Significant developments in technology have changed the way products and services are offered to consumers. An example of this is the modern customer support model in financial services and telecommunications. In these industries it is common and cost effective for customers to be supported by staff located in other countries. This has been driven by a number of factors including cost pressures, rapid growth, skills shortages, scalability constraints within the existing workforce, changing behaviours and a move to 24x7 usage.
Some companies responded quickly to these changes and evolved their operating model. They understood the benefits and adapted their way of working, developing practices that enabled success.
To be effective today and succeed tomorrow, companies must learn, adopt and follow the practices of these early pioneers.
Challenges
Most organisations struggle with some of the same challenges: cost pressures, workforce constraints and skills shortages.
Cost pressures
Year on year budget cuts mean that companies must do more with less. Increasing costs for staff, office space, support services, etc., are forcing organisations to think and behave differently.
Workforce constraints
Companies can be faced with complex labour and immigration legislation, constraining growth. This causes organisations to change how they operate. In some cases staff turnover is used to change the operating model. Instead of replacing roles, managers are looking to transform the way they work, allocating some of the budget to outsourcing organisations. This can enable projects, services and even entire functions to be outsourced either onshore or offshore.
Skills shortages
Localised skills shortages prevent organisations from developing in-house talent pools to support business plans. Outsourcing organisations have built their business model on identifying and grooming the best, most skilled resources in their market. They then offer access to these resources through a global model which takes advantage of the costs differences.
Effective communication is one of the key skills companies need to develop in order to work successfully in a global environment.
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Opportunities
Global landscape
Over the last 20 years technology has changed the global landscape. It has enabled new and innovative ways of working. Consequently, global partnering organisations have emerged and are able to offer a wide variety of services, from the simple to the complex. These can be off-the-shelf, fully tailored, onshore, offshore and can meet any kind of specialised requirement e.g. security, legal, regulatory etc.
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As a result of this change, it has now become common to work in an environment with people from different cultures and backgrounds. On one project in Hong Kong, I was the only native English speaker amongst almost 100 staff. The languages used to communicate, aside from English, were Cantonese, Mandarin, Hindi, French and Spanish. Weeks would pass before I heard or encountered another native English speaker. Ironically, even amongst the staff from the Indian partner companies, English was the preferred language of communication. This was due to local languages In India dominating large regions, relegating Hindi to a secondary language. It all made for a rich, diverse and interesting work environment. The challenge however was making communication clear, simple and effective.
Evolving models
In response to the drivers mentioned, the partnering models on offer are also evolving. Previously simple tasks and projects were suitable opportunities for partnering. As these companies become more capable, complex tasks and projects are now considered suitable for outsourcing. Nothing is seen as too complex or sacred. McDonald's once famously stated that they outsourced everything except for the special sauce used in the Big Mac. This created an attitude of outsourcing all but the essential or unique, that which made a product or service different from the competition. After all, if you give all your secrets away, what's to stop someone else from copying your entire business? The reality is that today, even companies like Apple, with valuable intellectual property, have to partner in order to remain competitive.
The increased maturity amongst outsource partners has also enabled a change in how these businesses function. Previously a central facility would deliver globally in a 'one to many' model. Today we see outsourcing companies use a small number of global centres to support their customers. This 'few to many' delivery model is also evolving. As new locations mature, the model is becoming 'many to many'. One of the partners I worked with was able to support its largest insurance customer from several global locations. It offered the customer flexibility, a consistent way of working and ultimately savings.
The ratios for offshore versus onshore delivery have also changed. Previously customers demanded that partner companies provide greater onshore coverage, typically 40 per cent onshore and 60 per cent offshore. Today it is 30 per cent and 70 per cent respectively. There are some organisations which are currently working with a 20 per cent and 80 per cent onshore/offshore ratio. A few are even contemplating 10 per cent and 90 peer cent for certain functions and services. Again, this reflects pressure from the factors mentioned earlier and the ongoing maturity of the models offered.
Skills and practices needed to succeed
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Given the evolving landscape, it is clear that some companies are ahead of others when it comes to partnering and working flexibly with outsourcing firms. Learning from companies who have responded to and adopted collaborative models can help new partnerships work more effectively.
Effective communication is one of the key skills companies need to develop in order to work successfully in a global environment. There are a few considerations which need to be taken into account in order for success to be more likely.
Clarity
Communication must be clear, free from slang, jargon, abbreviations and other non-standard elements which could be misunderstood or misinterpreted.
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Real-time
When communication is done in real-time, it offers a better opportunity to correct mistakes and misunderstandings. It's much harder to multi-task when having a real-time discussion. People frequently multi-task and this can reduce a person's overall comprehension.
Quality
Always select the best quality method for communication. Aim for video calls over audio calls and where possible use multimedia to support complex ideas.
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Frequency
Overcommunicating is much more desirable than under communicating. There should be a constant focus to ensure that all parties are on the same page, schedule, plan, etc.
Broad and deep
Some companies will limit communication to just senior staff, project managers or delivery managers. Avoid this common mistake and communicate to the wider group, particularly those involved in the project at a deeper level.
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Multiple locations
There are many issues when working with partners in different locations. Time zones are the obvious challenge but so are holidays. National, regional, and even local holidays need to be taken into consideration when planning. At a project I worked on in Asia, the total number of public holidays amongst all parties accounted for almost 60 days. This required careful management and ongoing vigilance in order to manage impacts from schedule changes.
Multiculturalism
Sensitivity to language and culture goes a long way to building relationships. It's not enough to understand language differences but also how people think and react. In some cultures, losing face or protecting one's honour is of great importance. This can breed a culture of saying yes even if the task is impossible within the timelines. Knowing this can avoid problems and embarrassment.
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Relationships
Building relationships is often cited as a key skill which many profess to have. Developing high level relationships is straightforward for some. Developing deep, successful and long term relationships is a skill few possess. Everything mentioned previously needs to be considered. Being great in this area involves the intersection of cultural sensitivity and masterly communication. Only once you have managed to achieve both, can partnering become effective and successful.
Conclusion
Partnering with outsource companies both onshore and offshore is a foregone conclusion for some, particularly those who have felt pressure to evolve and develop new ways of working. Early adopters are further along the maturity curve and can negotiate contractually built-in efficiency improvements with their partners e.g. 10 per cent performance gains every year. These can demonstrable via predetermined metrics such as customers managed per hour, policies issued per day, etc. They can also establish outcome based agreements that focus on value and performance with financial incentives designed to reward when targets are exceeded.
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Organisations that are just starting to contemplate working in a different way need to adopt the skills and best practices of these first movers and learn the lessons already mentioned.
Latecomers do have a second mover advantage over early adopters. This is because outsourcing has evolved and developed quickly. Transitioning roles, functions and services is now a well established process which is largely repeatable. Concerns around job losses, over dependency on partners, costs, unintended impacts, etc., are handled much more sensitively and in conjunction with the new partnership model. Some outsourcing firms, in a bid to assuage fears of complete dependency have even begun transferring skills back by training staff inside the client company.
Today outsourcing companies are learning Mandarin, Spanish, French, and German to serve those markets. Yesterday they were perfecting regional British and American accents.
Tomorrow, who knows how organisations will have to respond in order to serve an increasingly demand driven global market.
Bradley de Souza (bradley@xtanz.com) is an internationally recognised CIO/CTO who has specialised in change and transformation across industries around the world.
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