Off-shore Outsourcing: Prepare Before You Dive In

For many in today's business environment, off-shore outsourcing seems to be a given. Recognizing it as a powerful business tool for maximizing profitability and creating opportunities for continued growth, they're ready to take the plunge. Perhaps you're one of them. Before you do, there are some important things you need to consider. Moving an operation off-shore can quickly become quite overwhelming. Here's some information that will help you keep your head above water.

It's fairly standard practice these days to start out any new effort by educating yourself through the Internet. So, you might approach the idea of taking one of your operations off-shore by doing a search, hoping to find some answers that point you in the right direction. If you do, you'll most likely come across a list of consulting firms that offer to place you with a call center agency in the country you've selected for outsourcing.

These consultancies usually maintain some type of relationship with a number of agencies in the most popular outsourcing destinations. But wait, what exactly is the call center agency's role in this to begin with? And, let's get back to that country you are considering. How can you be certain it's the best location for your particular off-shore operation? There's a lot more you need to know and understand - a lot more expert information to develop - before you can take that first step outside of the country. For instance, let's start with a fundamental yet critical question. Is outsourcing your operation off-shore a solid business decision for your organization in the first place?

Taking all or a part of your operation off-shore is a major business decision. You've got to do your homework. It will help to have someone in your corner who has the track record and expertise to say, "Been there, done that - and our organization has the savvy and the connections to help you to get there with a minimum amount of risk." Find a consultant with credentials like these; one that can take you intelligently through the entire process, and you'll be in a position to proceed with an elevated degree of confidence and success.

The Off-Shoring Process
Before you go forward, it's essential to have an overview of all that's involved in the decision to take an operation off-shore.
The process includes:
1) Cost/Benefit Analysis - This brings us back to that all important, fundamental question. Is outsourcing the operation off-shore the best choice? A detailed, cost/benefit analysis will give you the information you need to answer that question. It will also alert you to issues you need to consider, as well as arm you with the facts when you have to sell your decision to stakeholders.
2) Selection of Vendor - If the cost/benefit analysis supports a decision to off-shore, the next step is choosing one or more qualified vendor(s).
- Developing the RFP for an outsourcing vendor requires specific knowledge of outsourcing, and off-shoring in particular. It should include:
§ Performance Criteria - stated in terms that allow tracking and measurement
§ Performance Assessment - a functional tool to assure the vendor is meeting expectations
§ Management Outline - defining management requirements for a business relationship between you and the vendor
- Evaluation and selection of a vendor based on the response to the RFP can be a science in itself. Starting with a well-written RFP is crucial. Taking the information provided in the response and evaluating it in the context of the off-shore environment requires real expertise. The success, or failure, of your off-shoring operation might well rest on how well you are able to interpret the information you receive. And, on your ability to understand the impact of that information on your operation overall.

3) Site Selection
- Determining the best location for the particular operation to be off-shored begins another process requiring detailed understanding of variables such as technical capabilities, and the availability and qualification of the labor pool.

4) Transition Requirements/Planning
- Finally making it all happen requires an accurate roadmap, complete with specific milestones marking all the many elements critical to successfully moving or starting a business off-shore.

Conclusion
There are many challenges to face should you decide to outsource off-shore. A popular slogan of marketers reads: The question no longer is, "Can I really afford to outsource off-shore?" but "Can I afford NOT to!" Maybe the better question is: "Can I really afford to outsource off-shore without beginning with a detailed cost/benefit analysis and moving step-by step through the process with a proven, qualified consultant?" If you're going to venture into those swirling off-shore waters, it makes sense to be well coached and prepared.

The Customer-Service Outsourcing Craze

Outsourcing: It is arguably the biggest issue in customer service today. And not just customer service -- the debate about using offshore operations for tasks previously completed in the U.S. even has a role in the presidential race. Everyone, it seems, has an opinion about outsourcing . However, organizations arrive at outsourcing decisions in fairly predictable ways, says Yankee Group's Art Schoeller. When it comes to contact centers , it all depends on how the enterprise views its customer-service operations at the outset.

Outsourcing: It is arguably the biggest issue in customer service today. And not just customer service -- the debate about using offshore operations for tasks previously completed in the U.S. even has a role in the presidential race. Everyone, it seems, has an opinion about outsourcing . However, organizations arrive at outsourcing decisions in fairly predictable ways, says Yankee Group's Art Schoeller. When it comes to contact centers , it all depends on how the enterprise views its customer-service operations at the outset.

