The article aims to discuss how Connext Global Solutions solves Outsourcing Mistakes (#3: Not understanding costs both internally and for the partner).
Even with a commodity, which is by definition fungible, the price is not meaningful without specifying some key parameters. Consider oil – the volume, the location, and delivery date all have a huge influence on the price, sometimes even more than the actual index price of the oil. When prospective client asks how much offshore staff costs, to some extent it is like asking how much is the annual salary of a baseball player or how much does an actress make. The question just is not meaningful without a relatively detailed discussion about what the client is trying to accomplish.
Key aspects of understanding costs for Connext Global Solutions include:
- Quality
- The times in which services are provided
- Location
- Availability
- Management and oversight
- Stability of the workforce
- Training
- Allocation of risk
- Other client or project specific factors
Most of these are self-explanatory at the surface level; however, each of these factors has multiple layers. Each requires thoughtful consideration to ensure alignment with the overall strategy. Then, even when all the above is fixed at the team level, at the individual level, things like education, work experience, professional certifications, general aptitude and attitude all drive wage differentiation.
It should be clear that an assessment of cost, or more accurately value, can only be undertaken with an understanding of the factors listed above. Therefore, when first assessing costs, it is more relevant to understand the services provided and the pricing model of the prospective partner. It can be quite difficult to ascertain this from a website or a discussion with the average business development executive. The best strategy is to use the list above as a guide and continue asking a series of detailed questions until an adequate level of understanding and confidence is developed. If the prospective service provider is unable to do this, simply move on.
Connext Global Solutions helps companies build custom, dedicated support teams in the Philippines. Learn more about Connext.
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