Who is afraid of offshoring?

Who is afraid of offshoring?

Dirk Langenfeld

Experienced Chief Financial Officer at Professional Advantage Pty Ltd. Director, adviser and angel investor with a demonstrated history of working in the information technology, scientific instrument and services industry.

3/06/2019

Offshoring gets a bad rap

Offshoring often gets a bad rap, so first let me cover off why this is so:

Larger organisations in particular have embraced offshoring reasonably successfully and have probably achieved their financial objectives, but often at the expense of end customer satisfaction from where most complaints stem. Call centres were the first roles taken offshore and whilst they have always had popularity issues this is particularly so when run offshore. Indeed, some companies differentiate themselves by promoting their onshore support centres. The primary complaint heard is that customers are unable to speak to someone in their own vernacular, operators lack the skills and sometimes the tools, and are unable to resolve issues satisfactorily. This poor image is aggravated by those same large corporations who employ offshore teams who speak English, but not in the vernacular of the Australian consumer and hence communication suffers, adding to the difficulty of serving that customer.
 
I recently had a personal experience with a telco where I spent a cumulative of 8 hours of my time to resolve an issue with offshore consultants – and I was simply trying to have services moved a mere 4 kilometres from one location to a new location. The telco ended up with a dissatisfied customer, and having to pay a refund for services not provided. And the long-term relationship is under threat as I am actively considering alternatives. Not to mention the 8 hours+ of their time! The task is not exactly a brain teaser, so it does point to a fundamental point: they are doing it wrong! They are just doing it wrong on so many levels, and they are certainly not doing it well enough to successfully gain all the advantages available to them.
 
Consider offshoring as an option

So let me now focus on why you might consider offshoring as an option, and why you could do well by doing it right.

To begin with, be clear about your strategic objectives. Do you only want to achieve cost savings or are there other objectives, such as broadening your capabilities? You need to focus on the strategic move taking all aspects of your business into consideration – internal and external to your organisation. No doubt it is a challenge; you need to be prepared to bridge skill gaps, the language barrier, the cultural barrier: it is hard work and demands unexpected effort and cost to achieve a level of performance that is acceptable to the customer, and your organisation.

When organisations consider offshoring, their eyes light up when they hear of the substantial cost savings. Spoiler alert : typically you will not pocket all the savings, you will incur other costs necessary for the offshoring to work – so don’t be greedy. To be successful, a number of other factors must be considered and costed into your budget.

Some of the more successful strategic plans include the following key ingredients:

Strategic intent - be very clear on your strategic intent: Which roles and capabilities do you wish to deploy? Are you expanding your capability, lowering your cost base or both? What will your savings be? What portion of the savings will be invested to make this strategy work? What are the KPI’s that measure your success? If you are expanding your capability, what is your ROI?

Change Management – Change management at the home base will be critical. To start off with, everyone needs a clear understanding of the benefits that the offshoring strategy will bring to the business and all who work in it. You need to consider the impact on the local team and their reaction to the initiative. There will be suspicion that home jobs may be in jeopardy as a result of this strategy, and those fears must be addressed effectively.

Cultural awareness - Cultural awareness training – you need to intimately understand the culture of the offshoring host population and identify the gaps as they relate to how Australians do business, and your organisation in particular, and relate that to the expectations of the end user to achieve maximum satisfaction. Your organisation must understand its own culture, and clearly understand how to work with the culture of the host country in order to effectively manage the offshore team and ensure they clearly understand their roles and success expectations. Critically the end user or customer experience must be a key focus. Whilst the cost benefits are very important, your organisation will not maximise the benefits if they remain the sole raison d'etre.
As an example of a cultural difference, in some host countries it does not come naturally for people to tell you the truth, but rather tell you what they think you want to hear. Similarly, you will encounter cultures that will avoid confrontation at all costs, undermining vigorous, productive debate and problem solving. There is no training course that will resolve these issues in a one hour classroom session. It demands ongoing cultural awareness training and coaching to create an environment in which the offshore team will accept and participate in a culture where telling the truth as it is and embracing problem solving techniques are fundamental. The home team will require similar coaching to help them understand the offshore culture and develop the necessary empathy and other soft-skills to help build the internal relationships.

Training is necessary, but not as a one-off classroom experience – it is an ongoing focus to maintain and ingrain the expected cultural and work protocols. Ongoing one-on-one coaching, team education, team support, a focus to “catch them doing it right”.

Invest in Face Time - Offshoring is not a “set and forget” project. Ongoing investment in people is necessary and crucial, continuously focussing on bridging the cultural divide. This must of necessity include face time, in-person face to face and the effective use of tools such as Skype/Teams. Merely putting an Aussie on site won’t do the trick. More success is achieved when multiple people are regularly visible on site, so you will need a project management group at your home base that will cover the key success ingredients – IT infrastructure, recruitment, onboarding, performance management etc. Key to management success is making the offshore team feel an important and integrated part of the organisation. And don’t be afraid to bring team members to your home base for skills training or orientation and to help develop important connections with the home team. A judicious investment that can produce good returns. Working closely with your host country partner as an extension of your own organisation will help you achieve your objectives.

Identify a partner - Smaller organisations are fearful of embarking on an offshoring project as their experience with large organisations, such as the insurance companies and telcos, leaves much to be desired. And the assumption is that if they can’t get it right, what chance do I have? Do not be afraid! When you are seeking to offshore less than 100 roles, your best option is to partner with a premium offshore staffing solutions partner who will enable your organisation to take advantage of the opportunity to build scale and capability at a lower cost than you could in Australia.

They provide the infrastructure necessary to allow you to focus on your business: IT/technical infrastructure (you may have additional spend for special requirements such as private networks and other tools), office infrastructure, HR recruitment and management services, and advice on running your team effectively in the local cultural environment. And, they will even assist you when you are large enough to go it alone.

At Professional Advantage we use the services of Satellite Office to help us manage our offshore team.  We benefit from Satellite Office’s experience in the Philippines from recruiting the right candidates, providing premium office facilities, to managing payroll, employee contracts and HR queries which enable us to focus on our business.  We see Satellite Office as a business partner and would not hesitate to recommend them. 
 
Another option for those who may wish to test the waters with a handful of employees would be tag along with someone who already runs an offshore operation, and once you are confident you can make your own arrangements to get the full cost benefit. Despite all the incentives offered by the host country, you would not expect to be able to cost effectively go on your own until you have a critical mass of say 100 people. There are operators out there who make it sound so easy and who will wave attractive tax benefits, but it never is that simple! So beware!

In my experience most roles can be offshored, not only the traditional call centre type roles. I have experienced the successful deployment of teams consisting of software developers, marketing teams, graphic designers, project managers, internal IT support, customer support, account management, accounting; all of which integrated with the home business teams, which is a significant part of the success story. Making full use of available technology tools together with ongoing face time will ensure your success.

Don’t be afraid of offshoring, it is an opportunity to achieve great strategic and operational benefits.

©Dirk Langenfeld 2019
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