February 16th, 2008
Should your firm offload its offshore operations to an outsourcing provider?
Some interesting debate going on regarding whether firms which have already established offshore service centers (termed as “captives”) are better off selling these centers to outsourcing providers. It would be interesting to hear your views - especially if you work with offshore staff within your own firm - on whether you’d prefer to have these staff work directly for a service provider, where they are contracted to perform stipulated services, as opposed to being part of your organization. The following 10 questions are posed to help firms understand what is the best option for them:
1) Is the work being performed in the captive truly core to our business, or could we move it over to a third party?
2) How much risk are we exposing to our business by transitioning the captive operations over to an outsourcer? Can we work with the outsourcer to manage the transition process to ensure there is a smooth transition of people and operations?
3) By selling off our captive, how much can we save over a 5 year period?
4) What is our option-value in the future if we want to take some of these operations back in-house?
5) How severe is our attrition rate, and how does this impact running costs and quality?
6) Is the captive truly a part of our global organization, or is it really a distant support center that doesn’t play a core role in day-to-day business operation?
7) How much management time, and how much cost, is spent flying senior executives over to offshore locations to oversee low-value processes such as accounts payable, help deck support etc.?
8′) How much experience with offshoring do our firm’s senior executives currently have, or are they learning it by trial and error and substantial cost to our organization?
9) How complex is it to transfer knowledge from our parent operations over to our offshore operations? Wouldn’t it be cleaner and easier to move the work to a third party outsourcer, who will take on the work they are contracted to do?
10) Is it worth keeping our captive, but re-locating it to a more appropriate location? And what are the costs / benefits associated with doing that?
Phil Fersht is an acknowledged and well-recognized industry analyst and advisor across Business Process Outsourcing (BPO) and IT services worldwide. See his full profile and disclosure of his industry affiliations.
