A Crash Course in Outsourcing

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By Dian Schaffhauser

Authors of outsourcing books have it tough. Can anybody honestly admit to looking forward to reading them? Like going to the dentist, it’s an activity you put up with because of the back-end benefits.

Yet some volumes are better reads than others. They include plenty of story-telling in the form of case studies to keep the pace lively and timely information to make you feel like you’re reading about something that’s going on right now, not a decade ago.

John Berry’s newest title, Offshoring Opportunities: Strategies and Tactics for Global Competitiveness (Wiley, $45), fits into this category. Berry, a business consultant, held a number of interviews with experts in the field to get their best offshoring-related anecdotes and alludes to events that took place as recently as mid-year 2005.

I get the sense that Berry is driven to bring order to the chaos that is the current state of outsourcing today. Methodologies abound in all areas of business -- except outsourcing. Nobody has yet put forth a framework for structuring the process of outsourcing that has achieved broad adoption. Not Gartner. Not Lacity and Willcocks. Not Carnegie Mellon. Not even GM.

So into the fray jumps Berry with his “Offshoring Value Delivery Framework.” It breaks the process into four divisions: strategy development, selection process, relationship building and sustained management. This aligns somewhat with Gartner’s approach, which also has four stages: sourcing strategy, evaluation and selection, contract development and sourcing management.

Each division has specific activities. For example, Phase 1, “Strategy Development” (or “Think”) encompasses: strategy/goals alignment, deciding to go in-house or out of house, organizational readiness and making the business case.

Berry so strongly believes in the framework, he includes a reference card with instructions to cut it out of the book and use it to refer to as “you feel the need to reestablish your bearings as you explore the principles of offshoring.” Nice touch, because if you’re new to outsourcing, rest assured, you’ll lose your bearing. And the less you know or understand about the process, the more likely you are to put yourself in the position of having to rely on others -- especially sales people from service providers -- to explain how it works. It might have been nice to include page numbers so the reader could refer to that section of the book covering the given topic. (But maybe he figured if you wanted to do that, you could just chop out the table of contents and have that handy.)

While “offshoring” is part of the title, in many ways it actually plays a minor role in the contents of the book. That’s not to say the author ignores the nuances of offshore vs. domestic/global outsourcing altogether. He spends a considerable amount of text early on exploring offshoring backlash (even though a lot of people who rail against job loss due to outsourcing don’t distinguish between domestic and offshore). In fact, he explains his coverage of the topic by pointing out something that’s rarely acknowledged: “There is another motivation for conducting this exercise: to disabuse anyone of the notion that a worker’s ability to move up the cognitive foodchain inoculates him or her from the forces of offshoring. This is not necessarily true.” And, as he reminds us, it’s not jobs being offshored, but business functions.

Also, Berry includes a chapter at the end of the book titled, “Calling All Low-Cost Reps,” in which he shares a set of metrics provided by an India-based service provider to show the cost and quality differences you can enjoy with certain types of offshore call center operations.

Plus, there are plenty of tidbits here and there providing interesting offshoring stats and stories.

But most of the advice offered is useful in just about any outsourcing scenario for a mid-sized or large company.

Is that a loss or a gain? Unlike Offshore Outsourcing by Marcia Robinson and Ravi Kalakota, you won’t find listings of functions that are typically well-suited to go to an offshore provider or the primary vendors in each category, such as finance and accounting or HR. Nor will you find much discussion of cultural differences you’ll face in dealing with people from another country. Those are losses when you’re trying to get a crash course in offshoring.

On the other hand, managers getting into outsourcing currently may go straight from internal services to offshore, without that rehearsal period of days gone by when companies became practiced in working with domestic service providers then dabbled in offshore services. So maybe the mix of general outsourcing theory with offshoring practice is appropriate.

So where is the reader left? With thoughtful consideration of how to manage the managers in charge of those newly relocated business processes that are now being done in another location. That’s right. We’re no longer managing the workers or the processes. Those are now in the control of others. The only influence we have in the offshoring environment is choosing what companies we’ll work with, negotiating the agreements by which the work is done, and developing and maintaining those relationships once the work is undertaken.

Here’s where the book shines -- in exploring the complexities of this new management mandate.

Of course, it all starts with strategy, as the author points out. If the furthest you get in your deep thinking about offshoring is that the company wants to save money, you may be ignoring the bigger rewards -- process reengineering, a change in how the company interacts with customers, closer proximity to new markets and greater collaboration with partners that might lead to new business directions.

If, in the next 18 months, you’ll be considering outsourcing in any form, this is a good book to plow through to get the basics of the process down. Plus, its offshoring aspects will bring you up to speed on some of the specific characteristics of that form of outsourcing.

It’s not the final word by any means. Nor do I think that Berry’s framework will become widely adopted as the standard way to formulate outsourcing plans. For one, it’s not catchy enough in name to be easily remembered by attention-span-challenged executives. But in trying to follow his ideas, you’ll gain a greater understanding of the burdens you face in making outsourcing work. If you’re looking for easy answers to hard management problems, this book isn’t for you. But then neither is outsourcing, let alone offshoring.

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