Right Sourcing in an Outsourcing Strategy
Date: Monday , December 01, 2008
When we were in school, it was dangerous to be different – it would make us the butt of everyone else’s jokes. Fast forward a few years to the business world – here differentiation is a key to survival. This is especially true in the present times of global slowdown. Faced with more competitive markets and greater demands on cost controls, organizations are taking the fast track to cost-cutting by down-sizing and reorganizing their divisions, streamlining their operations, and closing down unprofitable activities. Companies and individuals have to demonstrate a viable ‘Unique Selling Proposition’ in order to attract both customers and employers. Knowingly or not, all success hinges on being able to outrun competitors in key areas such as price, quality, customer service, technology, reputation, availability, and safety.
Competitive Advantage through Right Sourcing
For companies like SPI, the company I manage, which operates in the IT offshore outsourcing space, one key differentiating factor can be ‘right sourcing’ IT projects, i.e. doing IT project related tasks at the location where it is most effective using resources that are most qualified to perform them.
One of the ways to stay competitive is to be a good ‘right sourcer’ and thus maximize savings for customers without compromising on quality. The value already seen by customers in flexibility and transparency of operations will assist in more effective right sourcing by the organization. The rest of this article discusses the way companies such as ours balance the customer desire of ‘low cost’ with their implicit expectation of successful project execution by utilizing the most optimum mix of geographically dispersed resources – the art of right sourcing.
The customers expect you to be an expert in delivering IT projects in a globally distributed environment and provide a low cost solution as a result. Trying to incur a relatively low cost should always be a major objective of any ODC – achieved by focusing on productivity as a primary metric on all projects. It is imperative to deploy state-of-the-art collaboration systems – usually on the Web, to effectively communicate between geographically dispersed teams. This allows more and more work to be performed at the more cost-effective location in India.
Exceptional Hiring Capabilities
Having exceptional hiring capabilities is a must for ‘right sourcing’. This allows the firms to hire the right profile for the right position at the right location – an extremely critical ingredient for anyone aspiring to be an outstanding ‘right sourcer’. The other side of this is the ability to plan well for resources, and companies need to pay a lot of attention to this through communication carried out frequently to determine adequacy of skills on projects.
In a global delivery model for executing IT projects, firms frequently differentiate between skill levels they make available at different locations that may conform to their hiring strategies and project requirements. The delivery mechanisms should be centered on a high quality customer-facing presence. Exceptional ‘onsite’ presence is an important differentiator in a company’s offering and it leads to greater customer satisfaction and significant success in IT projects.
Strategic Direction and Financing
In order to achieve excellence in right sourcing, companies need to build a base of highly skillful project managers. The companies should invest in acquiring and retaining knowledge related to specific industry verticals and business practices of customers such as making financial investments in innovative software design for running multi-location projects as well as in major quality initiatives such as CMMI Level 5, PCMM, Six Sigma practices, etc. Invest on designing compensation packages and hiring practices to help retain the best possible talent.
In order to be successful in the increasingly complex and competitive IT outsourcing industry, the organizations need to be effective right sourcers. They have to constantly improve on their strategies to find the right personnel at the right location in a timely manner to deliver on value propositions.
The author is the CEO and MD of Software Paradigms International