Educating the CEO on offshoring

Offshoring is too important to be left in the hands of the CTOs (chief technology officers). The subject has to be sufficiently dumbed down so that CEOs can understand the key issues at stake and take a decision on them.

In order for offshoring to be successful, it must become a part of a company's key agenda, not remain an individual project over transfer of a process.

While technical people in a company can chalk out the "how" of offshoring, the CEO has to understand the "why" and decide whether to offshore or not and if yes, how much.

This is the mission which the Vashistha brothers, neoIT founder and CEO Atul and managing partner Avinash, set out to achieve when they decide to put together their forthcoming book The Offshore Nation: The Rise of Service Globalization which will be out shortly.

A clear sequence of steps have to be taken to successfully address offshoring, says Atul Vashistha who spends most of his time in the US, tracks global trends and interacts with buyers of offshored services.

First, the CEO has to be educated on how to lead this strategic move, then process owners within his organisation have to be educated so that the task migration takes place smoothly, and finally (this is where the CTO comes in) the methodology of the actual offshore execution has to be laid down.

There are many books on the 'how to' of offshoring that deal with the issue at the technical level. But now that the issue has become a matter of strategic concern, you need to impart knowledge, help the CEO think strategy.

It is only after the why, what, where, when and which issues have to be addressed that comes the need to figure out how. The book addresses the strategic part of the issue, says Atul Vashistha.

This is really one side of the matter, the need to educate the buyer of offshored services so that he can make the right decisions. There is an equally important obverse to it, the seller of offshored services who also needs to urgently put his act together.

Avinash Vashistha, the managing partner of neoIT who handles the suppliers' side of the business, says suppliers must know what clients want. "They have to be equally prepared, but not many are," he feels.

Clear trends are emerging in the offshoring arena. As CEOs start looking globally for talent and not just low cost options, their security concerns become significant. Suppliers and their lawmakers (the Indian government) have to address this concern for data security.

Unless this is done, businesses most eager to go in for offshoring, financial services firms with a great deal of back office work, will tend to open captive units.

Then, when the comfort level rises over someone else doing the back office work, captive units will tend to get hived off, as has happened in the case of GE Capital Services.

"In a few years many more captives will be sold," predicts Avinash Vashistha, spotting a trend. The book essentially offers a framework for CEOs on both sides to think out all these issues, he adds.