Tuesday
11Dec2007
Successful Outsourcing Advice from CEO of SciQuest
December 11, 2007 Stephen Wiehe, CEO of SciQuest posted an excellent response to a comment I made on WSJ's Business Technology blog about cost over runs associated with offshore work. Below is an excerpt of my comment:
"Most offshore vendors are little more than ’software sweatshops’ In that context, this report makes perfect sense. The client is equally to blame because outsourcing should be about high value, not low price. Companies that did the whole ‘lift and shift’ thing are now under pressure to outsource to other parts of the world or derive more value from the outsourcing vendor."
Wiehe followed up on my comment with some great advice...
gl hoffman
"Anyone who questions just how significant hidden costs can be when outsourcing only needs to look at the recent recalls of toys manufactured in China. Many companies focus on costs they can see, but fail to consider the unknown costs that are often the greatest source of risk when offshoring jobs.
Forward-thinking companies know that you can’t be high touch, high tech and low cost without sacrificing one or more over the others. For example, offshoring service jobs might lower costs, but you’re likely to lower your customer satisfaction rating at the same time.
As wages continue to rise in India, organizations need to take a serious “look under the hood” and begin to articulate the unknown costs of augmenting their workforce with offshore staff. As stated in Raza Imam’s post, organizations should seek to expand their workforce with overseas talent to bring more value to the organization, its stakeholders and its customers, rather than solely as a means to cut costs.
We began to notice the trend of rising overseas employment costs several years ago and have downsized our offshore team to just 10 percent of what it was at its height. We’ve solved the communication issue broached in the study by bringing members of our overseas staff to our headquarters for three months on a rotating schedule. Our offshore developers have gained a sense of unity and camaraderie with our U.S. staff while furthering their knowledge of our procurement solution suite. Effective communication with your offshore workforce, as well as the uncovering of unknown costs is 90 percent of the hurdle to a successful partnership. As a result, you can eliminate what may be the greatest hidden cost of all-inefficiency.
- Stephen Wiehe, President and CEO of SciQuest"
You can read the entire post here