If we take a look at the market, we find examples of both, simple and high-end tasks being offshored. Finding and hiring various types of professionals requires different strategies and tactics. In the offshore market, HR needs to be a partner in aligning the HR strategy with the business strategy; determining the overall mix of the workforce; developing targeted strategies for key talent pools and addressing the broader implications of moving work overseas.

STEP II

Assess and prioritize the sourcing options through careful due diligence and analysis. While all other elements of the business case for global sourcing are critical in their own right, the biggest factor in establishing the business case is people costs and cultural alignment of the offshore workforce to the clients and partners of the company. HR must play a key role in assessing the talent-cost arbitrage and its sustainability, compare the quality of talent, assess what works and what doesn’t in the offshore markets being evaluated and understand cultural and other risks that might result from offshoring.

HR also adds value to the analysis of data such as labor costs, tax implications, unionization and benefits liabilities, as well as people issues such as cultural compatibility, community impact and employee engagement.

STEP III

Design an offshore model with a focus on organizational and people issues. Most offshore markets are a lot less mature than say the U.S.A. or the U.K. in terms of HR practices, capability of training and in many of the preferred offshoring destinations, it is hard to find and retain good quality talent. It is critical for the HR function to create a compelling employment brand and promise when entering these markets.

Compensation structures and trends are also markedly different in most offshore markets in comparison to the developed economies. This makes it essential that HR understands the market dynamics well and factors that into the business case and its hiring strategy.

We all know that HR programs and policies are not “one-size-fits-all.” When designing an employment deal, HR must strike a delicate balance between consistency, fairness and inclusiveness while addressing the needs of local markets.

STEP IV

Implementing the offshore model. Even the best made plans can fail if the on-the-ground execution lacks focus. Corporate HR plays an important role in the early stages of the set up of the offshore operation. In some of the more successful offshore projects, corporate HR does a “roll-up-the-sleeves” act, and is closely involved in vendor management and hiring. This enables the local office HR to be aligned with the company’s ways of working.

In the case of hybrid models such as Build-Operate- Transfer (BOT) and Assisted Build-Out (ABO), the complexity of the work for HR increases. Operational issues such as hiring, training and vendor management are managed by the service provider, but HR has to ensure that the people practices remain aligned with the company’s philosophy. Such models also pose a big challenge in terms of cultural alignment of the offshore center with the company, when the center becomes a captive unit of the company.

STEP V

Monitor operations. People management takes up the lion’s share of the time of senior executives in offshore centers. High attrition and low employee engagement severely dent the benefits of offshoring for any company. Companies need to continually monitor the performance of key people-related aspects of the offshore operation. HR has to regularly measure and monitor key metrics including attrition, time-to-hire, cost of hire, training time, training effectiveness, absenteeism and schedule adherence and work with line managers to identify improvement projects.

Getting Started: HR Leader’s Checklist

We have identified a five-step framework as part of the checklist, which includes sourcing strategy, due diligence, design, implementation and monitoring.

From the above steps, we have developed 12 key questions HR should bring to the table as their companies embark on the road to global sourcing.

For instance, what kind of talent strategy has the company developed and what is the employee proposition could be part of the sourcing strategy; what are the available sourcing and delivery options and what are their projected business benefits could be part of due diligence and what is the transition plan for re-structuring and hiring/layoffs could be part of implementation.

If HR can help business leaders integrate a consideration of people issues into their business-planning process, they will be far along the road toward a successful offshoring initiative.

The Road to Success

In order to maximize the chances of success during a global sourcing initiative, it is essential that HR becomes a true business partner throughout the project. From developing and evaluating the business case, to selecting the offshore location and executing project on-the-ground, HR plays an important role throughout the journey. Companies need to follow a structured process for strategizing, planning and implementing an offshore initiative. Meticulous planning, particularly on people issues is a key tenet for successful offshoring. And, because most offshore locations have very different people practices and cultural nuances vis-à-vis developed markets, HR must not fall into the trap of applying global policies, systems and practices to the offshore centers. And finally, HR must identify and implement key metrics and management policies in order to identify areas for improvement during the ongoing initiative.