happening “locally”

It’s easy to get swept up in a business trend as compelling as offshoring. The potential to deliver better products and services at lower costs is hard to ignore. A wide-range of approaches now exist, including captive centers, build-operate-transfer and direct outsourcing to third parties amongst others. There are dozens of countries vying for your business and almost any business function can now be offshored. Proven advisors are in place to help manage a company’s program and to help minimize its risks.

But, as easy as it is to get swept up in the ‘offshore’ side of global services, true success comes from paying even closer attention to what’s happening “locally.” As former Rep. Tip O’Neill said, all politics is local, the same goes for services too. And it’s these local considerations that ultimately determine success or failure.

What are some of these local considerations?

The first is the customer. A business may be going global in its operations, but the customer it is serving — whether it’s a business client in Chicago, or a consumer in Phoenix — is still local. A company has to continue to deliver the products and services local customers need — in the way, at the place, and in the manner they need it. These local customers will not accept trade-offs just to support a business’s desire to “go offshore.”

The second is a company’s local management structure and systems. They continue to be the point of control ensuring that the company’s overall operations are effective and efficient. It is an oft-repeated reality that the key to success remains in the ability of the business to integrate such structure and systems into the overall management structure, regardless of the number and place they are added in.

The third is the company’s employees. Local employees are the ones most affected by an offshoring decision — even if they are not within the current scope of what’s being offshored. Local employees continue to be the foundation upon which the business’s future will be built, especially how it relates to and is perceived by its customers.

The fourth is the local court of public opinion. In the offshore location, the company will certainly be welcomed by the people as a new source of economic growth. But, what about the folks at home? It’s the local communities, government officials and press that will be most skeptical, questioning the wisdom and even the motivation for the offshoring decision.

Public opinion and local employee reactions are not just “problems” to be managed. They create a company’s brand image — an image that can be irreparably damaged if offshoring is not supported by a fully integrated “local” change and communications management program.

The fifth is regulations and laws. The Sarbanes-Oxley Act of 2002, the Health Insurance Portability and Accountability Act (HIPPA) of 1996, and various banking regulations are all examples of “local” regulatory and legal requirements that define how a business must operate — regardless of where the work is being done, or by whom. The fact that the work is done offshore or by an outsider, virtually never relieves an organization of its local responsibilities.

Then, there are the local considerations in the countries where a company will be doing business — but those are for a future column.

In the end, it’s hard to imagine any organization, regardless of its size or industry, being successful without a well-integrated, global-services strategy. But, it’s even harder to imagine any organization being successful with that strategy, unless it first ensures continued success locally.