The imperatives of offshore outsourcing


The imperatives of offshore outsourcing

OFFSHORE OUTSOURCING — A Path to New Efficiencies in IT and Business Processes: Nandu Thondavadi & George Albert; Published by Thomson & Co-published by Vijay Nicole Imprints Pvt. Ltd., C-7, Nelson Chambers, 115, Nelson Manickam Road, Chennai-600029.

Outsourcing is a much-debated topic these days with the atmosphere getting charged with political overtones, particularly in the West. This book sets out clearly the compelling imperatives of offshore outsourcing in terms of the need for cost reduction, increased focus on core operations, improvements in process quality, more rapid processes and product development, and access to a deep talent pool.

However, it has been pointed out that there are costs to offshoring in terms of vendor appraisal and selection, and process transition. Also managing the media and employee goodwill requires the use of professional public relations (PR) firms, a cost that companies have to reckon with. Also, lobbying to prevent changes in the laws that create hurdles in offshore outsourcing has a cost component to it. An interesting part of the book is the two tales of four companies by drawing a comparison to bring out sharply the short-sighted strategy of not offshoring.

The offshore progression has been traced starting from outsourcing information technology arising from the need to start using enterprise resource planning (ERP) software packages to e-commerce and then on to application maintenance outsourcing which has three basic business models: product outsourcing, product re-engineering and production support.

Another development has been in the realm of business process outsourcing (BPO) and contact services like the call centres. Offshoring is rapidly moving up the value chain like GE's technology centre providing research and development (R&D) services in the areas of aircraft engines and power systems. The multiple delivery channels namely, on-site delivery; mixed mode delivery and partnership models have been outlined. The offshore delivery is the most favoured with its cost scale and speed advantages.

A very valuable part of the book has been the drawing up of the profile of market players including TCS, Infosys, Wipro, iGATE, Mascon, Mphasis, V6 Technologies and Software Ventures International. These profile summaries provide at a very quick glance their strengths, areas of engagement and experiences. Outline of independent multinational service providers like EDS and IBM, and captive service providers like Microsoft and GE have also been given.

A country analysis has been given comparing India, Russia, China, the Philippines and Ireland, with India a clear winner for now. The key to offshoring success has been analysed and the importance of intercultural management in the service delivery issues has been brought out.

An interesting discussion has been presented on shifting of jobs and changing economies. While stating that the issue of job losses in the West is expected to become a major concern in politics, the other side of regaining equilibrium in the market has also been cogently presented.

Salaries are getting pushed up in India and this gives greater purchasing power due to which foreign companies like GM, Ford, Reebok, Motorola and Nokia have started growing successfully in India.

The final part of the book is very illustrative. Case studies have been presented of ABN Amro Bank, Citi Bank, Infosys Progeon, Mascon, General Electric Company and North Western Mutual. The ABN Amro case study is a very insightful one. Among the talent access in India, it has been mentioned that several experienced bankers who have opted for voluntary retirement schemes of various public sector banks have been identified for quality assurance on banking operations.

It is this combination of IT and domain expertise which India has from hidden corners that is helping it to be a winner. These are vital new insights, which have been unearthed by the authors who must be complimented on producing an excellent book that is very up-to-date and practical. The book is racy to read and the titles and sub-titles are apt. It is a handy volume for practising managers, teachers and students alike.