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Offshore outsourcing is the practice of contracting with an external organisation to perform some business functions in a country other than the one where the product or service will be sold or consumed. Today, there are various functions such as software development, software maintenance, remote infrastructure management, payroll processing, document conversion, research, etc that are being offshore outsourced to a variety of low cost countries.
Outsourcing for Small to Medium Enterprises The advantage of outsourcing functions that are not core to the business are familiar. Many organisations need to reduce back-office costs and improve overall operating efficiencies to maintain their competitive edge. Media coverage of outsourcing can leave the impression that such activity is the preserve of large multinationals with large budgets. However it is becoming apparent that small to medium-sized companies (SMEs) with smaller resources and budgets can actually have a more compelling business case for evaluating outsourcing’s ability to initiate cost savings, provide process efficiency and the freedom to innovate.
However, such organisations do not have the time or skills to develop that business case to evaluate what outsourcing can bring. Statistics reveal that between 30 - 35% of offshore initiatives fail because of lack of initial study and analysis on the part of these companies. They require assistance from external experts / consultants who can provide guidance through all stages of an outsourcing project, from initiation to implementation.
Reasons to Consider Offshore Outsourcing
- To focus on core business activities rather than on back-office, commoditised services
- To improve flexibility and responsiveness to business changes
- To focus management away from operational issues onto strategy
- To release key resources from non-core functions
- To reduce operating costs and optimise current assets
- To improve financial ratios
- To avoid major investments
- To gain access to resources/skills not available internally
- To reduce time to market for new initiatives
- To focus on key issues following a merger or acquisition
Source Paradigm's Offshore Readiness Tool (SPORT) In any offshore outsourcing engagement, what works for one company may not work for another. Hence it is important to identify specific potential areas for outsourcing within an organisation.
Source Paradigm's strength lies in conducting an Offshore Readiness Assessment by using our proprietary Offshore Outsourcing Readiness Maturity Framework (O2RMF). SPORT aligns with the organisations business dynamics and maps it to their short-term and long-term business requirements. We help you identify offshore outsourcing opportunities in both IT as well as BPO areas. Our assessment involves:
- Understanding our client's business
- Aligning IT Strategy with our client's business
- Evaluating our client's business processes and IT applications
- Benchmarking our client's processes with Industry Best Practices
- Developing an offshore roadmap
- Setting realistic ROI expectations
- Providing Offshore Outsourcing as a strategic tool to improve our client's top line
Offshore Outsourcing Program Management Developing an effective Offshore Outsourcing strategy does not in itself ensure success, the other important aspect is effective execution. If not implemented correctly, the best of strategies will not deliver the desired results. Offshore outsourcing requires an understanding of how to work with a different culture, most probably in a different time zone and certainly in a more process driven environment.
Source Paradigm brings this expertise to the table and works as an extension of the clients organisation and ensures that the offshore outsourcing strategy is implemented. Our priorities at all times are to ensure that your organisation's goals are met and to minimise your offshore outsourcing risk.
Our expert program managers will work on a day to day basis with our client’s business and IT teams to ensure a smooth implementationof the strategy.
Outsourcing Implementation Management Selecting the best fit vendor to partner with your company in your offshore outsourcing program is critical to your success. The next thing is to ensure that you implement the right controls in place with the vendor. Source Paradigm will help you -
- Identify the best fit vendor by conducting a thorough research and due diligence on the vendor's capabilities and expertise in executing offshore projects as they relate to your needs
- Assist you in getting the paperwork in place e.g. Master Services Agreement, Statement of Work, Service Level Agreements,Penalties for infringement of Intellectual Property Rights, etc.
- Manage transition from onsite to offshore resources, using experienced Transition Managers
- Deploy an experienced Project / Program Manager to oversee the day to day project execution
- Provide regular (weekly / fortnightly) reports on vendor's performance
- Raise early alarms and escalate issues
- Work in conjunction with the vendor's project manager(s) to ensure the clients get value for money
- Identify, document and create a knowledge repository for sharing best practices within your organisation
- Ensure that the expected ROI is achieved
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