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Offshore Outsourcing: Business Models, ROI and Best Practices

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Something radical is happening to corporate organizational structures, something subtle yet far-reaching in impact. It is the rapid emergence of offshore outsourcing as a corporate strategy. Cost reduction, productivity improvement, and cheaper labor - these are the promises of offshore outsourcing. This book reveals how GE, American Express, Dell, British Airways, Delta Air Lines, BellSouth, British Telecom, and numerous other companies are successfully using offshore outsourcing to reduce costs associated with ...

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Something radical is happening to corporate organizational structures, something subtle yet far-reaching in impact. It is the rapid emergence of offshore outsourcing as a corporate strategy. Cost reduction, productivity improvement, and cheaper labor - these are the promises of offshore outsourcing. This book reveals how GE, American Express, Dell, British Airways, Delta Air Lines, BellSouth, British Telecom, and numerous other companies are successfully using offshore outsourcing to reduce costs associated with IT, customer care, finance and accounting, human resources, and transaction processing.

Offshore Outsourcing: Business Models, ROI, and Best Practices is a comprehensive guide to the real-world application of offshore outsourcing across all industries. Authors Marcia Robinson and Dr. Ravi Kalakota give you an in-depth analysis of offshore outsourcing. They discuss what is behind this trend, how it is paying off, and, most importantly, provide you with a step-by-step guide on how you can implement your own offshore strategy.

Based on extensive research and interviews, this book offers insight into how managers of leading firms are implementing offshore outsourcing. You will find plenty of practical tips and tools to apply offshore outsourcing in a wide variety of business environments.

Offshore Outsourcing is organized in three easy-to-read sections:

- Part One introduces the value proposition of offshore outsourcing, including fundamental concepts, the different business models, and the business process landscape.
- Part Two examines the specifics of the processes being offshored today, namely information technology, customer care, finance and accounting, human resources, and transaction processing.
- Part Three describes the major activities of the offshore strategy, vendor sourcing, and country selection.

Robinson and Kalakota include multiple best-practice case studies to illustrate how firms are executing their offshore strategies. The authors map out key steps to help you make the right choices with your own offshore projects and reveal the benefits, costs, and risks of offshore outsourcing. Finally, it’s your choice. Offshore outsourcing can be a haphazard affair that creates anxiety among employees and fails to deliver bottom-line results. Or, with this book at your side, it can help you create a more focused, streamlined, and competitive organization.

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Editorial Reviews

Business Book Review

According to Robinson and Kalakota, most large corporations have cut costs as much as possible, using traditional methods. Understanding the "more for less" battle in which they are engaged, these firms realize that driving more costs out of operations means going offshore (i.e., migrating part or all of their value chains to low-cost locations). Drawing on the experiences of GE, American Express, Dell, BellSouth, Delta Airlines, British Airways, and others, Offshore Outsourcing introduces CEOs and senior managers to the creation and implementation of offshore strategies that can be used effectively to create more focused, streamline, and competitive organizations.

As the authors note, offshore outsourcing is "... an unstoppable mega-trend. ... profoundly affecting the competitive capabilities and hence the labor structures of all multinational corporations." Thus, they offer Offshore Outsourcing as a comprehensive guide to the practical application of this trend across all industries. Their premise is that offshoring is is a long-term development that has emerged as both a strategic and a tactical tool for meeting new business realities. And, though this tool is hardly new (companies have been offshoring manufacturing for many years and reaping significant cost and productivity improvements), the offshoring of business processes is still in its infancy. Thus, there is still much uncharted territory, and this territory is full of new rules, tools, and business models.

Robinson and Kalakota present a clear and detailed schematic that delineates these rules, tools, and models, superbly filling in the blanks left by the many general and oversimplified discussions currently available. Their approach, based on extensive research, focuses on helping CEOs and senior management understand the specific skills and management practices required to integrate individual projects, as well as large-scale offshoring activities into a company’s overall strategy. Thus, customizable guidelines take into account unique business needs and different levels of readiness for change. Moreover, these guidelines are organized to emphasize and explore three critical points for companies that may still view outsourcing as "a short-term fix for saving money and ‘getting rid’ of some noncore functions": (1) Offshoring is becoming a "need-to-have" competency. (2) It is a tactical business decision with long-term implications. (3) It is no longer an unproven model.

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Product Details

  • ISBN-13: 9780974827018
  • Publisher: Mivar Press, Incorporated
  • Publication date: 10/28/2004
  • Edition number: 2
  • Pages: 314
  • Product dimensions: 6.10 (w) x 9.22 (h) x 1.16 (d)

Read an Excerpt

Why are corporations such as General Electric, HSBC, IBM, Oracle, and Deutsche Bank transforming their internal services and administrative operations using offshore outsourcing? Can companies that have focused on outsourcing manufacturing for so many years replicate similar cost and productivity improvements by offshoring business processes such as IT, finance and accounting, human resources, customer care, and transaction processing? What can others learn from the market leaders? Is outsourcing offshore a temporary management fad or a long-term business trend?

