Companies have been working with offshore partners for years now, putting process, functions and roles into countries like India. Leveraging the benefits of lower cost geographies is no longer limited to large companies struggling with high costs. Today companies of all sizes are using offshore partner models from the very beginning.
The key to successful partnering lies in a number of factors and decisions which affect the outcome.
Cheaper isn't necessarily better. Lower cost and better productivity/higher quality, don't necessarily go hand in hand. Choose the best partner you can afford. Higher quality partners have good, capable people, not just great PowerPoint or well-defined, well-illustrated processes.
Chemistry and communication are key to a successful outcome. You need to be able to work efficiently and communicate effectively with the people you've selected. Only then can you create, develop and build a good, productive relationship.
Investing in a relationship isn't just about a financial commitment. Treat partners with respect and aim to build a long term relationship. The best outsource relationships are built up over time. There will be ups and downs but in the end you're in it together for a better outcome.
Avoid the 'your mess for less' outcome that so many companies end up with. It's always best to fix the problems you face before making them someone else's problem. Of course there are benefits to partnering which you'll want to leverage.
Working with a CMMI (Capability Maturity Model Integration) level 5 company such as the top outsource firms delivers a robust experience once you've gone through the initial pain of transitioning your capability to the new model. It's a bit like going to the gym for the first time. As you keep training, you get better, stronger, fitter and faster. The benefits take time to materialise.
In order to achieve a smooth transition to a partner you need to take a staged approach and refine it over 12 to 24 months. This approach will yield savings, performance and growth:
Stage 1: Shift process/functions/roles to the partner (three to six-plus months depending on the size and complexity involved)
This is the most painful part of the journey which requires the greatest courage and commitment. There will be internal resistance to the new operating model which, in itself, will always have teething trouble.
Stage 2: Collaboratively optimise the transferred capability (three to six-plus months).
Once the partner has enough experience operating the new capability, it's important to start a process of optimisation which both parties are involved in. The goal is to review and improve the new model once enough time has passed and relevant data gathered. This can yield good savings and efficiencies if the right approach is taken.
Stage 3: Move to an outcome based model.
Once the capability has been optimised and then run by the partner for a minimum of 6 months, a move to an outcome based model can be suggested. The goal here is to drive productivity, performance and also shared risk.
Going beyond stage 1 is a key indicator of a successful transition to the partner. Some of the benefits include lower cost, increased productivity, reduced time to market and greater scalability.
Modern partnering isn't just about moving simple tasks to a partner. Complex roles and functions such as project management, technical design, incident management, etc., are also being moved to partners offshore. It is important however to keep things simple at the start.
In order to drive successful outcomes, organisations are using models which focus on risk and reward. Using two partners in tandem can create positive competitive tension. Some organisations use contractual undertakings that effectively create de-facto joint ventures. Whichever model is chosen, it's important to build the right construct to get the results that align to the strategic vision of the company.
Gone are the days when companies could afford to do everything. Recognising the need to partner and the value that partners bring is key to driving value, growth and agility.
Bradley de Souza is an internationally recognised CIO/CTO who has specialised in change and transformation across industries around the world. He is currently programme director at Telstra Global based in Hong Kong. Reach him [email protected]