Business Book Review

Monday, October 30, 2006

Offshore Outsourcing - Business Models, ROI and Best Practices - by Marcia Robinson and Ravi Kalakota - Remarks

Reading Suggestions & CONTENTS
About the Authors


Offshore outsourcing is today’s hot topic. As Robinson and Kalakota note, it is “… an unstoppable mega-trend. … profoundly affecting the competitive capabilities and hence the labor structures of all multinational corporations.” In its wake, continuing wage deflation is overloading an economy already burdened with high levels of consumer debt. More and more workers are being displaced. And, federal and state governments are hard-pressed to come up with any foolproof solutions to make the problem disappear.

Though the authors raise these issues, they make no attempt to explore or analyze them, fully or in passing, for that is not their purpose. Rather, they offer Offshore Outsourcing as a comprehensive guide to the practical application of this trend across all industries. Their premise is that offshoring is not a temporary management fad—that despite the present and future challenges it is imposing on the U.S. workforce, it is a long-term development that has emerged as both a strategic and a tactical tool for meeting new business realities. And, though this tool is hardly new (companies have been offshoring manufacturing for many years and reaping significant cost and productivity improvements), the offshoring of business processes is still in its infancy. Thus, there is still much uncharted territory, and this territory is full of new rules, tools, and business models.

Robinson and Kalakota present a clear and detailed schematic that delineates these rules, tools, and models, superbly filling in the blanks left by the many general and oversimplified discussions currently available. Their approach, based on extensive research, focuses on helping CEOs and senior management understand the specific skills and management practices required to integrate individual projects, as well as large-scale offshoring activities into a company’s overall strategy. Thus, customizable guidelines take into account unique business needs and different levels of readiness for change, and sort out the many business models available for offshore outsourcing. They detail how to make offshoring work in yet untapped areas of administrative, customer-care, and transactional processing. In addition to showing how to reduce costs, they also illustrate how to achieve a balance between managing people and improving performance. And, they shed light on the dangers that can derail an offshore initiative in the assessment of ROI and risk. Throughout, an impressive array of best-practice case studies demonstrates how to apply offshoring to diverse processes and tasks so as to maximize every aspect of the initiative.

Essentially, the book is organized to emphasize and explore three critical points for companies that (to their peril), lack a comprehensive understanding of the core concepts and practices behind offshore outsourcing (i.e., companies that may still view outsourcing as “a short-term fix for saving money and ‘getting rid’ of some noncore functions”): (1) Offshoring is becoming a “need-to-have” competency. (2) It is a tactical business decision with long-term implications. (3) It is no longer an unproven model. Thus, the book drives home the reality that offshoring projects are complicated processes that deserve serious consideration and a disciplined approach. With the consideration and approach Offshore Outsourcing provides, CEOs and senior management can arm themselves with the right tools to quickly lower operating costs, improve customer service, and generate sustainable growth.


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