PwC recently released an excellent survey report discussing the risks and rewards of offshoring (a must read for financial services executives). You can access the report here.
While most comments on the report centered on lack of cost saving initially or no savings even after 5 years for few companies, the surprising element on cost savings was:
– "Only 9% of the companies surveyed are saving over 30% costs even after 5 years of operations!"
Zinnov comment: Remaining 91% of the companies are not realizing the potential of offshoring and needs to re-look at their offshoring strategy.
The report also has good insights into the potential and existing risks such as:
– "Rising wages and cost overrun were cited by less than 25% companies as a major risk."
Zinnov comment: Many opinion makers predict doomsday scenario for Indian offshoring due to rapidly rising wages, but they often overlook that the employee salaries in India constitute a much smaller part of operations cost than in US and UK.
– "Falling quality and HR (Hiring, retaining) are the clear winners for potential offshoring risks."
Zinnov Comment: In our extensive research on HR challenges, we realized that salaries are not the only motivators for attrition. Most companies often overlook the aspects of job satisfaction, growth roadmap or even the need for a brand to hire and retain the talent. Attrition also plays a major part in falling quality of services.
– "Security and data protection is a major concern for very few companies."
Zinnov Comment: For all the attention it has been getting lately, companies are very comfortable with the existing data protection laws and prevention capabilities of major vendors in India.
Access Zinnov Research for more information on our HR reports.