Global Sourcing is not a bed of roses

Information Technology, Customer Support  and Call Centers,  Finance and  Accounting, Manufacturing, Engineering, Human Resources - you just name the  services and  Voila!! There will be a huge crowd of companies from developing countries, ever ready to jump on to the bandwagon. The count is like a glimpse of  the sun on a rainy day. And it’s a “no surprise” that they are willing to offer services not only at substantially low costs but also with a promise of efficiency, productivity, quality, and soaring revenues. Although Global Sourcing sounds like a blessing, it is certainly not a bed of roses.

The key proposition up for debate is that though global sourcing is integral to most companies to improve profits, the toughest challenge is the bundled up complexities. Managing complexity in IT is the foundation of being a technology leader today and it is this frame of reference that my entirely subjective thoughts will be based upon.

As companies grow, their chain of suppliers and vendor prospects tend to become more global making it possible to purchase products and services from nearly every corner of the globe. Due to globalization and liberalization, the role of IT within an organization is continuously evolving, which in turn has made management and governance requirements more complex than ever before. So what are the typical aspects of complexities and how to manage it? Bingo! I realize the reader may well be echoing the same question. If this doesn’t get too long and hard, I could answer this question starting from the thick of it to the extreme realistic aspects. There are a series of thoughts on complexity in organizations and the question remains as to how should companies identify, qualify and negotiate with the vendors. The causes for complexity are varied and diverse. Here are some of the aspects of complexity for us to get started-

• Technological Advancements
• Choice of Vendor
• Security and Risk

Technological Advancements– Although technological advances have made global communication faster, cheaper and easier; the technology used in the IT industry is extremely vast and complicated. The architecture used is diverse and its components are not always compatible. It has become difficult to build a system with static components. Being dynamic in nature, they keep changing frequently. Besides, they go through different release cycles. The problem is aggravated when there are new components releasing every now and again. It is a challenge to the IT professionals to understand the techniques and skills that can be applied to resolve this complexity.

Choice of Vendor – This is the single most important issue. To choose a vendor is a tough decision though you can prefer to go by the crowd and pick one of the recognized outsourcing vendors. Although there are plenty of options available, companies have to consider where to outsource, such as Eastern Europe, China,Philippines or India. One of the biggest hurdles is the complexity of dealing with foreign cultures, new business practices, government regulations and in some cases currency exchange. However, the approach for vendor selection to obtain the global skills and resources should be to effectively support the organization's objectives.

Security and Risk – A critical area of consideration in outsourcing is the level of security and risk involved. It is important to clearly define the security objectives in the agreement, such as leakage of critical information, revelation of customer and employee information, violation of patents and exclusive technical know-how, shifting IT hardware and software to a new and insecure location, with no provision for control over the staffing by the vendor. To put it as simple as possible, these security concerns need to be addressed so that eventually there is no room for uncertainty.

I may have only touched on some of the aspects of complex global sourcing but would encourage readers to share their opinions, views and comments in order to garnish this discussion. I wouldn’t choose to end this post in a monologue and anticipate upfront exchange of ideas. No doubt, each of us has a lot we can share and learn from each other