| GS100: The Global Outsourcing Compendium | |||||||||||||||||||||||||
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The last decade witnessed a substantial growth in outsourcing. Existing services providers evolved into becoming market leaders and many new ones took birth to address the need of niche markets. The dawn of recession compelled the industry to adopt new practices and embrace automation to improve productivity at various stages in a project lifecycle. The patience level of the customer dropped. It was important to deliver. Hence, service providers (at all levels) began analyzing risks more seriously and built impressive mitigation strategies.
Most Band 1 (with annual revenue between 1M-10M) companies continue to depend on third-party certification (like ISO) to manage security risks. 46% of respondants in this category claimed to have unique employee assessment system, proprietary career development system, and free certification and education for their employees to manage increasing attrition rate. A common pratice noticed across the band is the usage of reward program for employees. 15% routed projects to delivery centers at cheaper locations when labor costs went up. One of the favorite destination being China's tier 2 cities.
The trend noticed in Band 2 (companies with annual revenue between 10M-100M) was significantly different. Companies depend highly on technology to manage risks associated with labor and non-labor operations costs. Over 70% have a system for production control where cost of services, projects and back office is registered. This information is periodically analyzed and contrasted with the estimated budgets for each operation, and actions are established to control the cost level, avoiding deviations from the established thresholds. 18% maintain a dedicated audit team that ensures every project team complies with all policies set by the company and their clients. Employees working for this band are often subject to desktop inspections at any time, and the audit group performs random inspections periodically. All employees are required to sign an internal NDA and also client-specific NDAs.
Most service providers manage risks by adhereing to global standards such as ISO, COPC, CMM and PCMM. Adopting these models ensures that there are mechanisms defined to capture any failures or non-performances proactively. These monitored mechanisms include tools such as internal and external audits, dashboards, quality score cards, management reviews etc. which ensures failure avoidance in the standard procedures. A few use online HR systems to statistically predict and analyze the labor cost. These costs are monitored and analyzed in real time at corporate level.
