Anticipated acceleration in the global services market in 2014 follows slight growth dip caused by macroeconomic slowdown
Romania’s ADM and non-voice business process FTEs are 60-75% less costly than tier-2 U.S. and UK cities’ workers
Chengdu, the provincial capital of Sichuan province in Southwest China, offers significant benefits over major cities such as Shanghai and Beijing for supporting non-voice BP services
If you said Asia Pac, great … but do you know what APAC is particularly good at? And do you know about available alternatives beyond APAC?
We all know location is half the battle (possibly the entire battle). But location selection is difficult – it’s not just about cost arbitrage, talent scalability, and sustainability, but also linguistic and cultural affinity.
The most mature location may not be the best fit for your company or your industry, and you definitely can’t toss a dart and hope to find the right location.
Here’s the battle plan – a map of GIC “hot spots.” Need multi-lingual support? Check out Central & Eastern Europe; Poland alone delivers services in more than 34 foreign languages. Need support in the Technology and Telecom industry? You might want to take a look at MEA (Middle East & Africa). While you’re there, check out Latin America, India, and the rest of Asia, too.
Click on the map to expand the image
Looking for more information on GICs? Check out these three resources:
Leading contact center outsourcing (CCO) providers are more likely than other providers to be using a balanced mix of high-, medium-, and low-cost delivery regions
New demands are driving changes in location maturity for life sciences ITO, but India remains the preferred delivery location
Its attractive cost arbitrage over Western Europe and established service delivery locations in Central and Eastern Europe (CEE), coupled with its large, high-quality pool of multi-lingual entry-level talent across both IT and BP services, make Bulgaria a land of opportunity for global services.
Comparative operating cost per FTE of Peru versus Tier-2 UK and U.S. cities
Everest Group’s Eric Simonson, Managing Partner, Research, recently led a panel titled “Location Strategies: Optimising Your Operations in Growth Markets” at the 12 – 15 May SSON Shared Services & Outsourcing Week in Dublin, Ireland. Sarah Burnett, VP, Everest Group, was in the audience and shares the insights she gleaned from the discussion.
Last week I attended Shared Services Outsourcing Week (SSOW) in Dublin, where Eric Simonson, Everest Group Managing Partner – Research, ran a panel session to discuss location strategies. Taking part in the panel were:
Emerging from the debate was that change is inevitable — so location strategies cannot stay the same for long periods of time. Accordingly, Shared Services Center (SSC) organizations must be highly skilled in managing location as well as transformational change while delivering services, keeping staff motivated, and achieving ever increasing year-on-year efficiency and improvement targets.
Factors that contribute to change include:
For example, one company had moved some of its IT services offshore to India but had problems with talent retention. The quick turn over of staff made the services unsustainable and led to the company bringing its capabilities back onshore. This is the type of problem that could be exacerbated by the lack of brand awareness among the local workers who might prefer to work for an IT company rather than the IT unit of a different type of business.
Taking services back onshore can bring its own issues, such as lack of onshore skills particularly in IT where skills are expensive. Of course, changing locations does not necessarily mean bringing services onshore but likely to other locations and nearshore, particularly where the company might already have offices. Panel members had experienced moving SSCs to existing nearshore offices. Having had staff already in place in these new locations had made the moves much easier. The benefits of having an existing presence in a location had to be balanced against availability of the desired skills in that locality, for example required language skills or availability of specific technology platform expertise, such as, Oracle.
Having change management experience is essential for SSCs, not only to move locations but to modernize and transform services too. Some of the transformation challenges that panel members had dealt with included cultural resistance to change within their organizations. Their advice was to ensure good communication to engage well with stakeholders and all staff who will be affected by the change. One panel member gave the example of having to win hearts and minds to support even the simplest form of change; from paper to electronic payslips.
SSC managers also have to excel at marketing and sales in order to sell their services to the rest of the business. This activity requires performance data, monitoring and reporting, to demonstrate the value of the SSC in order to win new clients. This ties in to benchmarking and monitoring to measure year-on-year improvements.
Continuously improving performance can be very challenging, with expectations seemingly on an ever upward trajectory. This goes for year-on-year process and performance improvements as well as cost cutting targets. Consequently, panel members emphasized the need for SSC management to take a broad view of their services and how these can be improved. Some organizations have set up service optimization functions that work in parallel with the operational function of the SSC, but which are focused on achieving year-on-year improvements.
On the subject of continuous improvements, panel members believed that times of change, e.g. moving locations or bringing services back in house after outsourcing an SSC, provide good opportunities to review and improve processes, to fix them if they are broken, or to simplify them if they have become over-complicated.
Another important skill for SSC managers is good people management. The issue of staff retention has already been mentioned. Add to that the problem of staff in onshore or nearshore centers knowing that the service is very likely to be offshored at some point in the future. The SSC manager has to deal with the resulting job insecurity issues that this raises and the potential impact on staff engagement, motivation and retention. Some companies have specific HR policies to address this issue, for example, they will not take on raw graduates in the main part of the business but have career paths for their SSC staff to transfer to the main part of the business instead.
Finally, if the service is outsourced, the panel recommended that some capabilities should be kept in house, such as the operational oversight and the optimization functions mentioned earlier. This would keep some important skills inhouse should the outsourcing not work out.
Photo credit: SSON