Stage 1: Initiate—The first stage focuses on extending a capability in a single, low-cost geography. To initiate a global sourcing program, organizations must consider both geography and structure of a global workforce provider.
When choosing a place to start, organizations typically consider the low-cost geographies of India, the Philippines, China, Russia, Latin America, Eastern Europe and Canada. For now, the vast majority of companies are turning to India, reflecting India’s well-established reputation, educational infrastructure and pipeline of recruits.
Not surprisingly, the market in India continues to evolve rapidly, with an influx of new players, rising wages, increased attrition, currency volatility and industry consolidation. Organizations getting started or looking to scale existing India-based capabilities should be aware of the changing market factors in India.
In addition to geography, organizations must consider which type of global workforce provider to choose—pure-plays, niche players or globals. Depending on an organization’s objective, each type has its pros and cons.
Pure-plays offer a large workforce, a wide range of technical and functional skills, and are generally located in a single geography, at this point primarily in India. Niche players specialize in a single industry, technology or phase of the software delivery life cycle. And globals are characterized by their moderate-to-large scale in multiple industries, technologies and geographies.
As organizations move through the Initiate stage, they can expect to face some challenges and risks as well. For example, in choosing a global workforce service provider, organizations must consider which provider will bear the most risk and manage it effectively. Providing resilience to geographic-specific issues is another risk aspect to consider. There are inherent dangers involved in betting on a single labor market or single geography. And if workers are going to be displaced, organizations must select service providers that can quickly and respectfully transition responsibilities.
Stage 2: Scale/Diversify—This stage focuses on specific actions an organization may take to reduce investment risk and realize a more consistent, predictable return.
The Scale/Diversify stage is realized through organizations creating a virtual network of low-cost IT delivery centers around the world, and tapping the individual strengths of these locations while mitigating the risk of wage inflation, currency fluctuation, service disruption, domestic and foreign legislative changes, and political instability.
Since the sourcing frenzy in India may ultimately drive up costs, savvy organizations are beginning to diversify their sourcing portfolios to other low-cost, talented labor pools. Having a geographically dispersed workforce capability also provides built-in redundancy and management levers to organizations.
As for risks and challenges in this stage, the trigger point to diversify will be different for every organization, but should be addressed proactively rather than reactively. As the portfolio of workforce sourcing options becomes more diversified, management will be challenged with uniting the independent workforce locations as a single, cohesive unit. This requires providing a common infrastructure, process, vocabulary and culture.
Stage 3: Optimize—The third stage, Optimize, addresses the Scale/Diversify challenge with practical approaches for integrating and managing a global workforce for higher performance. These approaches include: - Achieving seamless integration—Mature IT organizations may wish to work toward seamless integration across all workforce locations in a global delivery network. This model provides true round-the-clock support and helps realize the value of an organization’s global workforce investment.
- Applying a common operating model—To help achieve seamless integration, organizations must manage individual work streams and life cycles end-to-end by a global network governed with a single operating model. The basis for this model is a core IT factory with multiple service delivery lines aligned by skills across geographies.
- Managing work flow—Instead of initiating global sourcing capabilities on an application-by-application basis, organizations must align by skills to improve workload balancing of employees, and to increase reuse of technology assets and application patterns. Furthermore, organizations must manage the workforce more like an assembly line, with near real-time data to provide information on capacity, efficiency and progress.
- Transferring knowledge—Organizations must address knowledge transfer at an organizational rather than an individual level. Knowledge must be transferred from individuals to a multi-site “factory” of capabilities using advanced collaborative and repository-based tools to allow multiple locations to come up-to-speed simultaneously.
The biggest risk in this stage is that organizations may view global sourcing as a process with distinct beginning and end points. This only produces diminishing benefits. Rather, organizations must continuously examine and improve integration and management between workforce locations. Accenture experience and research shows that when global sourcing is viewed as an ongoing process, the potential for greater benefits and satisfaction continue to increase over time.
¹ Forrester, Tech Choices, Low-Cost Delivery Model Showdown, John C. McCarthy, August 6, 2004, 34317 Next: Author |