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Saturday, April 10, 2004

Capturing the Real Value from Outsourcing -John Hagel's perspective

John Hagel, the well known management thinker writes,"There’s a storm brewing over offshoring, but the irony is that neither side in the emerging debate fully understands the challenges – and the opportunities – ahead. One side – the opponents – focuses on the workers being displaced from their jobs as companies shift work to offshore locations and see nothing but challenge. The other side – the companies that are actually shifting key areas of activity offshore – focus on the near-term cost savings and see only benefit, if only they can keep a low enough profile to avoid adverse publicity. Both sides miss the key significance of the offshoring trend." Excerpts :"offshoring will force all of us to become more specialized and to make some difficult choices to exit certain activities along the way". There are distinctive resources available offshore -like chinese superiority in wireless design, performance of indian software engineers at superior levels of productivity than the average levels seen in large US corporations. Hagel argues that."To realize the full potential of these distinctive resources, companies need to adapt their approach to building high performance organizations, often going against conventional wisdom.It is challenging to master these techniques for building high performance organizations offshore. In many cases, it will make sense to go with specialized offshore service providers, rather than trying to create your own offshore operation.Rather than viewing offshoring simply as a defensive move to cut costs, the real winners will be companies that understand that offshoring can be used as a competitive weapon to expand market position.By understanding how to access world-class capabilities through offshoring, companies are more likely to recognize that offshoring is not just an operational initiative. It has profound strategic consequences." An extremely well written notes - need to be definitely read by people of both camps in offshoring and also by all beneficiaries of offshoring to understand what enduring/cutting edge value are possible with offshoring.
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"All views expressed are my personal views are not related in any way to my employer"