Focusing on the HRO Lifecycle Part I: The Knowledge Phase

Getting a feel for the provider is not just recommended but strongly advised. In the first of four articles examining services globalization, the author explains why buying a seat for an overseas flight is a smart investment in offshoring.

by Atul Vashistha

In this and my next three columns, I’ll talk in depth about the four phases in the services globalization lifecycle: the knowledge phase, the plan phase, the source phase, and the manage phase.

Looking at the process of services globalization as a lifecycle is an important part of seeing the big picture, of understanding that services globalization is a journey and not a destination, and ensuring a disciplined process is in place for long-term success. The knowledge phase is the preparation part of the services globalization process. Unfortunately, too many organizations ignore the importance of this phase, only to realize later how much better their initiatives would have turned out had full due diligence been performed in gathering knowledge and having a better understanding of the markets and activities.

There are three steps within the knowledge phase: conducting market research, learning from peers, and visiting locations and suppliers.

• Conducting Market Research. The market research step involves understanding the field of potential locations and suppliers; it should focus on three areas:

Getting to know the different services globalization models (third-party, captive center, shared services, build-operate-transfer); an organization’s risk, control, cost, and quality issues will greatly influence its choice of operating model.

Getting to know the supplier universe. This is about getting an understanding of the direct and indirect costs, process maturity, data security and IP protection, area(s) of expertise, and previous clients’ experiences—which will help the organization better understand the outsourced model and determine how to compare the various suppliers.

Getting to know the different geographic options. The client organization should learn about government support, language proficiency, the educational system, geopolitical environment, labor pool, infrastructure, physical and time zone displacement, and cultural fit to help determine where centers of excellence are, the risks associated with each location, and the unique advantages offered by different geographies.

There are a number of different ways a client organization looking to globalize its HR functions can conduct market research. There is a wealth of good and often free information available on the Internet. Some of the best resource sites are firmbuilder.com ; bakernet.com ; neooffshore.com ; globalservicesmedia.com/sections/bpo/hro; hrotoday.comnasscom.in ; sharedservicesbpo.com ; and shrm.org . Many client organizations also find it worthwhile to enlist the help of a third-party consulting firm (see hrotoday.com/Magazine.asp?artID=1274 ).

• Learning from Peers. As is often the case, learning from peers is one of the best ways to build knowledge. Many client organizations have developed informal peer networks within which they can talk about services globalization experiences. But there are also a number of good formal networks set up for companies to get together and share HR services globalization experiences. Some of the most popular are The Corporate Leadership Council; the HR BPO Buyers Advisory Board (the Buyers Group); The HRO Association; Shared Services and Outsourcing Network (SSON); and Society for Human Resource Management (SHRM).

Another way that many client organizations learn from peers—and take advantage of market research opportunities at the same time—is by attending conferences, including: HR Executives Technology Conference and Exposition, The HRM Strategies Conference and Expo; HRO World; and Shared Services and Outsourcing Network (SSON) Annual Summit.

• Visiting Locations and Suppliers. Visiting locations greatly expands the organization’s knowledge. It enables a team to better understand the opportunities that exist. It exposes them firsthand to the suppliers’ capabilities, people, and infrastructure and gets rid of the myths that exist.

As I think about the knowledge-gathering phase of the services globalization lifecycle, I’m reminded of something Wilbur Wright once said: “It is possible to fly without motors but not without knowledge and skill.” Hopefully, client organizations will keep this in mind, as what Wright said underscores the importance—indeed, the necessity of—knowledge.

Posted December 10, 2006 in Contributors

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