Challenge

Offshoring and Outsourcing alone are not "silver bullets." Offshoring in combination with other business transformation initiatives will drive performance optimization. Since the late 1990s, organizations in North America and Europe have outsourced a growing portion of their back office functions, like IT Infrastructure and Applications Development, Human Resources and Finance and Accounting. Most of these transactions represented a "Lift and Shift" business process outsourcing strategy whereby current processes were moved from a high costs to a low costs geography but little or no business transformation either preceded or followed the process transition. As expected, few of these transactions enabled company to achieve world-class performance. Hackett believes the next wave of Business Process Outsourcing, (BPO) transactions will encompass both a "Transform and Shift" and "Shift and Transform" strategies. This expected change in business process outsourcing strategy will have a profound impact on how sourcing strategies are formulated and executed.

Total cumulative 10-year NPV:$366 million

Transform and shift scenario 1: Offshore first (large chart)

Total cumulative 10-year NPV:$462 million

Transform and shift scenario 2: Transform first (large chart)

World-class companies have continued to leverage technology and business best practices to widen the gap between their business performance and that of their peers. In recent years, world-class companies have shifted their focus to offshoring and outsourcing business activities to drive higher business performance. Globalization provides the most compelling event in the SG&A world for the next 5-10 years. The impact of service globalization is of such magnitude that it will challenge the conventional wisdoms that have guided the way service delivery models for SG&A have been architected over the past two decades. Ensuring the correct mix of structure, people, performance and technology will result in the optimum balance of an effective and efficient global organization.

Hackett Solution

Hackett uses its market leading intellectual property on world-class performance and business best practices and its deep knowledge of the BPO service provider capabilities to assist clients in selecting and contracting with the optimal Business Process Outsourcing service provider that can enable the client to implement its business transformation roadmap via a "Shift and Transform" business process outsourcing strategy. Not only is more value derived from the project, but the actual project timetable can be significantly accelerated reducing costs and mitigating project risks for all stakeholders. Although the majority of the traditional sourcing advisors can assist their clients to execute a "Lift and Shift" business process outsourcing strategy.

Hackett advisors offer the optimum combination of in-depth functional, business transformation and strategic sourcing expertise to guide clients in their business process outsourcing efforts. Our approach is to treat business process outsourcers as client partners and to work collaboratively with them, to drive innovative solutions through targeted workshops and to look at their business transformation skills subsequent to replicating business processes in an outsourced environment. By focusing on successfully integrating retained and outsourced functions, we develop a balanced business process outsourcing strategy and ensure that end-to-end processes are integrated and perform at world-class levels.