Challenges in international business ? towards outsourcing (off ...

During the past decade growing operational costs and dipping profit margins pushed companies abroad to look for alternatives. Outsourcing served as a great option for the western world to find solutions to such similar issues. It was understood and tested that moving a part of business operations overseas brought considerable benefits to the companies. Large, low cost, educated, English-speaking pool of labors was a great attraction to these companies to migrate to off-shore locations such as India. However, with time many faced and explored different challenges and issues with offshore outsourcing. It is now understood that to build and maintain successful operations overseas, companies must effectively predict and counter the challenges which are inherited with offshore outsourcing.

There are number of challenges faced by companies when moving operations overseas. Some of these like long-distance management, communication, high employee turn-over rate, additional training costs,? and assuring security of information with borrowers etc are cannot be afforded to ignore.

One of the main challenges faced by companies moving overseas is the cost of investment in infrastructure and IT services. Developing countries such as India do not have a high quality of infrastructure available uniformly. This is mainly due to lack of efforts and issues such as corruption within the government and bureaucratic structure. It is normally observed that areas or zones adopted by private companies in a particular city offer the best facilities or services in terms of infrastructure. This shows that although the quality of infrastructure is available but companies have to spend an initial cost to set-up these services on their own. Therefore, due to economies of scale mostly larger organizations are able to take advantage and offset such high cost.

Another challenge faced by offshoring companies is the cost for extensive training required for the employees located overseas. This is mainly as the personnel located overseas are alien to the local business practices of the company. What makes this further challenging is the communication barriers sometimes even faced in an English speaking country like India. This is mainly due to differences in accents, vocabulary or use of phrases which are often influenced culturally, together making the communication more difficult and ineffective. The demand for trained personnel have risen rapidly over the last few years, therefore it has become very difficult to retain trained and high-quality employees. This has urged all companies to pay a great amount of attention to employee retention policy while operating overseas.

The recent records show that companies face many situations where employees quit either after payday or soon after the appraisal. The annualizes turnover rates are as high as 100% which results in companies constantly hiring and training new employees and failing to maintain consistent high-quality.
An additional challenge for companies looking to set up offshore site is long distance management. There is a considerable distance between India and countries like US, UK, Australia and those in Europe. Therefore companies must commit additional resources for monitoring and maintaining consistent quality compared to their operations back home. Internal audits and quality assurance programs are deployed by many companies as a measure.

Data security is also a huge concern for companies at their offshore site.? Due to this many implement several upgrades to their processes like securing access by using electronic cards and monitoring via security cameras. Separate lockers are set-up by some for employees to store personal belongings and formal confidentiality agreements are signed. The security measures taken by many companies are quite rigorous by applying a far more stringent security policy than found at their native location.

Due to all such challenges, small and medium enterprises are often reluctant to set-up a separate operations division at an off-shore site. Does that mean SMEs cannot get benefits from outsourcing? Not exactly! If off-shoring is not a feasible option for SMEs, they can enjoy benefits by partnering with specialized IT service providers based overseas. India today provides a decent opportunity to the world with its outsourcing capabilities. Comparing worldwide, India alone dominates 80 to 90 percent of the total offshore development revenue. Considering vast pool of skilled and talented human resources available in India, not many developing countries will be challenging India its supremacy in this sector. India ranks highly in areas such as capabilities, quality of work, work ethics, linguistic capabilities and qualifications, and thus is ahead of competitors. Indian IT outsourcing industry is continuing to experience a tremendous growth rate of 25 to 30 percent per year due to these factors.

The final challenge is to pick the right partner to outsource. Increasing number of outsourcing service providers has made the situation tricky for the new entrants. Many first timers often burn hands due to bad outsourcing experiences. Companies looking for outsourcing partners must pay extra care and go for established and matured service providers with a proven record. For the first timers, handling cross cultural issues can alone prove to be the deal maker or breaker. It is only with some time and experience of working with Indian employees and understanding the work culture, companies can afford to experiment further.

The writer of this article is associated with OTS Solutions which is a leading Software Development Company. OTS Solutions has been providing? Software Outsourcing Solutions to different sections.

Source: http://blog.otssolutions.com/challenges-in-international-business-towards-outsourcing-off-shoring/

palmetto rob lowe sanctum the notebook duke basketball miranda july joe paterno near death