“Offshore outsourcing is not a silver bullet, it can backfire”

The interest in outsourcing ICT projects to low-wage countries is experiencing strong growth not just because of cost considerations or the desire to achieve a competitive advantage, but also because of the skills shortage affecting many countries. Companies who wish to opt for outsourcing need to consider many aspects (financial, fiscal, cultural, technology, quality issues, etc.). In addition, decisions need to be made about the nature of the outsourcing contract. Several types of collaborative arrangements are in use:

1. Indirect
You use an experienced local service provider in the selection process and/or delivery process.
2. Direct
You transact business directly with the offshore outsourcing provider.
3. Internal multi-site
You set up a subsidiary in the relevant low-wage country.
4. Joint ventures
You start up a joint venture or partnership with an offshore provider.
5. Sourcing
You take on employees from low-wage countries and have them work for you locally.

Offshore or nearshore outsourcing is not a process that should be entered into without careful consideration. Many have had disappointing experiences where the expected goals were not achieved. MUNDIS focuses on the first approach in the list above and we can offer you advice on your required approach based on our experience.

The most often cited advantages of offshore or nearshore outsourcing are:

• lowering of cost price
• innovation, quality
• access to best practices
• more flexibility in capacity

Offshore outsourcing takes place in various stages. In the preparation stage, the objectives are defined and the organisation is prepared. At the end of this stage, a detailed step-by-step plan is drawn up. This is followed by the selection stage. This requires in-depth knowledge of the provider's market. A few small, non business-critical pilot projects may aid in the decision making. Finally, in the introduction stage the intended goals and objectives are realised gradually. MUNDIS has a proven delivery model that can be used for this purpose.