Outsourcing: Debunking the Myths and Best Practises
The CIO of Deloitte has sought to dispel some ‘widespread fallacies’ surrounding outsourcing and instead outlined the steps needed to successfully outsource a company’s operations
Only A Few Locations Have Been Suitable
A variety of factors influence the selection of an outsourcing location. Because of that, companies need to take a quantified approach to assessing whether a particular country is right for them. “You need to figure out in a methodical way where you want to be,” Quinlan said.
My Competitor’s Successful Location Will Work for Me
“I think we’re encouraging a more thoughtful approach to where you locate,” Quinlan said about this particular myth.
The Risks Are Too High
Every location bears risk, which Quinlan suggests needs to be quantified before any decision about outsourcing can be made; the creation of a workable risk model for a particular location is therefore an essential part of the outsourcing process.
“If a bomb explodes in Mumbai, you are thinking about personal safety,” Quinlan said. “It’s not clear to us, though, that those risks are any higher than in manufacturing; the risks are there, but the risks cannot be classified as too high as long as they’re mitigated appropriately.”
Shared Services Are Difficult to Manage Remotely
This was one myth that Quinlan seemed to concede held a particular grain of truth. In the end, he suggested, mitigating any difficulties in remotely managing shared services is a matter of time-zone management and ensuring a high quality of staff interaction.
No Need for Captive Centres – Outsource Everything
Why invest in a captive centre, especially if your competitors are saving overhead costs by outsourcing everything? But what works for one company may not be a suitable model for another. “You need to come up with the right answers for your organisation,” Quinlan said. “It’s not a me-too world.”
Outsourcing is Bad for the US Economy
“There are different points of view on this,” Quinlan conceded about the outsourcing debate’s traditional third rail. “Like many religious arguments, perhaps, the issue is really about what’s going to happen; and we see the trend of regional centers and global centres really continue.” By citing the opening of outsourcing centers in the US as well as places such as India and China, Quinlan seemed to suggest that companies would avoid any political fallout from their outsourcing policies by distributing the work within the US in addition to overseas.
Quinlan wrapped up his presentation with a list of “lessons learned” about the steps needed to successfully outsource a company’s operations:
- Focus on gaining leadership support
- Create a blueprint
- Make off-shoring someone’s full-time responsibility
- Combat the change management challenge and communicate
- Create an employer-of-choice destination
- Don’t underestimate the complexities
- Learn from others
- Invest in process excellence
- Focus on quality
- Have fun
Despite the conference’s adamantly pro-offshoring focus, the issue is one guaranteed to invoke an extraordinarily emotional reaction among many US technology workers.
