Contributors

More Myths of Services Globalization

Charges that offshoring uses slave labor, is a temporary fad, and leads to a decrease in quality simply doesn’t hold water in today’s outsourcing market.

by Atul Vashistha

In last month’s column, I revealed five common negative myths that surround services globalization. Here are five others that opponents of offshoring often hold but fail to consider real-world scenarios:

Myth 6: Offshoring is a flash in the pan.
Reality: Offshoring will persist as long as there are wage and talent discrepancies around the world. That’s because offshoring opens a global market for buyers and suppliers by transcending national borders and circumventing antiquated trade routes. If the firm that can provide a company the highest quality HR services at the lowest price happens to be in Poland, then to Poland it is. Perhaps that means that firms in Ohio will have to hone their playbooks to stay in the game, but competition is good for the market—it allows quality to rise while prices fall. So even as wages equalize, offshoring will still allow firms to concentrate on what they do best: knowing that their non-core processes are handled by the highest quality service provider at the lowest cost, wherever that provider may be.

Myth 7: You lose control when you offshore.
Reality: It’s true that when a company outsources a process it gives up a certain amount of control. That amount of relinquished control used to be much greater when outsourcing offshore than onshore, but technological advances have closed the gap. Now, outsourcing HR processes to Chennai is no more risky than outsourcing to Chicago. Many Internet-based technologies, for example, offer companies a clear view—on their computer screens—of the day’s activities at their offshore process centers.

Myth 8: Offshoring means lower quality.
Reality: Many offshore suppliers offer a higher quality than companies can achieve at home. Summit HR Worldwide, for example, finds that its clients consistently see a 20 to 35 percent improvement in quality after moving their HR processes offshore. Many offshore suppliers obtain ISO, SEI-CMM Level 5, and Six Sigma process certifications to demonstrate theircompetency. And where tasks are performed in the Unites States by employees with little or no tertiary education, many employees performing the same tasks at offshore locations hold bachelor’s degrees or MBAs.

Myth 9: Offshore suppliers use slave labor.
Reality: In the past decade, there have been several highly publicized cases of inhumane labor conditions in offshore manufacturing plants. But offshore suppliers of HR and other business processes—white collar work—are in a league far removed. Yet the myth persists: Despite the fact that SPI Technologies, for example, is one of the world’s largest business process outsourcers with headquarters in the Philippines and locations throughout Asia, the U.S., and Europe, the company still fields questions from prospective clients about the work conditions in its offices. In reality, the conditions that SPI Technologies’ largely college-educated agents work in easily rival or exceed conditions in the U.S. and U.K. client offices. And while lower relative wage rates attract U.S. companies to offshore, many BPO agents in offshore locations are earning significantly more than their counterparts in other industries. And they’re working in jobs that are highly desirable, too.

Myth 10: All offshore suppliers are the same.
Reality: As in any fast-growing industry, there are suppliers that were set up solely to take advantage of the offshoring trend, and there are those dedicated to providing quality services and nurturing long-term relationships. Fortunately, it is possible to differentiate between fly-by-night companies and those that have long provided high-quality business process services to their clients. Hiring a third-party sourcing advisor with intimate knowledge of a company’s particular sourcing needs as well as a deep knowledge of the supplier country will help a buyer to make the optimal sourcing decision.

Offshoring is not going away. The trend has already demonstrated remarkable resilience to bad press. And it continues despite the presence of myths such as the 10 I’ve discussed in this and the previous column. Dismissing these myths will benefit the companies contemplating offshore initiatives and the providers of offshore services.

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