The new faces of sourcing


Outsourcing still holds out the hope of cost-cutting for many enterprises, but savings aren't always as great as projected, as the wage gap between onshore and offshore labor diminishes. With these realities in mind, outsourcing customers are coming up with new and varied sourcing models, writes Rakesh Bhatia, a senior associate at the consulting firm Pace Harmon.

Some companies that have found themselves "over-offshored" are looking for their service providers to move more work to the customer's site, Rakesh writes in a post at CIO Insight. This is easier--from a contract negotiation perspective--than moving to an insourced model because the scope of the provider's work is largely unchanged.

In situations where customers are not satisfied with a provider's performance, insourcing seems to be an increasingly popular option. Services that are highly customized can be brought in-house at a relatively low premium. However, a successful transition requires the service provider's cooperation, as well as the customer's ability to acquire the necessary talent and tools in-house.

Another option is to use captive offshore centers, which allow a company to remain in charge of the strategic direction of the operations. This has worked for some companies, but it has been difficult for others to find the talent for the centers when competing with global outsourcing providers.

For more:
- see Rakesh Bhatia's post at CIO Insight

Related Articles:
Outsourcing contracts fell at end of 2012
Evolving sourcing needs spur changes in provider, customer relationship
Reasons to consider insourcing