Reframing Offshoring

Overview

The global economic landscape has seen a surge in the offshoring of operations to low-cost locations over the past few decades. This model offers businesses a cost arbitrage advantage due to reduced labor and operational costs. However, this cost-saving aspect, while appealing, often overshadows the need for process efficiency and waste reduction.

Businesses frequently offshore processes that are fraught with waste and redundancy, under the assumption that the low costs will cushion these inefficiencies. This approach merely relocates the issue, allowing it to proliferate unchecked, undermining the original offshoring objectives. Consequently, these inefficiencies persist, leading to accumulated unnecessary costs and a compromise in quality and efficiency.

To tackle this issue head-on, businesses need to focus on a ‘fit for purpose’ approach, that is, evaluating and refining processes continually to ensure they efficiently fulfill their intended purpose. This evaluation must be rooted in operational efficacy, quality, and cost-effectiveness. It requires asking critical questions: Is the process delivering the desired outcome? Can it be improved? How does it integrate into the larger operational framework? These constant evaluations can help identify and purge waste and redundancy, thereby driving operational excellence even within an offshored model.

Center of excellence

Creating an effective center of excellence (CoE), which epitomizes the ‘fit for purpose’ approach, becomes possible through such continual evaluation. A CoE, defined as a team dedicated to leading others in a particular operational area to achieve business excellence, thrives in an environment that incessantly assesses and enhances processes. It fosters a culture of innovation and improved service delivery, and significantly elevates overall productivity. Essentially, a CoE looks beyond cost arbitrage and embraces operational excellence as its driving force.

Automation

Automation serves as a cornerstone in this journey towards process efficiency. By automating repetitive, labor-intensive tasks, businesses can direct human resources towards more strategic, value-adding roles. Automation mitigates the risk of human error and significantly boosts efficiency and productivity.

Moreover, automation directly supports scalability. As businesses grow, so does the volume of processes. Manual management of these growing processes can lead to bottlenecks and errors. Automation, however, effortlessly accommodates increased volumes, ensuring seamless business operations irrespective of scale.

The potential efficiencies of this approach are staggering. In many cases, organizations can create the same operational capacity at only 50% of the original offshore cost, providing a substantial scale benefit. But the pivotal question is: are businesses truly thinking about efficiency and optimization, or are they stuck in the rut of running repetitive processes without seeking improvement?

Conclusion

While offshoring offers substantial cost benefits, it’s crucial for businesses to continually evaluate their processes from a ‘fit for purpose’ perspective. This eliminates waste and redundancy and lays the groundwork for an effective CoE. Embracing automation as the core of process efficiency can enhance productivity, reduce errors, and support scalability. By adopting this approach, businesses can maximize the benefits of offshoring without falling into the cost arbitrage trap.