With more than 50 countries to choose from, today organizations are spoilt for choices on where to outsource. Emerging locations and new cities are swiftly finding a place in the list of best outsourcing destinations and preferences are moving beyond just a few popular offshore locations. For organizations, outsourcing is no longer restricted to few tried and tested locations but a whole portfolio of services spread across far and wide locations. So diversification is the key word today when it comes to deciding where to outsource. But with this new trend comes new risks that organizations should be prepared for.
Today work is being farmed out to far and wide destinations across the world. Experts believe that some element of diversification is advisable to balance out the outsourcing portfolio as too much of reliance on one or two locations can turn out to be very risky in case of unexpected events. Anupam Govil, Partner, Avasant, says, ”New locations are being explored more as organizations seek to diversify their operations and look for a balanced portfolio”.
A diversified portfolio of locations, if managed well, can give out great results. But its not that simple. When you are dealing in one country you need to be aware of the ground realities of that coutntry and should be able to foresee situations there, but when you deal with multiple locations you have to do the same thing for all those locations.
There are certain questions to be asked when an organization thinks of diversifying. Think about why you need to diversify. Does it serve your purpose? Emerging locations are really hot today, but you have to look at the attractiveness and challenges in each location in the context of your business. Every region has its unique capabilities and strengths. What is it that you are looking for? Govil says ”Instead of single objectives like low cost advantage or skill sets, what organizations are looking at and should ideally look at is a mix of factors. The location that offers the best mix has a clear advantage.”
Risk management and risk monitoring is very important. Outsourcing managers have a task in front of them. How to manage work spread across different locations and how to identify diverse risks associated with multiple locations. For instance, unforeseen happenings like the floods and hurricane in the US and the Tsunami in Japan are examples of how natural calamities in different locations that can wreck havoc to businesses.
Most of the times risks cannot be foreseen or predicted. But risks associated with different locations can be assessed, and decisions can be taken in time. Surveys suggest that risk management tools are hence being used more. In one of his articles with Global Services, Atul Vashishta, Founder & Chairman, Neo Group, has mentioned about the Capability Maturity Model (CMM) that organizations can use for assessing risks. It is important for organizations to be aware of what challenges they might face in operating in different locations. While in no way the risks can be eliminated, but having some knowledge helps in preparing for the future and bringing down the impact of these risks.
Read more about CMM.