Vanilla or Chocolate

Thus, whether an enterprise will choose to send its customer-service operation to a U.S., near-shore, or far-shore facility -- or keep it entirely in-house -- depends a great deal on the kind of decisions the enterprise makes in other areas. "Do you like vanilla, or do you like chocolate?" Schoeller asked. For many companies, whether to outsource is such a question.

In an organization that already farms out various functions, I.T. and customer-service executives who try to resist the momentum toward outsourcing are swimming against the tide, according to Schoeller. If an organization already has a propensity to send non-core operations out, the decision may be a done deal.

'Can Work' vs. 'Will Work'

For those enterprises sitting on the fence, certain factors make outsourcing call-center operations more or less attractive, Richard Feinberg of the Purdue Center for Customer Driven Quality told NewsFactor. The first thing to know, he said, is that "in most -- if not all -- instances, outsourcing can work."

However, there is a big difference between "can work" and "will work," in Feinberg's opinion. "All too often, companies leave customer service to people that don't buy into or understand the mission of the company," he said.

For example, many callers to a customer-service line automatically assume that if a rep with a non-English-language accent responds, they will not get their problem solved. Disappointing as that attitude may be, Feinberg noted, it is a fact of call-center life.

If an enterprise has no strategy for addressing that problem proactively, Feinberg said, perhaps outsourcing -- especially to an offshore operation -- is not the best option for that company. If, however, call-center management puts procedures in place to allay customer concerns at the beginning of a call by scripting some sort of statement -- for example, "I will do whatever it takes to get an answer to your question" -- then outsourcing becomes feasible once again.

"Given a choice, would you rather be on hold for 30 minutes or get a solution from a person in India?" Feinberg asked. Most customers enjoy talking with someone interested in helping them, he said.

As the Pendulum Swings

A decision to outsource all or part of contact-center operations also can lead to considerable organizational upheaval, Schoeller pointed out. The scenario goes like this: One executive is a big fan of in-house customer service. Under that person's leadership, an enterprise staffs up its contact center and invests in an array of technology. That person leaves the company, however, after four years.

The next executive leans toward outsourcing. That person lays off half or more of the contact-center staff and supervisors, and makes a significant investment in establishing an offshore operation. That person leaves the company, however, after four years.

The next executive starts the cycle again, leaving a wake of turnover and employee dissatisfaction -- not to mention inefficient technology use. "If you track organizations over time," Schoeller said, "you see that they outsource customer service, it gets in trouble, and then they bring it back in-house to fix it." This cycle, he noted, can be disruptive and expensive.

Offshoring to zoom in 2005

BANGALORE: NeoIT, an offshore advisory and management firm, foresees a big growth for offshore outsourcing in 2005. In its annual roundup of predictions for the coming year, neoIT sees increasing acceptance for offshoring as a foregone conclusion for multinational corporations that must keep pace with global competition, global supply and global delivery models. The role of offshore outsourcing will continue to grow in importance as offshoring moves to a corporate “must have” as companies develop more sophisticated global delivery models across IT and multiple business processes. Geographically, India will continue in its leadership role as the supplier role model, with strong growth predicted for secondary markets. Of all the supplier countries, China and the Philippines are expected to mature most rapidly in 2005, with central Europe, particularly Poland, Czech Republic and Hungary following close behind. “Global sourcing has become a corporate mandate for both leading corporations and global service suppliers,” stated Mr Avinash Vashistha, co-founder and managing partner, neoIT. “2005 will witness a bevy of M&A activity in the supplier market similar to General Electric's recent spin-off of its India BPO unit, and we also predict the emergence of multi-country supplier and delivery models that span the globe from India to China to central Europe. In the client market, US companies will no longer be the dominant buyers as western European firms create strong demand for offshore services.” According to neoIT, offshoring will grow in size and complexity as clients leverage on early lessons. Significant analytical work in addition to data entry and data processing is expected to come. Despite Gecis' spin-off, the increasing complexity of processes being offshored will lead to more wholly-owned offshore subsidiaries for BPO, often referred to as captive centres. Existing captive shared services centres will become targets for further efficiency and expansion. It predicts that over 40% of offshore initiatives will not yield anticipated savings, scale or risk diversification. The key reason for these disappointments will not be due to supplier capability but buyer preparation and management. Next year, small and medium enterprises will finally be clients for offshoring as they weigh the benefits of offshoring due to budget pressures and a more accepting political environment for offshoring, according to neoIT.