Thursday, May 26, 2005

Offshore Outsourcing ---- Hidden Benefits

Offshore outsourcing is falling into 4 major categories:Software development and supportCall CentresData entry/cleansingBPO (Business Process Outsourcing)The basic principal is that any work, can be easily transferred and can deliver benefits or cost savings very quickly. However there are many pitfalls. Let us look at each category of activity in a detailed mannerl.SOFTWARE DEVELOPMENT AND SUPPORT: This works best when you have strong and structured methodologies. However it becomes vital that your chosen partner understands your industry sector.Some of the major threats that were faced by retail business is that the programmers /developers do not understand the processes such as range planning or category management, which led to real problems in getting good designs for user interfaces or getting teams to generate test data. With experience, many of those limitations are disappearing. Their programming skills are excellent, they know the technologies and they have good project management. Some of the companies also provide an invaluable service at low cost.
CALL CENTRE OPERATIONS: Call Centres have been one of the fastest growth sectors in offshore outsourcing recently. This is one activity, which can impact the brand or image of a company. The quality of communication skill and accents can matter .Good quality and integrity of the product become important values.Call Centres work well where outcomes are very predictable. The area becomes problematic where operators need to have knowledge, expertise, or need to apply judgement. It takes a lot of investment and time management to bring call centre staff up to speed on product knowledge.
Customer complaints recording- Taking appointments- Taking reservations on fixed assets (theatres or airplanes)Outgoing calls- Ringing customers to book delivery slots- Calling hotels to check availability, etc.DATA ENTRY: With the advent of cheap scanners and the internet, why any data entry is done onshore. Provided you have browser based data entry systems, you can send it electronically and have somebody key it into your format offshore.It is easy: particularly for coding of data, that require a modicum of knowledge, with large volumes and repetition, operators become experienced very quickly.
BPO (BUSINESS PROCESS OUTSOURCING): This technique is the mother of all processes. It is also the hardest to get right.You have to have very structured and well defined processes: data interfaces have to be excellent; quality of data going into the process has to be excellent, clearly articulated organizational roles and skills are needed at each step of the process. The biggest problem for companies is to decide which processes should be outsourced and to make sure that they are clearly documented.
CONCLUSION: One of the hidden benefits of offshore outsourcing is that your outsourcing partner ends up investing the capital expenditure. It's not just that labor rates are lower; you are leveraging other people's capital. It's a form of capital financing. Thus, in a world where markets are rewarding those companies that are efficient capital users, it is no surprise we are seeing such a high growth in offshore outsourcing.