Building a Sustainable Competitive Position: Leveraging Offshore Service Delivery to Drive Cost and Value Improvements

Executive Summary

Without sacrificing service delivery quality, a major provider of IT and related outsourcing services to the U.S. Healthcare Provider marketplace wanted to gain cost advantages by offshoring certain roles as a component of its service delivery model. Through sector expertise and rigorous model and risk/reward analyses, Everest Group helped the client define an offshoring strategy – although not the one the client initially anticipated – that simultaneously improved cost effectiveness and preserved service quality.

The Client’s Challenge

The client has long been successful in supporting the U.S. healthcare provider market across a broad range of IT services through an almost entirely U.S.-based workforce. While the client was not experiencing a market cost impact from this delivery model, it wanted to improve its cost effectiveness by tapping into broader pools of skilled, offshore talent. But to maintain its strong reputation for service delivery excellence, it wanted to implement in a timeframe which guarded against any service performance degradation.

Insight to Action

The client initially asked Everest Group to manage an RFP effort to evaluate third-party offshore IT providers with which it could partner for certain roles. To determine if this was the most viable approach, Everest Group collaboratively worked with the client’s key functional leaders to review the activities, delivery requirements, and interdependencies of the potentially offshorable roles, and identified a range of possible offshoring models, both with and without external service providers. To evaluate the potential risks, reward and timing of the options, Everest Group’s Healthcare Industry Practice leveraged insights and expertise from the firm’s Location Optimization Shared Services Practice. The comprehensive analysis made it clear that the superior, long-term strategic alternative would be for the client to develop its own internal offshore capability. This recommendation was solidified when the team determined that two of the client’s India-based units were enthusiastic potential bases upon which to build the offshore capability. 

Working in tandem with the client’s U.S.- and India-based units via phone calls, in-person meetings, and workshops, Everest Group helped the provider refine the scope of the roles to be offshored, develop the most effective sequence of transition waves, and craft a detailed implementation and change management/communications approach.

Impact

Through the efforts of the combined client and Everest Group team, the client implemented an internal offshoring model that enabled it to significantly accelerate progress toward its cost savings and service performance retention goals. It captured these benefits by executing a carefully staged approach to ensure the most effective knowledge transfer and avoid service disruptions and degradation. Strategically, the client has established a more competitively sustainable position for near- and long-term growth.