As clouds of hesitancy concentrate around the IT outsourcing arena, enterprises across business verticals have started exploring alternate models of off-shoring.
As a matter of fact, outsourcing is posing as a big-ticket expenditure item, as offshore contracts account for up to 20 per cent of an enterprise’s total Ecommerce Agencies. And though cost savings is the foremost reason for which IT firms outsources projects, the actual savings turn out to be only about 15 per cent.
Furthermore, the difference between Top Ecommerce Companies offshore and onshore labor costs is curtailing. As a result, the original concept of outsourcing has hit the downhill and businesses are exceedingly exploring alternate models.
Eyeing the eroding profits resulting out of typical outsourcing contracts, some major models that are being taken into consideration are as follows:
Selective Multi-sourcing: Multi-sourcing is considered to be the most apt way to outsource services, as it ensures that each outsourced task gets ‘best-of-the-breed’ services.
However, many organizations find this model daunting, as it is intricate to manage multiple vendors in a single work environment that is interconnected. However, over the period of time organizations have strengthened their governance capabilities and developed internal organizations for vendor management.
These internal agencies prevent value leakage by overseeing particular outsourcing vendors. With a noteworthy increase in maturity and experience, various organizations have pulled up their socks to take up multi-sourcing responsibilities.
Another variation seen in the traditional self-governed model is the hiring of a third party to oversee and control the governance of multi-vendor environment.
The concept of in-sourcing has picked up steam especially in cases where customer satisfaction or service delivery issues have cropped up time and again. This model is being increasingly adopted by organizations that have sour relations with their outsourcing vendors or are finding it challenging to manage outsourcing transactions. Organizations usually make this decision depending upon the type of service and continually outsource the ‘towers’ for which service provider is rendering satisfactory efficiencies. In this model, all major in-sourced activities are removed from the scope of the IT outsourcing company.
This requires the scope contract to be revised, including renegotiation of related conditions and associated terms. Organizations need to be mindful that the resulting contract should clearly demarcate outsourced and freshly in-sourced functions.
Despite of all major benefits, in-sourcing comes with its own set of downsides as well. Thus, companies should carefully weigh the decision of in-sourcing.
Captive Offshore Centers: Multinational companies pioneered the concept of captive offshore centers in the early 1980s.
While cost-saving is an overriding benefit of this model, it also bestows upon organizations the freedom to safeguard and retain their data, key processes and skills. It also enables them to steer their operations in a strategic direction, rather than depending upon a third party for making leadership decisions.
Though examples of successful captive offshore centers are easy to locate, some companies find it challenging to hire labor for their work centers when juxtaposed with global outsourcing leaders, and thus are unable to …