For many managers and decision-makers, the Outsourcing opportunity is accompanied by rising bewilderment. To navigate through the uncharted topography of Outsourcing, managers will need to answer three principal questions:
The relationship between the outsourcing organization and the outsourcing provider is a critical factor in realizing the expanding potential of Outsourcing. With the advent of reliable, cheap global communications, the Internet, and the abundance of skilled labor forces in many developing countries, offshore service centers have become both feasible and real. Many banks and others in the financial industry have already moved IT operations abroad, and some have started business process off shoring efforts in which whole processing tasks are exported.
The power of the Internet revolution lies in the way it changes the internal structure and processes of companies. The concept of a monolithic, vertical, integrated enterprise that owns all products, services, and channels is rapidly becoming obsolete. To become more flexible in a changing business landscape, enterprises are developing a complex spectrum of outsourcing relationships, ranging from mundane payroll outsourcing to more complex business-critical services.
Consider the following:
These examples illustrate a mega-trend: offshoring (companies establishing their own captive offshore centers) and offshore outsourcing (companies outsourcing to external vendors who perform the work overseas). Sourcing work from anywhere in the world at the best prevailing prices is now becoming a mainstream practice for a variety of business processes.
Offshoring opportunities are increasing due to the availability of low-cost, educated, English-speaking manpower, and strong computer skills in countries such as India, China, and the Philippines.