Thousands of U.S. companies now receive services from offshore vendors. Many companies that began global outsourcing to reduce labor costs by augmenting staff now source project-based services from multiple vendors in multiple countries. Many also have offshore captive (subsidiary) centers that provide competitive and/or complimentary services. As companies increase their usage of outsourcing providers, it becomes increasingly important to manage these portfolios of global services relationships in a deliberate, organized way, not just the engagements. One tool to help manage the global services portfolio is a periodic evaluation using three relationship aspects: (1) global services buyer management practices, (2) the individual buyer and provider relationships, and (3) provider service capabilities.
Writing in Forbes, veteran Forrester analyst Stephanie Moore, recently wrote that “every offshore development team requires an onsite component, [and] that [the] onsite component could be provided by American citizens — who naturally have more contextual business understanding, thus satisfying one of clients’ most pressing needs today.” (True Global Outsourcing Should End The Visa Debate). Moore is right that American employees can and should staff more of the onsite roles in global IT outsourcing projects, but the reason they don’t is driven more by the difficulty of finding American employees who have the appropriate skills and interests than it is by costs. Read the rest of this entry »
Offshoring analyses routinely incorporate comprehensive risk evaluations of economic, political and other well-known risks, but often fail to consider how these intensify as offshore operations scale. This probability of magnifying other risks as operations become geographically clustered is called “Concentration Risk.” The remainder of this post illustrates the concept of Concentration Risk by applying a simplified offshoring risk management architecture to the operations of a hypothetical U.S. company as it evolves through an offshoring lifecycle. Read the rest of this entry »
As the volume and maturity of offshore outsourcing continues to grow, companies are developing sophisticated location strategies to balance the cost and efficiency of leading offshore locations against their economic, political, and operational risks. During a recent analysis of global delivery center locations, my firm, Red Bridge Strategy, compared locations based on economic factors (i.e., GDP, prices, wages, and growth rates) and differences in the availability of business, technology, language, and management skills. We then evaluated each location’s strategic suitability within our client’s optimal portfolio of offshore locations. Read the rest of this entry »
The Pan-Massachusetts Challenge raised $35 million for the Dana-Farber Cancer Institute this year. Thanks to all those who supported my small part in this. For the full story see www.pmc.org — Matt Sullivan
Pangea3’s recent opening of a delivery center in Carrollton, TX, near Dallas, highlights the speed with which the legal process outsourcing (LPO) industry is incorporating the general evolution of the BPO industry. Initially, offshoring was exclusively to low cost countries to take advantage of labor arbitrage, and thereby, lower the overall costs of business processes. Since then, offshorers, both outsourcers and companies with captive centers, have begun implementing portfolios of offshoring locations using the so-called “hub and spoke” system. “Hubs” of offshore work are generally located in scalable countries, like India and the Philippines, where there large numbers of low cost, skilled workers. “Spokes” tend to be smaller centers that are used to meet particular skill, geographic, or regulatory needs. Examples of spokes include the use of medium cost locations like Poland for European language skills or the location of a data center that can meet particular E.U. regulations; and Israel to get medium cost yet highly sophisticated legal skills. (Sales offices, even when they house a few delivery people are not considered “centers,” and therefore not included in this analysis.) Read the rest of this entry »
It’s time for me to use my blog to plug the Pan Massachusetts Challenge (“PMC”). On August 6th and 7th I will be riding my bicycle on a two-day, 163 mile route from Wellesley to Provincetown as part of the PMC to raise money for the Dana-Farber Cancer Institute. During my four previous rides I’ve raised nearly $23,000, and my goal is to reach a five-year total of $30,000. That means I need your help to raise more than $7,000 during 2011 to help Dana-Farber provide cancer patients with the best treatment available today while developing tomorrow’s cures. If you would like to donate or read more about my appeal, you can do so at my PMC site.