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Making sense of offshore outsourcing 2.0

Arpit Kaushik | Jan. 14, 2009
What does 2.0 mean? What is this new wave or generation or model of outsourcing all about?

I think we can adopt these principles very well into offshore outsourcing 2.0:

1.) Offshore as a platform rather than the delivery channel.

We thought of offshore as shifting headcount to a cheaper location, but are realizing now that that alone does not generate value. It takes analysis, planning, management, nurturing and a lot more to deliver value, and that comes when you shift the focus away from offshore as the offering to offshore as platform for the offering. Onshore becomes equally, not more, important here.

2.) Globally syndicated delivery networks.

Up until now, delivery centers were disconnected task silos. It really wasn't possible to engage multiple centers on one piece of work or to dynamically balance capacity or resources across centers. 2.0 is all about collaboration, integration and syndication--multiple teams across multiple locations on a single project, and the ability to shift resources across centers...the game is not about 'which' shore you use but how you collaborate and balance to maximize value.

3.) Rich user experience: Success as the measure.

Metrics about quantity and machine-like qualitative aspects: Number of people deployed, how productive they are (lines coded/tested per hour etc.), how few errors they make (deviation, errors per thousand lines of code etc.), customer satisfaction ratings, what certification level they have....are all fine in 1.0. But the yardstick for measurement in 2.0 is customer success.

4.) Rich user experience: Relationships, not complex contracts.

Last mile linkage and front-ends are often cited as the primary reason for outsourcing failing to deliver results, and guess which element do they refer to--yes, human interactions and relationships. No amount of contractual lingo, no penalty or indemnity clause, no target SLA ratio, no empty promises, no solid resume...can ever mitigate risk the way a relationship can. Rather than spending months contracting, companies should spend time and energy in making sure they have the suitable relationship managers from their suppliers. Contracts actually serve their purpose only when things go wrong--if you have the right relationship, well, things will not go wrong in the first place. It's about bringing the focus back from documents, data pipes and computer screens, to relationships.

5.) The engagement as a conversation: Co-creation, not blame-game.

The debate is no longer about whether suppliers can do a job better than the customer, or the supplier saying "tell us what you want, give us what we want, and then we'll have a go at it". 2.0 is about working and winning together to address challenges.

Customers and service providers alike would do well to bring in a sense of consistency and discipline in the use of the appendage 2.0. And the model of course would be worthy of being called so, only if it changes people's lives and brings about the tectonic shift in the way we do things, the way Web 2.0 did. If not that, it's all thin air. Over to the innovators now...


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