 FAQ's: Advice on Offshore Outsourcing
Innotex Global Services has researched available studies and important points to
consider for any U.S. or European manufacturing company considering an offshore
solution.
Which Organizations are Better Candidates for a Move Offshore?
1. When considering an offshore solution, carefully audit the
performance of your onshore team and honestly assess the maturity level of your
organization.
2. Identify a sound business case:
a. Take the time to identify specific items for consideration
b. Take time to identify root problems
c. Prove a specific offshore solution to be the best option
3. Customers (end-users) may be passionate about the offshore debate, however their purchasing patterns today do not indicate they are serious about the issue
4. Try a project or two to see the possibilities
5. Identify an offshore vendor’s niche expertise
6. Recommend following prior to selecting an offshore vendor:
a. Set performance goals
b. Identify candidates
c. Qualify
d. Compare
7. Scope of project should be addressed on a case-by-case basis
8. Moving an entire business process, function or product line offshore produces the highest ROI numbers, and is also one of the riskiest items a firm can undertake
9. Less than 1 in 3 firms undertaking such a widespread strategy will generate a material ROI at the 3-year mark.
Offshore: Organic or Forced?
1. Look at the business unit in its organic mode: take time to define a specific problem, investigate many potential solutions and then determine if moving offshore is the best possible solution
2. Three leading problems with forced offshore strategies:
a. Offshore is the wrong answer
b. No employee support
c. Public opinion – internal and external entities
Offshore and Onshore Vendor Maturity
1. 2003-2004 market sought: Quality; “I need a vendor that has the processes, methodologies and people to get the job done”
2. 2005+ market will seek: Domain expertise – total value; “I need someone that understands my business and can help us achieve the next level. The end result is what I am looking for…”
3. Vendors are not bragging about low rates
4. Vendors are highlighting their ability to transform your organization utilizing their significant investment in gaining domain and technical expertise
5. Decision should be based on the vendor’s ability to generate results; cost is not usually a driver
6. Focus on vendors with sound experience with both your industry domain and your core technologies
7. Start with a small project and don’t expect fast cost downsizing at the beginning. Get the quality assured and get familiar with the offshore vendor first
8. Encourage offshore vendor to help with reductions and solutions
9. Define clear roles, working relationships, responsibilities and expectations
10. Those firms entertaining a vendor on pure time and materials basis will experience the highest failure and fraud rates, while those firms implementing aggressive risk-reward models have a higher probability of success
Performance
1. Avoid three common catastrophic performance mistakes:
a. Failure to establish a baseline prior to moving offshore
b. Using superficial means for measuring performance once offshore
c. Substitute process for end results
2. Monitor Scorecard / Performance metrics (minimum recommendations)
a. Customer satisfaction
b. Total cost
c. Quality
d. Time
e. Productivity
f. Team morale
3. Make sure offshore strategy is customer centric
4. Make sure clear performance metrics are outlined
a. Service level agreements (SLA) and Audit mechanisms in place – decreases intellectual property fraud
b. Request the performance scorecard from each prospect when preparing a proposal
Recourse and Accountability
1. Sign contracts with a U.S. or European organization
2. Verify the local organization has adequate assets or insurance to cover the entire value of the engagement
(Source: Ventoro Offshore 2005 Research preliminary Findings and Conclusions)
|
