The exact strategy for successful offshoring – Part 1
Offshoring or “multi-shoring” of office-base roles has become a hot topic for good reason. Never before in the history of commerce has there been such an opportunity to greatly increase profit, and at the same time substantially improve services delivery.
Yet many businesses fail to hit their expectations, getting only minor benefits or none at all. Why? The answer always lies in the strategy they took with offshoring. In most cases those who get poor results have no strategy at all – they just try something they heard at a conference or somewhere. With no proper direction or guidance, they drift from mistake to mistake.
Bearing in mind that every 5 roles placed in the Philippines adds at least $200,000 per year to the bottom line, it pays big dividends to invest a bit of time and money to make sure you do it properly.
Unfortunately, too many approaches suggest it is simple to excel offshore – just pick a provider, put cheap bums on seats, and Voila! You’ve magically saved 90% of your costs.
This is absolute nonsense; it’s a sales pitch – no one succeeds that way. It takes work and planning to adapt your business to properly leverage offshoring. A good strategy means less work.
A lot of businesses dabble fearfully at the edge of global-resourcing, not fully appreciating how their establishment will change and improve over a 3-5 year period if global-resourcing is correctly implemented. With no long term vision, they think only as far as the first few roles.
Vision comes from experience, and savvy businesses engage external experience when they do not have it internally. With the benefit of experience, you can understand exactly what value your business can derive from offshoring and factor that intelligence into your broader planning.
Some of your competitors are already well into their initial 5-year offshoring plan. Some of those are growing exponentially, some are moving into cash-flow funded acquisitions – all because they constructed a solid strategy and executed it properly.
Others are still stumbling around, lurching from one problem to the next. It’s really just a choice.
Because I drone on a lot about the importance of strategy, I am frequently asked to explain what is involved in getting it right.
Naturally, your strategy report will address all the common causes of offshoring failure; with enough research these become apparent. Since every business is different, it should also examine your particular scope and situation; the way another business in your industry did things does not necessarily translate into the best plan for you.
Apparently similar businesses can be quite different in terms of motivators, company culture, management alignment and capacity, team size, current quantity of office locations, local cost and availability of talent, current cash flow and profit, and risk aversion. Any or all of these issues will impact the success of global-resourcing.
Next week I’ll share the complete list of topics covered in our Offshoring Strategic Plan. This will help you formulate a strategic plan to suit your particular enterprise.
The exact strategy for successful offshoring – Part 2
Last week I discussed why a Strategic Plan is so important in initiating offshoring, and outlined how the plan necessarily varies from one business to the next.
Below is a summary of what the Easy Offshore complete strategy report contains. Typically we would develop this strategy with a client over the first 1-3 months, then execute over 12 months. You can use this as a guide to build your own strategy but be aware that if you don’t have the insight to complete a section, you should anticipate unexpected problems to arise in those areas.
Here is what we consider in our report:
- Initial Discovery:
o Management Readiness: Identify and discuss all concerns, assign a champion.
o Initial Tasks/Roles: Round table discussion with initial thoughts on tasks and roles.
o Initial workshop on offshore outsourcing theory, including top ten causes of failure.
o Desirable Outcomes: Align the management team on the goals.
- Summary of Philippines Strategy Tour:
o Pre-tour Workshop on the 9 different outsourcing models, shortlist of most relevant.
o Overview of Philippines & BPO sector: key information, demographics and statistics.
o Debriefings of 6-12 facilities inspected, and your completed facility scorecards.
o Insights and value from the tour.
o Analysis and decision on shortlisted facilities, and analysis of facility contracts.
- Strengths, Weaknesses, Opportunities, Threats: SWOT Analysis.
- Risk Mitigation: Addressing all identified risks associated with your business offshoring.
- Costs and Savings Schedule: Expected setup costs, net savings and cash-flow impacts.
o Comprehensive list of market salary rates for all required skillsets.
o Comparison of overhead/office/seat costs, local versus Philippines.
- The Internal Sell: Recommendations for informing your local team to get their support.
- Phase 1 / Phase 2 Tasks and Roles: Identifying the best tasks to shift; building suitable roles.
- Recruitment, Induction and Training: Building a strong offshore team is crucial to success.
- Technology & Security Analysis
o Infrastructure Control, Data Security and Physical Security
o Hardware and Software
o Phase 1 Planning: Any projects and actions required before commencement
o Technology Role Requirements: what apps, data and security is needed for each role
- 3 Month Progress Analysis: Any changes needed to providers, recruitment, training, tasks.
- 6 Month Progress Analysis: Any changes needed to local management, training, and tasks.
- 9 Month Progress Analysis: Any changes needed, and preparation for Phase 2 deployment.
All of the above is included within our typical offshoring strategic plan. Of course planning and implementing are two different things entirely. Typically we will work with a client over 3 months or 12 months, depending upon the scope, to ensure implementation tracks to the plan. We also provide a valuable 30,000 word implementation manual based on years of compiled research.
What you should also do with implementation is ensure you have weekly management phone conferences, particularly over the first 3 months. This keeps the strategy on track and also gives us the opportunity to correct mistakes early, and draw attention to key parts of the implementation guides if the content has been forgotten. So a few months into implementation, when the initial learnings are starting to get forgotten, we often have conversations like this:
“Actually Geoff, the way you’re managing that issue with the team is going to cause further problems. There’s a cultural difference at play here – if you crack down on it with an Australian mindset you’re going to make it worse. Family comes first to a Filipino, and it’s best not to compete with that. In fact, the more you support family, and appear aligned with family values, the better team result you will get.
You need to give the team member greater flexibility to take time off over the next month to get the family issue resolved, even though the issue seems trivial to us. I suggest that the entire management team re-reads the Cultural Briefing chapter of the manual again – it discusses this issue, and shows how to merge Australian expectations of productivity and punctuality with a Filipino commitment to family.”
Every hour you spend planning your offshoring is an hour well spent. Your time is valuable and has a cost, but if you were to spend one quarter of your first year’s savings on preparing a strategy that ensured a faster and lower-risk rollout, wouldn’t that be an obvious thing to do?
Offshoring of knowledge-worker roles can feel new and adventurous, so if you don’t understand the details it’s easy to fall into the trap of assuming the details will work themselves out . But if you want great results the FIRST time, then do what great businesses do, and plan to succeed.