As per a recent McKinsey Article “we continue to find that companies make suboptimal design choices when crafting offshoring programs. Some lack awareness of the vendors’ capabilities or feel pressure to capture near-term cost benefits without thinking through a two- or three-year plan strategically. Others have preconceived notions about what they must keep close at hand.”
As an offshore outsourcing consultant, I couldn’t agree more with the findings of the McKinsey article. I have mentioned in one of my previous articles that offshore outsourcing needs to be looked at a strategic initiative rather just a cost saving exercise.
I have a classic example where a leading Financial Services company outsourced one of their core processes of document conversion to EDGAR II format for SEC filing. The workload in this process was seasonal and was usually very high during the quarter end period. As a result the company had challenges to arrive at a successful formula that could help them service their clients’ at most competitive price. The company looked at offshore outsourcing this core process to a low cost country and spent over a year and substantial money to train the offshore resources who could execute the process seamlessly. Had this company just looked at short term benefits, they would have not been where they are today – a market leader in their business!
Like this organization, company executives should look at innovation in offshore outsourcing. Executives should move away from piecemeal, task-level offshore outsourcing and use offshore outsourcing as a tool for a fundamental redesign of their existing operating model.
For all these years, we have been hearing about business transformation using ERP, CRM, etc. In my personal opinion “Offshore Outsourcing enabled Transformation” should be the new business model for organizations.
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