It has been pretty well established that outsourcing and offshoring to countries such as India, China, the Philippines and Eastern Europe has provided significant benefits to Fortune 500 companies. Various reports and case studies highlight the tangible benefits, the primary ones being reduced costs and increased quality of these services. Small to mid size companies have started following the trend inspired by the success of Fortune 500 organizations, and are establishing offshoring partnerships/engagements for various reasons – to focus on core business, compete with larger organizations, resolve talent availability and retention problems, avoid capital investments in operations to fuel growth and improve their bottom line. There are some additional strategic advantages for these organizations. They are the intangible benefits that can help transform an organization through offshoring.
1. Process documentation: A very high number of organizations have strengths in strong regional relationships with their clients. These relationships have been built over years by their employees who have grown within the organization. Typically, organizations have proprietary operations processes and more often than not, these methods are not well documented. Offshoring initiatives provide an opportunity for these companies to take advantage of the offshore vendor’s experience and expertise in documenting these processes. Leading service providers package this service as an integral part of their transition phase. Even the service provider benefits by this as the rules are well defined prior to the processes being transitioned. This results in reduced errors.
2. Process reengineering: Most small to medium organizations may not have the resources and budget to spend US consulting dollars to initiate a process improvement/reengineering exercise for its administration processes. Innovative and solution driven service providers recommend this important step and add value to these companies by implementing Six Sigma and equivalent best practices.
3. Skilled resources: As the offshoring industry matures, established offshore service providers have resources who have built expertise on specific tasks. This helps US organizations who are facing talent availability or retention challenges. Medium size companies can benefit by utilizing skilled resources offshore, thereby eliminating recruitment, training and retention challenges, to focus their efforts on client relationships and growth of their core business.
4. Higher sampling for QA: Just as back office administration jobs have lower cost advantage through offshore resources, even the quality assurance function is much more cost effective using offshore resources. The real value is for organizations to increase their sampling of QA through experienced offshore vendors. This helps the company reduce the number of errors while improving quality and customer satisfaction.
5. Cultural assimilation: There are innumerable exchange programs between various countries in the world for education. Their focus is to provide an exposure and opportunity for students from different countries to learn each other’s culture and educational environment. In the corporate world, offshoring provides a similar opportunity to employees to interact with employees of their offshore vendor partners and for some to travel to the offshore vendor country. This helps them understand different cultures in this era of globalization and become global citizens.
There are extensive intangible benefits for offshore service providers too. Established providers sponsor/encourage their employees to take industry standard (US) certifications and examinations as they move up the value chain and build domain expertise. This adds value to their employees and provides them a long term career opportunity. They also have the benefit of learning client systems, processes and enhance their domain knowledge. The exchange program example provided earlier works for service providers too.
For small to mid size companies, these intangible benefits offer much more strategic advantages and bigger bargains than just reduced cost and higher quality.
Samir Parekh
The author is the Vice President, Business Development at Motif, Inc., a specialized BPO (Business Process Outsourcing) company providing rules based and decision intensive back office transaction processing services, customized email response services and internet research & analysis.
(www.motifinc.com)
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