Offshore Outsourcing Companies – Is Cost-Cut the Only Motivation
Does offshoring represent money-grabbing opportunities? Well, there is hardly any doubt regarding the probable answer that reverberates with a positive note. What is the main inspiration behind the growing trend of offshoring? Majority will answer that it is cost-cut factor working behind the curtain. But really is it so? Well, that is a controversial issue.
The offshore outsourcing companies in IT field put in no uncertain term that they are after cost reduction. If they could have availed low cost service at home, they would not have outsourced projects. They say they have tried a lot to procure cheap in-house professionals but have met failure. That happens in the developed countries. Due to high living index, the IT professionals demand a very decent monthly package. Before the concept of offshoring gripped the IT world, the companies were succumbing to their demand. But now the table is turned and the companies are getting services at much cheaper cost.
Now if we consider public opinion regarding offshore IT services, 80% are confident that the process adds no value to output and the 65% thinks it is only based on cost-cut motivation. This data has been provided by the National Outsourcing Association (NOA) on the basis of its extensive research work. However, KPMO has different thought in this regard. Claudio Altini, the director within the outsourcing advisory practices and shared services has clearly told that cost shrink or headcount reduction is no longer the key reason behind the business decision for more offshoring.
The offshore outsourcing companies are turning to the third party to enjoy excellence too. The goal of cost-reduction is still there but today’s business challenge revolves around getting good value for the next level. And all these have made it necessary to break out of the conventional outsourcing contracts and renew them with more assurance of value for money.
If we dissect the past phase of outsourcing, we can exhume the realities why outsourcing relations came to an abrupt end. Mainly R-trios - Responsibilities, Rates and Results - are responsible for that episode. The offshore outsourcing companies now want strong evidence that service is flexible in arrangement, delivered on time, can meet the pre-specified demand of the stakeholders and change in accordance with the evolving strategic needs of an organization.
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