Australian SMEs resemble tiny apartments. They need to make the most of what they have. Use every space, nook and cranny. Identify every opportunity and explore all options available.
However, all this planning can take a huge amount of time, one factor that SMEs don't have enough of to become competitive in the global marketplace.
A viable option is to look for an offshore partner to help jump-start their initiatives. Here are three principles that can help your SME make the most out of offshoring.
Prioritise
First, sort out your priorities and goals. Offshoring is not one-size-fits-all, nor is it a magic pill to turn your start-up into an enterprise.
Here are important factors to consider:
Quick fixer upper or regular work?
Determine the volume of work that needs to be done. If you need a quick fix, then hire a freelancer. If you need a small group for regular work, an offshore staff is more suitable.
An offshore team can be as few as two people. You can grow the team incrementally as the volume of work increases. Typically, pricing includes a services fee + employee's compensation and benefits. Minimum lease on offshore staff is six months to one year.
Lift and shift or standardisation?
If you just want to offload routine tasks, then a lift and shift operation is the answer. It's not difficult to find a decent service provider for back office services, human resources, and other non-core functions. This can be done on a short-term basis, until your business is capable enough to handle it in-house.
If you want to be globally competitive, standardisation is required. This entails best of breed processes on proven platforms. This can be done better with long-term deals to lay the ground work and achieve transformational goals. Place a revocable service level agreement every three years to review the contract.
Cost reduction or bigger market share?
Cost reduction is a perfect fit for lift and shift operation. This model was built on a traditional business approach where the focus is increasing profit margins.
Standardisation is important for SMEs who want to be market leaders. They can leverage offshoring to access talent, tools, and technology to achieve the best processes in a cost-efficient service delivery.
What is your sourcing strategy?
Once you have identified your priorities and goals, you can better select the kind of service provider and offshoring arrangement you need. Determine what kind of sourcing strategy better fits your needs.
Seek Value
While there are certain sectors dominated by established players, such as India for IT, there are emerging markets who are offering new options. So which offshoring destination should you choose?
Focus on the value that you can derive from the service provider and its region:
Connection
Find out if the region has business, trade, and cultural ties to your own. This will help ease the regional differences with your offshoring partner and facilitate easier business transactions. There are countries who offer incentives to Australians looking for business opportunities.
Capabilities
Find out if the service provider has capabilities and value added services to meet (and exceed) your priorities and goals. This is essential for SMEs who want to extend their geographical reach and tap into international markets.
Value added services can be:
- Knowledge - a client-centred team based on your region
- Technology - proven platforms for standardised processes
- Infrastructure - a good working environment for your offshore staff, required quality equipment (software, hardware)
- ISO Certification - certification for Quality Management System and Information Security System
Invest in Collaboration
Whether you want a single or multi-source contract, collaboration is important. In today's global sourcing environment where all businesses can access the same low-cost offshoring destinations, the differentiating factor is a well established offshoring relationship.
Here are some tips on how to start a partnership:
Vested Outsourcing
A hybrid business model that operates on a shared desired outcome.
The Paradigm Shift
Robin Dutcher, a principal at Capgemini's BPO Delivery Excellence Team, provides useful tips on how service providers and customers can facilitate collaboration in an outsourcing deal.
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