Offshoring and Outsourcing Advantages – Buyers Perspective
The use of BPO services business model is not a decision a Service Buyer makes solely on location or geographic proximity. Strategic decisions for location sourcing will be based on end requirements, including complexity, quality requirements, available budget and financial resource allocation. Generally, a Service Buyer engaged in the offshoring process will assess the quality of domestic education, and technological infrastructure prior to sourcing a business requirement to a particular region.
Home-shore (national) and near-shore (continental) offshoring solutions can offer the advantages of cultural compatibility, linguistic similarity and similar time-zones. Service Providers located offshore (global offshoring) operate during various time-zones, varied quality of service, frequently deliver a higher level of service and can allow 24/7 working advantage for Service Providers (project turnover is completed at night and ready for the following day).
Home-shoring and continental outsourcing solutions also offers Service Buyers benefits of efficient knowledge transfer, similar cultural features, understanding of client requirements and processes and can rely on established technological infrastructure. Continental outsourcing is an effective stepping stone for deploying a full scale, multi-sourcing business operation. Global outsourcing leverages a blend of in-house, near-shoring and offshoring solutions for a strategic business model with “follow-the-sun” flexibility.
Outsourcing to a different geographic region can be an effective risk management solution with the use of disaster recovery centers. The back-up will allow businesses to smoothly continue operations, despite a major disturbance at a primary information location. Furthermore, global outsourcing allows consolidation of services and operational efficiencies across borders. A single global delivery center can take care of the order management system for an entire global enterprise, where traditional business models would require over 30 centers.
Global outsourcing adds flexibility for corporate decision-making and operations. Businesses are not constrained with outdated business models; rather businesses can evolve and meet new challenges. Simultaneously, firms will benefit from the consistency and quality of services provided.
Strategic business objectives frequently include gain-sharing arrangements, defined by SLAs (service level agreements). In otherwords, the Service Provider income from a potential project will be dependent on the key metrics of Service Buyer profit margin. The SLA allows Service Buyers and Service Providers mutually benefit from achieving project objectives.
Transformational outsourcing is another process that can result with corporate gains from optimizing and simplifying complex business processes and creating value-added benefits.