| Recently Sony announced at Tokyo that it will be | | | | The reality of IT outsourcing now is shorter contracts, |
| cutting 8,000 jobs which constitute five percent of its | | | | with a number of specialist suppliers. |
| total permanent workforce and the rest from the | | | | Similarly, multishoring enables companies to secure |
| part-time employees as a result of the global | | | | best-of-breed outsourcing solutions, thus tapping into |
| slowdown. | | | | specialist skills sets and maximizing the merits of each |
| According to Sony, the new business plan is expected | | | | offshoring location. |
| to deliver more than $1.1 billion in cost savings a year | | | | You can have different suppliers, in different locations |
| by March 2010. | | | | for different functions. As multishoring takes off, what |
| What is offshoring? Offshoring is a type of | | | | we're seeing is a trend towards suppliers opening |
| outsourcing. Offshoring simply means having the | | | | operations in different locations to give companies the |
| outsourced business functions done in another country. | | | | option of a multi-shore strategy but with the security of |
| Frequently, work is offshored in order to reduce labor | | | | a single supplier contract. |
| expenses. Other times, the reasons for offshoring are | | | | Simply outsource processes elsewhere in an attempt |
| strategic -- to enter new markets, to tap talent | | | | to break from the traditional mould |
| currently unavailable domestically or to overcome | | | | Use India as one supply location as part of a global |
| regulations that prevent specific activities domestically. | | | | strategy whereby elements in which India excels, such |
| The phrase that I think describes the old, outdated | | | | as knowledge process outsourcing, will be outsourced |
| approach well is, 'your mess for less', with the | | | | to India, but other processes will be nearshored, |
| outsourced company taking on your operation and | | | | onshored or offshored to other locations. In terms of |
| simply running it at a lower cost. | | | | costs, India and China remain amongst the cheapest |
| Today's corporation succeeds based on its ability to | | | | options, yet the tax-free incentives schemes offered |
| establish and sustain a network of strategic business | | | | by Dubai, for example, are leading to a far greater |
| partners. More and more companies are realizing the | | | | competition regarding cost in the global market place. |
| benefits in turning around core competencies and | | | | Conclusion |
| outside relationships. "Do what you do best and | | | | In conclusion, the new global environment is offering |
| outsource the rest" is the credo, and for good reason. | | | | opportunities aplenty to end users. With the |
| Outsource for More Profits | | | | emergence of global service provision, end users have |
| Resourcing allows to free internal resources and allow | | | | the world at their feet and the multishoring 'pick and |
| HR practitioners to be more strategic. Instead of | | | | mix' approach can maximize this. |
| entering data, crunching numbers and pushing paper, | | | | By capitalizing upon several offshoring locations, |
| HR can focus on core/non-administrative functions. | | | | possibly in tandem, end users can accrue a low cost |
| Offloading the administrative work maximizes the | | | | offering with the particular skills that are required. India |
| organization's resources. | | | | is still a vital cog in the outsourcing wheel, but taking the |
| Alternately they can offer access to expertise. | | | | risk and going elsewhere can sometimes reap |
| Organizations that outsource gain access to | | | | massive benefits. |
| know-how they probably do not possess. They tap | | | | Through innovative outside relationships, organizations |
| into a broad network of experienced people and best | | | | are aggressively reshaping themselves and |
| practices. There are, however, some common | | | | fundamentally changing the way they do business. |
| misconceptions about outsourcing, including the belief | | | | Unprecedented levels of performance and profitability |
| that it can and will in every situation: | | | | have resulted from these efforts. The bottom line is |
| One of the core reasons is that outsourcing cuts costs | | | | that outsourcing has become one of today's most |
| thereby increasing profits. Although outsourcing will | | | | powerful, organization-shaping management strategies. |
| provide cost savings for some organizations (mostly | | | | Smart corporations of the future will serve their |
| those that are very large and extremely inefficient), in | | | | customers by functioning more as a focuser of |
| most cases, it is dollar-for-dollar cost neutral. | | | | resources than as an owner of resources. |
| Take an organization with hundreds of people in HR: If | | | | Outsourcing a non-core function like the data center to |
| it can save just 5 percent of the $100 million dollars it | | | | a high quality provider that gives enhanced levels of |
| spends on HR, it will save $5 million. But a company | | | | service at a lower cost helps businesses to compete |
| with only 10 people in HR is not going to pay for the | | | | in today's highly competitive marketplace. |
| service by shifting the work off one or two | | | | In conclusion, it can be safely said that outsourcing |
| employees. What will happen is that the department | | | | allows freeing of internal resources and allowing |
| will gain an increase in benefits or services -- more | | | | executives to be more strategic. Instead of entering |
| bang for the buck. | | | | data, crunching numbers and pushing paper, company |
| Besides, "The capital crunch and cost pressures due | | | | executives can focus on profitability and core/ |
| to the financial crisis will force enterprises to outsource | | | | non-administrative functions. In other words, offloading |
| more of their back office operations to vendors like | | | | the administrative work maximizes the organization's |
| Sitel for cost arbitrage and access to talent pool. In | | | | resources. |
| spite of lower IT budgets, we are upbeat on surviving | | | | Bottom line |
| the crisis and sustaining growth," Adeni asserted. | | | | Outsourcing is a necessary component of a profitable |
| Multishoring is a trend that mirrors the evolution of IT | | | | company's business plan. By choosing wisely, a |
| outsourcing. Gone are the days of 10-year deals being | | | | company can be more profitable and efficient by |
| awarded to the traditional global outsourcing providers. | | | | letting other companies take some of the load. |