The Global Sourcing Model has finally arrived - companies no longer think about "whether to outsource" and "whether to offshore" decisions in isolation, but consider multiple mixed options simultaneously.

As their level of sophistication has grown, companies have begun to outsource and offshore not just horizontal generic processes, but also vertical business specific processes.

While cost savings continues to be the dominant motivation, quality improvements and flexibility are rapidly catching up as important drivers.

Rather than hand over the entire set of functions to a single vendor, companies are beginning to prefer managing a multiple-vendor, multiple-geography sourcing framework. This goes hand-in-hand with the development of global sourcing capabilities.

Such capabilities comprise a clear logic on how to match process characteristics to sourcing options along the dimensions of coordination and control, as well as competence at implementing sourcing arrangements.

Experience confers sophistication; the more experienced among our respondents outsourced / offshored more challenging processes, experienced fewer hidden costs, managed multiple models more effectively, and had more effective collaboration with their suppliers.

The most significant management challenges in global services sourcing are often at the operational level. Good project management capabilities are cited as the single most important ingredient to a global sourcing capability.

Concluded.

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Contributed by -
Ms. Bhuvana Ramalingam,
Director - Communications,
Indian School of Business, Hyderabad.