Global Sourcing, Out-Sourcing & Offshoring Services Tools Information for EU Companies & offshoring vendors!   

OutsourcingMonitor.EU: the real world costs and gains of outsourcing & offshoring

Once you are past the strategic planning, research, decision taking and the actual set up and implementation of your outsourcing plan you may start noticing a few things that cause you a little worry...

It's when reality sets in that the leaders and winners don't lose their cool. They were prepared, did their homework, accepted reality and they keep exploring new paths and opportunities.

It is important for you to realize the following:

1. Core development is probably better handles onshore
2. The labor costs are continually rising, especially in India.
   1. Nothing surprising here, just like any popular travel destination... Once every Tom Dick and Harry get there prices rise, the bargain-priced paradise ends. Maybe one day our whole planet will end up with similar wages, costs etc. However, lucky for you , there are still a few years to go before this occurs.
   2. Remember that your focus should be on a long term strategy vision rather than a short term savings on labor costs.
3. Talent is not easy to retain in the offshoring locations. Although one of the benefits of outsourcing is the access to an increased talent pool and the ability to resize or swap providers fast, you will find that it has also some drawbacks.
   As the number of companies who turn to offshore or nearshore locations for an outsourcing solution steadily grows, the more competition there is out there for the same talent pool. As the available free talent pool shrinks, the higher the wage they'll be demanding and lower the loyalty to the current vendor they're working for.
   The current climate of boom in the offshoring locations supports those worker's confidence that there's no problem to find the next and better job, whereas employees in your country tend to fear for their employment/ job security.
   Offshore talent moves about with consideration not for company loyalty (as may be in your own country) but for a better deal/ wage.
   Vendors and/or your company will need to get creatively smart and develop enticing bonuses to retain these talents. A loyalty plan may be a good idea to start. Perhaps we could help you - email us.
4. Hiring process, vendor selection and quality issues are some of the main challenges for organizations.
5. Communication is another main challenge;
   1. Many get burnt out maintaining communications across different time-zones- eating into your sleep/family/private time.
      Possible solution: Perhaps outsource nearshore or find a reliable vendor to manage your multiple vendor relationships.
   2. Language issues and not understanding the mentality and the cultural differences
      Possible solution: Educate yourself and both your teams on/near/off-shore with cross cultural training especially for the working cultural environment.