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Services and Innovation Offshoring
Offshoring is a form of Outsourcing. Offshoring basically means have the outsourced business functions done in another country. Frequently, work is off shored in order to reduce labor expenses. Additionally, the reason for offshoring is tactical -- to come into fresh market, to tap aptitude presently engaged locally or to trounce system that prevent specific activities domestically.
Services Offshoring
The telecom and Internet expansion of late 1990s and availability of large amount of reliable and affordable communication infrastructure led to the growth of services offshoring. Digitization of many services made it possible to shift the actual production location of services to low cost countries. India, having a large number of English speaking and technically proficient manpower benefited first from this trend. From the low end IT functions of the early 1990’s it has since moved up to back office processes like call centers and transaction processing. In the Y2K problem scenario the abundance of cheap software engineering talent helped India move up to value chain. This attracted large-scale software development project from US based companies. India now has been the most favored offshoring destination of major hi-tech companies like HP, IBM, Intel, AMD, Microsoft, Oracle, and CISCO etc. Together they are planning to invest about $1 billion in India to grab the market share to counter the cost -cutting measures of their rivals and the industry. This demand for Offshoring to India has resulted in double digit-waged growth in the country. The Indian operation send firms, concerned of becoming too expensive in comparison to the new destination like Brazil, Central American Countries, the Philippines, South Africa, & East Europeans countries are attempting to diversify to high end jobs. These jobs include research & development equity analysis, medical transaction etc. Countries like Brazil, the Philippines, South Africa etc. are slowly gaining ground as the new services offshoring destination. CAFTA has made near shoring very attractive between the Central American countries & the US.
Innovation Offshoring
The big companies of developed countries have realized the cost effectiveness of offshoring. They are satisfied with service offshoring too. Many hi-tech product companies are thinking now to involve countries like South Africa, India, China, and Russia etc. for the introduction of a new product. Numerous legendary Silicon Valley based company have jump on this bandwagon not just to cut costs but to cut down their product expansion time and right to use the talent pool available in these countries. Less Developed countries are usually utilized for this practice.
Choosing the Right Partner
One thing that a buyer should always keep in mind in outsourcing system is that the quality and expertise of providers. “If you only pay a nickel for your car, but it can’t start in the morning and get you to work, that’s bad situation,” says Paul Jameson, Vice President of Marketing and Strategy at Getronics. Traditional methods of handling risks in outsourcing always include extra effort. The marketplace is very much crowded and there are lots of ambiguity and lots of service providers saying the same things.
This is a warning. Buyers need to check references and loyalty ratings. From that crowded place buyers have to choose the right partner.
Sometimes the outsourcers ignore the importance of the quality and stresses on the low cost. Naturally when the customer fails to give them the quality services due to lower budget, the clients leave them. One root cause of this phenomenon is that when client appoint niche provider, they are happy with their services and they trust their providers. But problem arises when the client demands more. Every time their customer wants something new done, they turn to these providers to help them. For example a niche provider appointed for maintenance was asked to do a desktop rollout. Asking a provider to perform services beyond its actual skill is a big risk. In outsourcing system buyers can not disregard the importance of quality and expertise because a low graded product though very cheap comes in no use. Similarly a supplier may be hired for a very low cost but the most important thing the clients should notice is the quality of services they are giving.
In the end it is effective risk management that is the key to successful offshoring and outsourcing. Though outsourcing has been an effective business tool for quite some time, the risks nowadays are greater than ever. Advanced planning and sound outsourcing management system and choice of the right vendor are must.
Quality Web Solutions is working as a quality partners with many offshore outsourcing companies for over the years. It offers logo, graphics, flash, web design, content writing and SEO services.
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