Where is Back – Contemplating Bringing Work Onshore

///Where is Back – Contemplating Bringing Work Onshore
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Where is Back – Contemplating Bringing Work Onshore

Why Customers Are Considering It

Many global and organizational factors have changed since the time that companies made their initial decisions to leverage a global model for service delivery. As a result, a number of important considerations and alternatives should be evaluated in determining what to do next, if radical change in contemplated.
Customers who have made use of various global locations to source business services or information technology services may consider the question of bringing work back for a variety of reasons. First,it is good business planning hygiene.Call it Plan B. Second,regulators such as the US Fed,corporate boards

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and other governance-minded stakeholders increasingly want a better understanding of how well equipped subject firms are to deal with changes whether prompted by an outright failure of the current model, or,more likely, reasons that are ‘elective’ in nature.

It’s Not Always Binary

It is interesting to keep in mind that the

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prompts for bringing work back are probably not limited to the binary scenarios of either a Termination for Cause or for Convenience. On hardly an exhaustive basis, consider that in between these extremes lie a series of possible causes, including:
-Compliance or regulatory changes
– Scope or scale changes

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One example of a compliance-driven shift is a

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Another example, this one of a scope or scale-driven shift occurred with a large regional client; call

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While any of these factors may prompt the organization to consider termination, and could likely be classified into the “Convenience” category, the more important point is the implications of each respective cause on potential Choices in taking the work back.

Where is Back?

And where exactly is “back” anyway? Does it mean back to the country of the process’s origin? Back to the same city or the same center? (Though, it is doubtful that the center was mothballed in anticipation of such a day). How about back to the same business model? Or does it mean somewhere else entirely? The right answer may well depend upon the reason for termination.
Recall that both of the Banks in the earlier Collections and Auto Leasing examples found that performing their processes “offshore” was acceptable, but doing so on an “outsourced basis

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Now consider their differing possible solutions. Bank B with its outsourced auto leasing process could have made the choice of adding scale to its outsourced operation, rather than taking back the particular function. After all, it was pleased with

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both the outsourcer and its near-shore choice, while only the shrinking scale was problematic. By contrast, Bank A,performing outsourced collections, seemed to have little choice other than to shift the operation away from an outsourced partner.
The next question might be whether to move it back onshore,or keep it offshore – where it worked – and possibly domesticate the operation. By the time of its shift in compliance views, might the Bank also have other company-owned operations in the same or another offshore precinct that it should consider?

Further, if outsourcing had not become a compliance issue for the Bank, but instead factors such as resourcing or pricing in the country had become problematic, could another country work rather than bringing the function back onshore?
The point is that much has changed in the world in the short period of time since many organizations made their first or even second-round of global services sourcing decisions. In a world exploding with options, bringing work back in-house or onshore should not be the knee-jerk reactionary solution.

What’s Changed?

Consider that as recently as 2006, Pluto was still a planet,Apple hadn’t broached the iPhone, and India may have been the choice for low cost off-shoring –

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The Financial Case

This is not to say that a greater number of options make the financial case easy. Despite contrary claims, much globalization activity has been driven by a quest to find the lowest cost solution or destination. As a result, when a process must move, the financial

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Returning to the earlier example of Bank A, there would not be an expectation of retaining the prior financial case if the collections process were brought onshore. But, given that compliance was the driver of change, then the shift should necessarily consider the broader business case. For example, would such a move reduce the likelihood of compliance infractions or monetary penalties? Would it lessen the likelihood of legal actions by

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The Performance Trough & Other Factors

There are numerous other factors to consider

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when the “back” question presents itself. For example, there is the challenge of managing the “Performance Trough” that follows the transition of work regardless of business model. For many, bringing work in-house harbingers a smooth

return to experienced hands. Of course, those hands may be long gone. Even if not, the trough will likely persist.
Researchers from Carnegie Mellon and CalTech convincingly found that even when people trained in doing a specific, identical task did nothing more than rotate amongst themselves, their performance, as measured by such metrics as turnaround time, could get as much as 170% worse in the short term.
There is also the “Social Contract” with the resources or the locations in question that must be considered. If an employer, or

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the resources aren’t quickly re-engaged.What is the social contract between globalizer and community? What is the potential impact on brand – even in the case where Termination for Cause exists?

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About the Author: Alan Hanson

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Alan is a senior leader of Neo where he has responsibility for its global sales and marketing activities, and the continued development of its ground-breaking Global Supply Risk Management (GSRM)...

09-12-2012|WhitePapersComments Off on Where is Back – Contemplating Bringing Work Onshore