Global outsourcing and offshoring of business processes have been adopted within most large organizations today. Organizations have typically outsourced their services to low cost countries while offering quality services and expertise at a competitive price. Understandably, the global outsourcing industry is centered on low cost locations in Asia and Eastern Europe, and the industry’s significant expansion in the past decade was fuelled by the growth of large organizations based in the West.
However with the onset of the global financial crisis in late 2008, and following the wide reaching impact it has had on economies worldwide, organizations have been forced to re-evaluate their outsourcing strategies. And with global markets turning volatile over the past few years, organizations are preoccupied with varied questions related to offshoring:
- whether it is sufficient to outsource only simpler processes or also manage more complex processes remotely;
- and with increasing pressure on performance and profitability, how to derive better value out of an offshoring model.
Truth is, organizations can enhance the potential of their offshoring model though a well designed business services strategy that is much broader than the traditional platforms such as outsourcing and shared services. This can be achieved by aligning internal functions closer with organizational goals, and developing operational capabilities which aid better collaboration both within and also with external service providers. This helps drive key business outcomes and also create tangible differentiation and competitive advantage in the marketplace environment.
It is also important that these service strategies are designed around both short and long-term perspectives, such that they not only deliver effectively for immediate requirements, but also serve to aid organizational goals and respond effectively to unexpected events or changed scenarios in the future. So what must organizations do to create a business services strategy that is performance-focused and delivers effectively during times of volatility?
- Review expectations with the service provider, and revise plans for additional investments over the next couple of years.
- Explore a change in the scope and nature of activities being transitioned, and find alternatives when faced with budgetary constraints.
- Evaluate the scope, terms and commitments offered by other service providers and determine the value offered by current providers. Review and rationalize the number of present service providers, and the services being supported. It also helps to re-negotiate on the terms of contract where possible.
In today’s context of downturn and uncertainty, organizations have understandably stayed cautious and many have actively contemplated pulling away resources from planned new investments and strategic projects. What is important to understand is that, in such times, organizations benefit from a competent system that underpins all internal processes. A well-planned business services strategy will help create an offshoring model that delivers just that.