Non-Economic Barriers to Sourcing (Part Two)

Following on from my last post about the barriers keeping firms from outsourcing, here are three more according to Chuck Rosenfield, Senior Consultant at Alsbridge. His article is focused on helping companies “look outside of just the numbers and be able to make tactical decisions that go beyond economics in order to create a strong sourcing strategy.” In short, while costs are important, a laser-focus on them and nothing else, will lead to less than optimal results. The following may be obstacles for you:

5. Selective process outsourcing – Instead of selectively choosing which processes or departments to outsource, consider leveraging many of the combined offerings available in the market today. Vendors across the board are integrating the solutions they offer in order to provide a one-stop-shop for buy-side clients. Call centers are expanding into higher value BPO operations, other companies are offering BPO and IT services customized to fit your project, and boutique IT design shops are now also providing application development and social media marketing tools. 

Integration also applies when we talk about geography. Of course you should be selective about which locations you outsource to, but in a diverse region like Latin America, a multiple country strategy allows you to leverage the advantages of different areas, while mitigating their risks. Pick a vendor that can offer a strategy like that. 

6. Unions and employment laws – A while back on this blog I did a series on Latin America’s inflexible labor and union laws. They are definitely concerns for US buyers, but they don’t make it impossible to be very successful in the region. In countries like Brazil and Argentina for example, you will have to work and collaborate with the unions in order to get anything done, while in Nicaragua, union presence in the outsourcing space is almost zero. If you’re using a captive strategy, just make sure to forge positive relationships early on in the game. If you’re going with a third party provider, be aware that if they have to work around unions, they will most likely price and deliver their services accordingly, as Rosenfield says. 

7. Retained organization – One aspect of outsourcing work that usually doesn’t get discussed until the contract is signed is, what will the rest of your firm look like? Especially if you’re sourcing a project for the first time, your team will not have the necessary experience to manage that relationship. Training is always a good start, but you will also have to rearrange your people and define new roles for each member of the team. As Rosenfield says, “A successful sourcing strategy, while fuelled by quantitative factors, should begin with the evaluation of qualitative elements.”