These are some of the questions that led us to write this book. In Offshore Outsourcing, we introduce readers to offshore strategy creation and implementation. We hope to help managers of all levels tap into the power of the offshore outsourcing trend that is transforming the cost structures and competitive dynamics of several industries.

Slowly but surely, offshore initiatives are resulting in millions of dollars in operational cost savings for corporations like Citigroup, Ford, and American Express. Can your business achieve the same results? The answer is yes. Contrary to many people's fear, you do not have to be a multinational company to reap the benefits of offshore outsourcing. If done well, offshore outsourcing can improve your bottom line and streamline the structure of your organization.

Offshore Outsourcing - Where Do You Start?
When building something new or innovative, you need a clear blueprint. Unfortunately, while there is a lot of general discussion about offshore outsourcing, almost all of it is either anecdotal or simplistic. In order to help you unlock the value of offshore outsourcing, we decode some of the core concepts behind this trend in Offshore Outsourcing. In particular, we illustrate five areas.

1. Best Practices. Offshore outsourcing encompasses a broad array of business best practices and skills that are essential ingredients for success. Throughout this book, we use best-practice case studies to show you how to apply offshore outsourcing to many different processes and tasks and maximize the impact of your efforts.

2. Business Models. There are many business models for offshore outsourcing. Offshore Outsourcing gives you customizable guidelines that take into account your business needs and readiness for change.

3. Process Focus. Whether you decide on information technology outsourcing or business process outsourcing, the potential gains from each are equally impressive. Our priority is to explain how to make offshore outsourcing work in administrative, customer-facing, and transactional areas that are relatively untapped in the quest for cost reduction.

4. Creating Your Roadmap. Offshore outsourcing is as much about people, vendor selection, country selection, and project management as it is about cost reduction. Our goal is to show you how to achieve a balance between managing people and improving performance.

5. Assessing ROI and Business Risks. Done right, offshore outsourcing can deliver sizable bottom-line impact, but it's a lot of work, and it's not without risks. Offshore Outsourcing sheds light on the dangers and mistakes that can derail an offshore initiative.

It doesn't take a genius to realize that the companies that successfully implement offshore outsourcing are going to put a lot of pressure on their competitors to follow suit. Obtaining even a small cost advantage in today's brutally competitive market place can mean the difference between market leadership and failure.

The Organization of This Book
When we wrote this book we tried to structure it so that a variety of readers, from offshore outsourcing novices to managers in the midst of offshore projects, would find it easy to navigate. While you may prefer to read it cover to cover, the content is organized in three parts to help you learn about offshore outsourcing at the level of depth you choose. Following is a quick guide to the content.

- Part One of the book provides a thorough overview of the offshore outsourcing landscape. We begin by defining key concepts and trends (Chapter 1), business models (Chapter 2), and the process landscape (Chapter 3). We also explain how three best-practice firms - General Electric, Dell, and American Express - are capitalizing on the offshore outsourcing trend.

- Part Two of the book provides a detailed overview of the different business processes - information technology (Chapter 4), customer care (Chapter 5), finance and accounting (Chapter 6), human resources (Chapter 7), and transaction processing (Chapter 8) - that companies are sending offshore. Throughout these chapters, we have included many case studies because they allow you to see the key business processes being transformed, the implementation challenges that companies and third-party providers struggle with, and the ROI that results from resolving them.

- Part Three of the book focuses on the "how-to." We discuss how you can create, implement, and benefit from an offshore outsourcing strategy. We present the steps that are normally included when companies create clear, focused offshore strategies (Chapter 9), decide on vendors (Chapter 10), and select countries (Chapter 11).

At the end of this book, we hope that readers will return to their organizations with new ideas and an understanding that offshore outsourcing is a journey, not a one-time event with a quick payoff. Agree or disagree - offshore outsourcing is changing the business landscape.

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Table of Contents

Preface xi

Part I: Why Offshore Outsourcing?
Chapter One: Offshore Outsourcing: The Next Wave                               1
Chapter Two: Offshore Outsourcing Business Models                              23
Chapter Three: The Business Process Offshoring Landscape                    49

Part II: Offshore Outsourcing Best Practices
Chapter Four: Information Technology Offshore Outsourcing                   73
Chapter Five: Customer Care Offshore Outsourcing                                101
Chapter Six: Finance and Accounting Offshore Outsourcing                     129
Chapter Seven: Human Resources Offshore Outsourcing                         159
Chapter Eight: Transaction Processing Offshore Outsourcing                    185

Part III: Offshoring Strategy Creation and Execution
Chapter Nine: Creating Your Offshore Strategy                                       209
Chapter Ten: The Vendor Decision                                                          239
Chapter Eleven: The Location Decision                                                    269
Chapter Twelve: Final Thoughts on Offshore Outsourcing                         295

Endnotes                                                                                                 299
Index                                                                                                       307

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