In the course of six years, I’ve moved in excess of 600 jobs offshore. Along the way, I’ve learned a few lessons that I share in this article.
–> Lesson #1: Do Not Limit What You Can Offshore
One of our first decisions was to exclude client-facing work, except call center, from our offshore outsourcing initiative. It’s amazing to me how much managers tended to overestimate the amount of work that is client-facing due to their initial fears of outsourcing. It’s also a great excuse for some managers to run away from the outsourcing initiative.
We learned that we shouldn’t have limited the work suitable for offshoring. In the end, we found back-office work the easiest to move offshore, but call center and even some client facing jobs were quick to follow.
–> Lesson #2: Training at the Offshore Location is More Efficient and Cost Effective
Some managers think their work is too hard and they’ll never be able to move it offshore. This one always baffles me since the education level of the people doing the work offshore is generally the same as the people doing the work onshore. Solving this problem is difficult since you have to prove the offshore workers can do the work before onshore managers will outsource the work.
The typical resolution for this situation is to have a few of the offshore team members come to your location and learn your work. After learning your work, they go back to their home country and train others to do it.
There are four problems with this approach. The first is that this method of training is expensive. Since training is done at an onshore location, the expense, I estimate, is at least five times the cost of training offshore. The second problem is that it takes twice as long, since you must do double training. The third problem — possibly the biggest — is that the offshore team members being trained onshore learn the bad habits as well as the good habits, since they’re exposed to all employees and not just the pre-selected trainers. Finally, we found it bothered some of our best workers who were worrying that these offshore workers sitting right next to them might take their jobs at some point.
The solution to this problem is to choose your best people to do the teaching offshore. This will raise lots of questions about who would want to do such a thing. Frankly, in the time I’ve been doing this, I’ve never had an issue getting volunteers to go offshore and teach their work to others. Most people see it as an invaluable life experience. An added benefit is that you end up with well documented processes and training materials that work onshore and offshore.
–> Lesson #3: Replace Attrition and Add for Growth Offshore
Managers rarely want to downsize for any reason — and especially not because of moving work offshore. This is a difficult issue, and there are a few solutions that can help reduce or eliminate downsizing due to offshoring.
First, you can decide only to offshore when you have attrition. If this is too slow, then add all growth to the equation — only hiring offshore for growth. If you still need more jobs, then create some involuntary attrition. As the COO of a 3,000 person operation, I always forced my managers to drop the bottom 5% of our staff every two years. By dropping off the bottom 2%-3% annually you keep your team performing at a higher level. In most businesses the combination of these three ideas should generate an 8%-10% annual attrition rate; in a “short” five years almost 50% of your jobs can be offshored. In all cases, make it a hundred times more difficult for your managers to hire onshore vs. offshore and then sit back and watch your offshore workforce grow.
–> Lesson #4: Get Client Consent through Proof of Concept and Testimonials
The last issue I want to mention is the most difficult one to solve. There are usually some client contracts where permission is needed to outsource any of their work onshore or offshore. Luckily, many clients are multinational and are themselves outsourcing, so it’s not usually an issue. Some clients just don’t like the idea. To address this issue, the service provider must demonstrate the quality of the offshore operation and explain how moving work offshore will help the client remain price-competitive.
The client also needs to visit the offshore locations, if they’re agreeable. Seeing is believing, and many of the offshore vendors I have worked with were truly global organizations.