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Offshoring and outsourcing best practice

Slideshow about Offshoring and outsourcing best practice by Eric Tachibana

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Offshoring and outsourcing best practice

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  1. OFFSHORING IS NOT OUTSOURCING hey clueless managers – stop being lame!!!!! http://www.flickr.com/photos/55984616@N00/

  2. PART ONE OFFSHORING

  3. What is Offshoring?

  4. Let’s divide the world into 3 zones: 1) Americas 2) Europe, Middle-East & Africa 3) Asia Pacific

  5. Offshoringhappens when a delivery manager has team members based in more than 1 of those 3 zones

  6. Nearshoring, happens when a delivery manager has team members in more than one location, but within a single zone

  7. EXAMPLE a software development manager is offshoring if she has 4 developers in Zurich and 12 in Mumbai and/or 6 in Weehawken

  8. EXAMPLE An operations manager is nearshoring if he has 6 people in Tokyo & 20 people in Singapore.

  9. why offshore?

  10. REASON ONE Reduce the cost of operations (potentially by far the most important) by location-specific, loaded salary arbitrage

  11. REASON TWO To support our clients or other business units where (or when) they are

  12. REASON THREE Access global talent pools where they exist

  13. what do you need to know to be a good offshoring manager?

  14. managing nearshore& offshore teams requires many of the same skills

  15. unfortunately nearshoring managers often fail to receive training

  16. which is annoying for Singaporeans and Indians supporting managers in Tokyo and Hong Kong who only 'think' they know how to manage a nearshore team

  17. so nearshoring and offshoring managers both need to do some training

  18. Being good at Shoring requires 7 core competencies

  19. SHORING CORE COMPETENCY ONE Cultural Awareness / Sensitivity

  20. SHORING CORE COMPETENCY TWO Using Communications tools effectively / Knowledge Transfer

  21. SHORING CORE COMPETENCY THREE Managing and architecting distributed workload (how do you effectively divvy up work across locations and time)

  22. SHORING CORE COMPETENCY FOUR Matrix Management

  23. SHORING CORE COMPETENCY FIVE Virtual-Team administration & talent management

  24. SHORING CORE COMPETENCY SIX Jurisdictional compliance

  25. SHORING CORE COMPETENCY SEVEN Geo-political macro-economic trend / strategic risk management & site selection (only at leadership level, really)

  26. CAVEAT ALERT You can define Offshore, Nearshore, and Onshore around differences between cultures as opposed to geographical zone. I think geographical zones is more effective in practice though....

  27. PART TWO OUTSOURCING

  28. What is outsourcing?

  29. Outsourcing, happens when you enter into a contractual relationship with a third-party company to deliver a product or process

  30. outsourcing may or may not include offshoring

  31. so a manager in London would be outsourcing if she worked with IBM in London or Infosys in Chennai

  32. Insourcinghappens when you enter into a contractual relationship with a subsidiary to deliver a product or process

  33. insourcing also may or may not involve offshoring

  34. Note that many regulators (especially after 'Too Big To Fail') require the same operational controls for Insource as well as Outsource relationships even though Insourcing is through parent/child legal entities. So it is important to deal with them both in any internal curriculum

  35. why outsource?

  36. REASON ONE • Acquire specialized skills

  37. REASON TWO • Transfer costs and risk to third party who enjoys economies of scope or scale

  38. REASON THREE • Transfer out non core-competencies so that we can focus on our core competencies

  39. REASON FOUR • Move semi-variable balance sheet costs (salary) to fully-variable costs

  40. REASON FIVE • Move very fast

  41. REASON SIX • Handle short-term demand peak

  42. REASON SEVEN • Reduce costs

  43. what do you need to know if you are managing outsourcing?

  44. being good at sourcing requires 8 core competencies

  45. SOURCING CORE COMPETENCY ONE Service-Level Agreements & Management

  46. SOURCING CORE COMPETENCY TWO Negotiation

  47. SOURCING CORE COMPETENCY THREE Contract Management

  48. SOURCING CORE COMPETENCY FOUR Vendor Discovery & Selection

  49. SOURCING CORE COMPETENCY FIVE Transition Management (in and out) and Knowledge

  50. SOURCING CORE COMPETENCY SIX Invoice Management

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