This article discusses the three prevailing myths about outsourcing business processes to an offshore service provider. These myths have evolved over time and are based on the early experiences of companies with offshore outsourcing engagements. These myths may have been true several years ago. But the growing maturity of offshore service industry, increased domain expertise and improvements in technology have transformed this industry in the last decade.

Offshore Outsourcing is primarily about saving money
Different labor rates in different countries do offer an opportunity for companies to save money by outsourcing key business functions. But Offshore Outsourcing is not primarily about cost-savings. It is about building and expanding capacity. It is about gaining access to global talent.

In today’s hyper competitive environment, companies must continuously innovate, increase customer satisfaction and operate with greater efficiency and speed. A global workforce can enable a company to do exactly that. New outsourcing business models provide on-demand capacity and usage-based pricing.

Companies must think strategically about their relationships with their offshore service providers and develop deeper partnership in order to leverage the capabilities that the service providers have to offer.

Communication and Collaboration are major Challenges in an Offshore Outsourcing Relationship
This was true a decade ago when the Offshore Outsourcing industry was still in its infancy. Recent advances in technology have led to robust connectivity between major global destinations and availability of increased bandwidth. Both of these factors have led to improvements in communication tools.

Web Meetings, IP-Telephony, On-line Chat and Collaboration have become common business tools for companies doing business across the world. Exchanging thoughts, ideas or collaborating over a document in real-time has become common-place.

High Upfront Costs and Slow Ramp-up minimize the expected savings
Once again, this was true during the earlier days when companies were required to invest in capital to support an offshore outsourcing initiative. Lack of domain knowledge within the service provider community meant longer ramp-us and high touch engagements for knowledge transfer.

Today, however, the industry has matured. Vertical specialization has become the norm in the Business Process Outsourcing field. Strong domain expertise, operational expertise and technology advances have enabled offshore service providers to offer low-touch engagement models with rapid deployment and short ramp-ups.

This allows companies to focus on the strategic advantages instead of the operational challenges involved in an offshoring project.