If you buy into the theory that the grapevine is a more accurate gauge of company stirrings than the results of research by consultants, you’ll be interested to read this brief “FUDbuster” item from Network Computing’s October issue.
It disputes PricewaterhouseCoopers’ announcement a week ago that offshoring in the financial services sector is set to double by 2008. PWC bases its projection on a survey just published, titled, “Offshoring in the Financial Services Industry: Risks and Rewards.”
According to Network Computing reporter Tim Wilson, PWC’s numbers, derived from interviewing executives at presumably large financial services operations, just don’t mesh with what his readers report. The magazine’s survey finds that 80% say they have no plans to do offshoring, now or in the future — a number that hasn’t changed from the 2004 survey. So there. (Of course, Mr. Wilson’s conclusions could be better supported if he’d evaluated responses just from those readers who work in financial services, which I don't think he did, or he would have said so.)
But since we’re on the topic of the PWC report, I’ll share one of its findings. Only half of respondents say they’re satisfied with offshoring’s overall impact. How to increase the chance of success?
- Plan ahead exhaustively. “When asked what they would do differently in retrospect, survey respondents with offshoring experience repeatedly replied that they would have benefited from investing more in planning and shaping the deal.”
- Be realistic when drawing up targets. “Executives identified performance-based compensation for offshore staff and managers as the most effective strategy for delivering ongoing value from offshore operations.”
- Assess the risks properly. “True, there are solid and immediate gains to be had from ‘value arbitrage’ but there are hazards too, not least to a company’s reputation, if there are offshore security breaches or perceived failures of social responsibility in lower-cost locations.”
- Think ahead. “Fully one-third of respondents say that they either already generate revenue or that they intend to through selling the use of their offshore capabilities to other firms.”
- Stay close to the regulators. “While different regulators may have different standards and approaches, what is certain is that they will expect firms to be transparent and to demonstrate active management of risk, both operationally and contractually.”
- Reward outstanding staff. “The best way to tackle rising rates of attrition, to deliver sustainable improvements to performance and to ensure that the firm’s brand and reputation are consistently maintained around the world is to treat offshore staff as you would people in your home market.”