As recently as 2006, Pluto was a planet, Apple hadn’t broached the iPhone and India may have been the choice for low cost off-shoring – without serious significant competition.
Today, as outsourcing and off-shoring users increasingly are contemplating the question of how easy or challenging it may be to bring work ‘back’ into an organisation, much has changed. The prerequisite question however remains: “Why would work come back?” This in turn should inform: “Where is Back?” And the possibilities are broader and more interesting than ever.
CUSTOMERS ARE CONSIDERING IT
Many global and organisational factors have changed since the time that companies made their initial decisions to leverage a global model for service delivery. As a result, a number of important considerations and alternatives should be evaluated in determining what to do next, if radical change in contemplated. Customers who have made use of various global locations to source business services or information technology services may consider the question of bringing work back for a variety of reasons.
First, it is good business planning hygiene. Call it Plan B. Second, regulators such as the US Fed, corporate boards and other governance-minded stakeholders increasingly want a better understanding of how well equipped subject firms are to deal with changes whether prompted by an outright failure of the current model, or, more likely, reasons that are ‘elective’ in nature.
NOT ALWAYS BINARY
It is interesting to keep in mind that the prompts for bringing work back are probably not limited to the binary scenarios of either a Termination for Cause or for Convenience. On hardly an exhaustive basis, consider that in between these extremes lie a series of possible causes, including:
- Compliance or regulatory changes
- Scope or scale changes
- Changes in supplier competency
- Location issues
- Revenue model shifts
One example of a ‘compliance-driven shift’ is a former client; call it ‘Bank A’, which placed some first party collections activities in the Philippines on a co-sourced basis. Although pleased with the performance of the function, after an acquisition the prevailing view of its new senior compliance personnel was that the arrangement was inappropriate.
Another example, this one of a ‘scope or scale-driven shift’ occurred with a large regional client; call it ‘Bank B’ that had placed an Auto Leasing related function in a nearshore location on an outsourced basis. Performance was hardly an issue. In fact, continuous improvements to the underlying process were so dramatic that ultimately the size of the delivery team needed was deemed too small to be effectively managed on a sourced basis. We should all have such problems, right? Finally, clients seeking to enhance revenues in an emerging economy may eventually deem it attractive, imperative, or both to ‘own’ their previously sourced operations in that country.
While any of these factors may prompt the organisation to consider termination and could likely be classified into the “Convenience” category, the more important point is the implications of each respective cause on potential Choices in taking the work back.