It is well documented that Global Service Delivery (GSD), or “offshoring,” is gaining momentum in terms of the types of services being offered, and the geographic locations in which the model is being deployed. According to recent reports, most organizations are incorporating GSD to reduce costs, expedite growth and gain access to qualified personnel. There are many reasons for this growth: operating and capital expenditures are often less expensive with GSD than “onshore,” skill levels and language proficiencies overseas are increasing, IT infrastructure is becoming more robust and cultural compatibility issues are dissipating, to name a few. But what types of companies will be expanding their GSD initiatives? What is their level of satisfaction with GSD? Are productivity expectations being met? And as global service delivery expands, what type of service providers will be selected?
In an effort to answer these questions and to explore the quantifiable trends and key findings that directly impact global strategy, operational excellence and attainment of real financial benefits, TPI, a global-sourcing advisory firm, conducted a comprehensive survey during 2005, and published its results in the State of Global Service Delivery (SGSD). The SGSD report is based on research compiled in mid-2005 from companies of all sizes, with strong representation in organizations with annual revenues of over $10 billion. TPI polled more than 200 executives around the world with experience using global-sourcing delivery models of all kinds and produced a study exploring the current state of the global IT offshore service delivery market.
As the report was being created, and as the responses were being analyzed, clear and identifiable groupings began to emerge. Respondents, depending on their organizational experience with GSD, featured different and distinctive traits that directly affected their level of GSD success. Thus, TPI identified and established the Global Service Delivery Maturity Curve (GSDMC). In the study, the GSDMC serves two purposes: it acts as a yard-stick to assist organizations in defining where their organization fits into the continuum, and helps identify potential actions that can be taken to increase GSD effectiveness.
State of Global Service Delivery: Initial Findings
According to the study, GSD will experience a period of accelerated growth during the coming 18 months, particularly among companies with three to five years of global service delivery already underway — Stage 4 or higher along the curve. This growth is largely driven by an overall broadening of the work activity being executed at global service delivery location(s). For example, in addition to Applications Development and Maintenance (ADM) activities — a typical first step in offshoring — GSD operations often expand significantly to include infrastructure and R&D, while simultaneously adding additional global resources in ADM. This expansion of work activities increases the size of the organizations’ global sourcing operation, the number of offshore locations and the number of operational models used.
