Looking Inward

My recent engagement with the stakeholders at Pune Electronics and Technology Park started with a very intense discussion on the changing paradigm in offshoring.

It is no secret that few of the multinational companies have shifted their India base back to the United States and UK. Indian salaries have been on the rise and specialized skills commend 75% of US or UK salaries. There is a noticeable drop in efficiency on account of human factors like time difference, expression, communication etc. The dipping value of the Euro or the Dollar adds to the commercial woes.

So I was asked. Does offshoring to India make any sense? The debate gets intense here and it is evident that we need to look at the offshoring angle very differently in today’s competitive times.

1. Offshoring just to save cost doesn’t make sense. New rules need to be defined and implemented to make sense of the offshore business.
2. The offshore center shouldn’t just be looked upon as a cost saving measure but should be looked upon as a strategic unit which captures the full advantage of the country – be it the vast talent pool, or the vast market or the growing ecosystem of complimentary industries.
3. The working dependence on the various teams between the two destinations (say, US and India) should be less. The offshored work should be independent ‘delivery’ based modules rather than just a piece to fit in the overall deliverable of the main work. This allows for full innovation and quality improvement of the offshored work without interference to the whole process at stake.
4. The advantages of the time difference should be fully exploited. Besides support activities, other areas like research, marketing, logistics etc. should be explored and included in the list of offshored deliverables.
5. The offshoring center should be autonomous and must have authority to make business and commercial decisions based on a framework which allows for logical and swift decisions. Waiting for overseas approvals brings delays in the system.
6. Parallel reporting systems should be fully avoided. Even a fresh MBA graduate would endorse this. Authority, roles and responsibility of the managers should be clearly defined. Creating gaps encourage office politics and mars unit performance.
7. The staff augmentation model is now faced with intense competition from players with ‘fly-by-night’ attitude and the huge investments in delivery centers done my major players in the arena. Hence it should be avoided and, ideally, an offshore delivery center should build expertise and capacity in transitioning processes.
8. Businesses should be run (read ‘guided’) by processes and not by individuals. Hence sequential documentation is important and should be encouraged as a culture. It averts over-dependence on presence of individual employees and helps in the smooth transitioning of processes.
9. Credible metrics (to measure productivity, etc.) should be in place. This would help evaluate each process and center to assess, estimate and keep track of the workflow and avoid fingerpointing. Productivity of each resource (irrespective of where they are placed) can thus be planned and an equitable work load can be offloaded on employees, making it fair and simple.
10. Hybrid models of having a captive and third-party vendor is gaining ground and one should not feel hesitant in dividing work accordingly. For processes that are simple in nature and which require a small and independent team, a third-party vendor is a good option.
11. Communication between the two centers should be open, frequent and structured. Performances, goals and issues should be shared and periodic reports should be sent.
12. The management should drive HR to focus on cultural variances between different locations in play and the variance should be understood and worked upon.
13. The finance unit needs to be more innovative in assimilating data of individual pieces of the process and driving a micro efficiency in each unit. The focus can no longer be at the extreme ends of the process, but needs to be on each individual component of the project. CFOs with better management skills are henceforth desired.
14. The process timeliness and the demands from the customers have a huge impact on the stress situation of the employees. The HR department now needs to evolve from ‘paper-pushers’ to ‘employee-representatives’ and management should show the door to insensitive HR elements.

These are but a few of the areas to be looked at when opening an offshoring center. The process of transitioning does take time, but once done, the centers function smoothly and efficiently.

From my discussion with the stakeholders at the Pune Electronics and Technology Park, it was evident that there is a lot more thought going in this direction and more complex questions are being asked on the competitiveness positioning of an outsourced unit.

India has managed to be leaders in ofshoring till date and my colleagues are well set to make another paradigm shift soon.

Beware competitors! India is not sleeping!

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