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Title: Offshore Outsourcing: Business Models, ROI and Best Practices by Marcia Robinson, Ravi Kalakota ISBN: 0-9748270-0-2 Publisher: Mivar Pr Inc Pub. Date: 13 January, 2004 Format: Hardcover List Price(USD): $39.95 |
Average Customer Rating: 4.55 (11 reviews)
Rating: 5
Summary: Useful book for managers evaluating offshore initiatives
Comment: This book is probably going to have people who either like it or absolutely hate it. It depends on whether you are doing offshore outsourcing as part of a overall corporate strategy or having it done to you.
As a manager, I found that "Offshore Outsourcing: Business Models, ROI and Best Practices" was extremely helpful for my team in our offshore outsourcing initiatives. It is easy to read but there is a great deal of information contained in each chapter. Of particular note were chapters on: different business models (how to offshore), the nuances of the types of business processes (what to offshore), the pros and cons of different countries (where to locate operations) and the case studies of actual transactions.
The step by step guidance in the final section of this book is especially helpful to the project team as they move through the initiative. The authors offers many tips from their interviews that only a wealth of experience in the real-world could have generated. You can significantly cut your learning curve with this book.
For the busy executive this book brings real value in the discussions of offshore outsourcing as it relates to the company's vision, strategies, core competencies, and other cost management tools.
Highly recommend this book for managers and executives. Even business school students will find the global sourcing perspective valuable as they will now better understand how the offshore outsourcing tool fits into the bigger picture of continuous strategy.
Rating: 5
Summary: Excellent resource for strategic business decisions.
Comment: I decided to pick up this book with the hope that it could shed some light on the heated offshore outsourcing discussion for me. It did, but not in the "for or against" way I expected. More than anything else, the authors are focused on boiling down the concepts of offshore outsourcing so that readers can apply them to their own situations.
The business model chapter is particularly good and does an excellent job of broadening the definition of offshore outsourcing. Like a lot of other folks, I thought offshore outsourcing typically involved a U.S. company sending customer service or IT to an Indian company. The authors make it clear that that's not the case by going into detail about hybrid delivery models, captive centers, shared services, build, operate, and transfer models, and other business and delivery models.
The authors divide the book into three sections: the first part is an overview of offshore outsourcing, the second part talks about the different areas companies have outsourced (had no idea about human resources), and the third discusses how companies can select a vendor and a country and begin a project of their own if they find that offshore outsourcing is a viable option for them.
Overall, I thought this book was very informative, but don't expect the authors to come out guns a blazing on one side or another of the offshore debate. This is a "comprehensive guide," not a manifesto.
Rating: 1
Summary: An extremely rosy picture of outsourcing
Comment: I am always wary of books with obvious inaccuracies. This is especially true when non-experts, such as me, know more about a topic than the authors. The book paints an extremely rosy picture of outsourcing that is simply not supported by the facts.
Let's begin with this observation. "It would be hard to find a senior management team in any large corporation that is not currently investigating or prototyping an offshore project..." However, a March 9 article in Information Week notes that among CEOs, "73 per cent say they have no intention of doing any offshore outsourcing." Another survey by Gartner Research quoted in the same articles says that 80 per cent of CIOs "don't see IT outsourcing or offshore outsourcing as a priority." My caution to managers is this: Before you leap into outsourcing out of fear of being in the "laggard" category described in this book, do a reality check. That reality check should include reading reports with more substantial research to back up the claim that offshoring has reached its "tipping point" and that executives should hop onto the bandwagon for fear of being left in the dust.
In chapter two we are told that companies have "little choice" but to offshore their services. As an historical precedent, we are given the shift in manufacturing to low labor cost centers in the 1970s and 1980s. If that is true, why do I drive a German made car, why is my house heated by a German made furnace, and why do my kids play with German made toys? Doesn't Germany have the highest labor costs in the world? But it also has the most advanced engineers who are trained at that country's world famous Fruanhofer Institutes (government supported R&D centers). The result is high quality products that are safer and, because of fewer defects, cheaper to maintain.
In chapter five we are told that employees at call centers overseas do not "view customer service as tedious, so are less likely to leave." And "employees in many offshore markets regard the position of contact center rep as a career." Again, these assumptions are simply not true. Over the past few months I have read numerous articles in the popular and business media that discuss the problems Indian call centers have with retaining employees. In a CNET news article titled "India call centers face employee exodus," statistics are provided that clearly show the strain placed on these workers. They have to work ungodly hours because of the time difference with the US and they absolutely hate having to deal with irate customers. Workers are simply not prepared for the stress and most leave within a few months.
I was especially amused by the case of British Petroleum (p. 172), which sent its HR administration OFFSHORE TO SCOTLAND (sic). Perhaps the American authors don't know this, but that is like saying "American Airlines sent its HR administration offshore to Vermont."
The last page of this book warns us that if we cannot reduce costs, we are in for trouble. For example, of the Fortune 500 companies in 1954, more than 400 are gone from the list. The idea here is that those 400 companies were failures because they did not cut costs as well as their competitors. However, Smyth and Loomis, two journalists at Fortune that helped compile the first list in 1954 note that the majority of these companies were either acquired, merged, or were no longer considered industrial (see their article "Forty years of the 500"). Few are failures. This is nothing more than scaremongering, which there is simply no excuse for.
Finally, this book is very poorly written and includes lots of cut-and-paste excerpts from Internet web-pages (see top of p. 82 for example). The tables and images look like amateurish PowerPoint slides that took five minutes to create. And the "consider the case of [insert company name]" beginning to each section becomes tired after it is used for the n-th time.
In sum, the value of offshoring is dependent on the type of work, the type of industry, and a number of other factors not considered in the one shoe fits all philosophy extolled in "Offshore Outsourcing." I also believe that outsourcing is a temporary phenomenon that will be soon made obsolete through automation and computerization. Even the authors admit that outsourcing almost always entails mundane, repetitive work, just the kind of work that is most easily displaced by technology. In less than ten years, most of today's hot outsourcing firms will either be out of business or will have moved on to services other than those described in the book.
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