Outsourcing : The New Breed

Globalization brings challenges that require adaptation of the traditional
views around managing teams. Today, globalization is seen as an imperative by
some organizations and not as a choice anymore. Before we begin our discussion
on the demands that globalized workforce place on the managers, lets look at
the dynamic environs of the modern organization

The four attributes of the modern organization are global workflow, global
resource base, thirst for efficiency, and low-cost automation.

The four parameters are extensions of an organizations natural drive toward
optimization. With technology as the key enabler to help and achieve this
optimization, todays manager is poised to deliver greater value in his/her role
than ever before. However, the challenge lies in being able to develop the right
framework and tool sets that enable the manager to achieve the best possible
results. Further, the definition of the organization he/she is managing is
significantly different from the traditional structures. Todays organization
includes or could include his/her virtual teams, outsourced organizations that
deliver services to him/her and quite often, involves other third-party and
internal stakeholders.

Modern Managers

Broadly speaking, there are three demands that are placed on the modern
managers role:

• Flexibility: An outsourced/global work environment usually comprises more
  than one time-zone and culture, and it is important for the manager to
  understand the implications of them. Whether it is the daily or weekly team
  meetings, project plans or deliverables, the manager needs to have flexibility
  in his/her work schedules. It is not uncommon to find various clients managers
  starting their day early or scheduling calls and meetings very early in the
  mornings. In addition, most managers tend to be on email or their wireless
  devices through the weekends as well for important communications, work
  related requests or questions from their global teams.
• Contract Mechanism: All contract arrangements clearly define the process
  or the application environment that is being sent to offshore locations and,
  in most cases, there are specific service level guarantees or clearly defined
  deliverables that are to be met by the vendor company. This tends to be true
  whether the contractual relationship is with a captive offshore company or a
  third-party arrangement with single or multiple vendor companies. One of the
  key challenges that a manager faces in this environment is in aligning the
  contractual requirements with the work or process requirements.
• Internal Governance: Managers are usually required to present data points
  and updates to internal stakeholders on how the outsourcing/offshoring
  arrangement is working and what amendments, if any, would be required to be
  negotiated from a contract standpoint. This becomes necessary because the
  processes and work flows tend to change in a dynamic way and cause
  productivity and cost implications to the vendor.

  Transcending Functional Areas

  Governance methodology Transition management Forecasting and resource deployment Production management and productivity Contract review and change management process Reporting and communication systems Technology environment and improvement plans Disaster recovery and dusiness continuity planning Reward and recognition programs, independent of the contractual reward provisions. Financial performance review of the contract arrangement.

Sourcing Arrangements

Sourcing arrangements place a significantly different demand on the managers
and, therefore, the skills required are much different and more complex than
what you would have found to be the case in a traditional managerial role. Quite
often, the tendency is to put in place contract managers who are, more often
than not, either process experts (who the organization would like to retain) or
financial managers. The key challenge is to understand true value derived by the
buyer organization. Therefore, sourcing executives need to have cross-functional
skills. Sourcing executives have both a strategic role and an operational role:
they help select strategic suppliers, support transition, establish governance
structures, manage service delivery and should be able to think creatively to be
able to get more from the suppliers.

Finding Right Resources

Outsourcing suppliers have evolved their service delivery models to include
a complicated architecture. For example, the integration of applications and
business processes may help the buyer organization unlock a different level of
value than earlier. However, buyer organizations typically resent such a
combination of services/solutions. Not only is the degree of change high, but
also there is a difficulty in finding the right individual who is able to
navigate through the diverse array of demands that are placed on the sourcing
manager. More often than not, companies settle for less than the desired skill
set.

Invest in Development

It is also not uncommon to see organizations focusing primarily on the end
goals and not the means to achieve it. Very few companies invest in creating a
strong learning and development framework to coach the sourcing managers for
their complex roles. Quite clearly, organizations looking to reap the benefits
of the sourcing strategy need to make the investment in creating the human
resources ecosystem to sustainably leverage global sourcing.

T Narasinga Rao

The author is senior VP, operations, insurance and business process
solutions, Perot Systems, India and Manila

maildqindia@cybermedia.co.in