It is a general understanding that customer and vendor engagement is the key factor in order to deliver a successful product or service in offshore-outsourcing process. This includes recognising common goals, knowledge and skills of teams, cultural differences and being reliable to each other.
Willcocks, Cullen and Craig (The Outsourcing Enterprise, 2011) states that when managing an off-shore business as a vendor, managers need to oversee outsourcing life-cycle at least four phases (See figure 1.0).
- The architect phase – foundation for outsourcing is established. It consists of investigate, target, stratergise and design;
- The engage phase – one or more suppliers are selected and the deal is negotiated. It consists of two aspects – select and negotiate;
- The operate phase – the deal is put in place, operational and managed through its term. It comprises the transition and manage;
- The regenerate phase – next generation options are assessed. It consists of refresh.
Figure 1.0 – Offshore outsourcing life-cycle
To manage the above successfully the teams at each location are required to have the knowledge on sourcing processes, strategy development, project management, risk management, contractual law, financial analysis, supplier selection, certification and relationship development to earn a quality outcome (George ,2005).
Globally, organisations investing in developing successful relationships consistently to perform better than their competitors in the same sector. PriceWaterhouseCoopers (2007) states that the organisational managers must constantly pay attention to relationship development across the outsourcing life-cycle and it needs building right processes and skills in place and monitoring relationship has to be a key management task. The 31% of businesses, which are succeeding in outsourced relationships are most likely to have honest an transparent business dealings with each other. They decide matters of mutual interest jointly and have effective joint governance structures leads to productive partnership. In the meantime, relationship management can create 20% to 40% difference in service, quality and cost and other performance indicators (Willcocks, Cullen and Craig, 2011).
Getting innovation and business value from offshore outsourcing requires proactive business leadership. In addition, it demands alignment of business, sourcing strategies and in-house core information system capabilities being applied to the tasks. Willcocks, Cullen and Craig (2011) in their whitepaper published by Logica in association with London School of Economics outlines nine capabilities of a customer organisation to have are:
- Leadership – integrate with IT effort with business purpose;
- Business systems thinking – Ensure that BPO capabilities are visualised in every business process;
- Relationship building – Get the businesses engaged in operational issues, and potential offers;
- Architectural planing and design – Create systematic technical platform;
- Making technology and process work – Troubleshoot problems across the technical supply chain;
- Informed buying – Manage the business process and IT sourcing strategy to meet the interest of the business;
- Contract facilitation – Ensure the success of existing contracts;
- Contract monitoring – Protect the contractual present and future positions;
- Vendor development – Identify the potential added values.
Using innovation in business process offshore outsourcing market is increasingly becoming more practical as both clients and suppliers are tend to go beyond traditional outsourcing relationships. And they build a collaborative arrangements necessary for innovation. Willks (2010) states innovation is an important part in today’s business and is more important in economic recessions. Innovation can make changes in technology, business processors, in products and services offered or in a model of how the firm competes. This approach in collaborative innovation generates high personal trust between parties that leads to better business performance.
In order to mange the kills effectively, it is absolutely necessary that both customer and vendor organisational employees receive appropriate continuous training. This will make sure none of the entities fall behind in their knowledge in specific subjects. Similarly, to ensure quality of service, it is imperative that the service provider be appropriately staffed so that customers are not kept waiting for extended periods on the assigned projects and services offered.
In broader level, developing nations that are offering outsourcing services need to prepare for the growing number of people to work in the industry. At the same time the developed countries are still facing questions about how to revise their educational systems to prepare their citizens for jobs that will remain when other jobs are moved to lower-waged countries.