Risk reward ratio govern offshoring decisions

BANGALORE: "Offshoring has changed the risk reward ratio. With offshoring, while risk grows arithmetically, the rewards grow geometrically and for most companies this happens at a time of economic duress. That is one of the real reasons why offshoring outsourcing is the fastest growing segment among shared services, captive offshoring or onshore offshoring," was the emphatic statement of partner of General Atlantic Partners, Abhay Havaldar.

Speaking on "Funding Offshoring" at the second day of the 2003 India Outsourcing Summit being held in Bangalore, he said that success traditionally and in the BPO space also would rest not with the ownership of technology but the best application of the same.


He added, "If vendors from India have enough decisions on offshoring outsourcing made now, they will not have to worry about many a thing for the next three years. The timing of the decision will play a crucial role in building a critical mass in the country which will aid in keeping its lead in outsourcing for some time."

Havaldar also encouraged Indian corporate to start outsourcing a whole lot of shared services, which lay hidden in their activities pointing out that such outsourcing in other countries has created some of the biggest global BPO providers.

Stating that the ‘sweet spot’ for BPO operations lay in the area of broad shared services and high end vertical processes, he elaborated on the different ways in which Indian service providers and MNCs approach the setting up of a BPO operation.

"Indian vendors work at BPO services from the perspective of an execution led model where they are focused first on cost and then work on the processes and value addition. Mostly the services they begin with are ones that are already being outsourced and they just leverage on the offshoring model.

Alternately, captive or global BPO providers work on the expertise led model where offshoring is embedded in the process and value proposition of a BPO operation. The blended model, which mixes elements of both and which is fast being picked up by companies, is the one which will play the most important part in the future and bring in the bigger deals in the long run," he said.

He also touched in brief on the skills necessary to provide better BPO services, on how offshoring and reengineering processes can improve performance substantially and the various myths that surrounded the industry to date.

(CNS)