case study of offshore outsourcing

New Trends in Networking, Computing, E-learning, Systems Sciences, and Engineering pp 137–147 Cite as

An Exploratory Case Study of Offshore Outsourcing: Problems in Multicultural Settings

• Jussi Koskinen 3 ,
• Veikko Halttunen 4 &
• Juha Mansikkaniemi 4  
• Conference paper
• First Online: 01 January 2014

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Part of the book series: Lecture Notes in Electrical Engineering ((LNEE,volume 312))

Outsourcing means using factors which are external to an organization to perform its functions whereas offshore outsourcing relies on using foreign resources to perform those functions. We focus in this paper on offshore outsourcing of information systems (ISs). We have conducted an exploratory case study of outsourcing IS support services. The services have been outsourced by a supplier organization which has been based in Finland. Main parts of its customer support services have been allocated to so-called production centers, which have been located in three countries; Latvia, India, and the Philippines. We have gathered qualitative data from nine experts via theme-based interviews. The empirical data gathering has focused on revealing problems in the outsourcing practices. There were 74 mentions of different kinds of confronted problems. The differences between the studied countries in terms of the typical outsourcing problems have been noted and the results compared to the most important related works. The presented results on the studied thematic issues can be useful in their part for better understanding typical problems related to initiating and organizing similar IS-related offshore outsourcing activities.

• Software engineering
• Offshore outsourcing
• Theme-based interviews

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School of Computing, University of Eastern Finland, FI-80101, Joensuu, Finland

Jussi Koskinen

Department of Computer Science and Information Systems, University of Jyväskylä, 35, 40014, Jyväskylä, Finland

Veikko Halttunen & Juha Mansikkaniemi

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The appendices provide the details of the gathered data related to the studied four themes. Due to the posed length limitations the actual transcribed citations cannot be reported here. Instead, they have been digested to a more compact form such that publishing is possible; by using the extra pages option of the target conference.

The prefixes ‘p’ and ‘i’ stand for p roblem and i nterviewee respectively in the identifiers to be used. The running numbers differentiate the identified items from each other within each theme and country. ‘O’ stands for O utsourcing, ‘D’ for D istributed work, ‘T’ for Scheduling and T iming, and ‘C’ for C ultural differences. ‘L’ stands for L atvia, ‘I’ for I ndia, and ‘P’ for the P hilippines.

Appendix A Outsourcing Relationship

Overall, the outsourcing relation worked relatively well in the case of Latvia according to the Finnish coordinator, who regarded the customer relation to be very intimate and spontaneous (iL1). His view was that the relation was not like a normal customer-consultant relation, but a more profound one. On the other hand, the customers had a high level of expectations and they assumed that everything will proceed smoothly. Consequently, the coordinator regarded building trust as the most significant challenge in the beginning of the service (pO-L1,iL1). The Finnish chief noticed that in the starting phase of the service the customer had a feeling of not having enough control (pO-L2,iL2). This was because the customer did not yet know the persons involved in the production center’s service group and was not aware of their working habits.

Another potential problem was that the customer was receiving contradictory messages regarding the fluency of the service (pO-L3,iL2). Occasionally persons who were not communicating face-to-face revealed more readily concerns which were not relevant (pO-L4,iL2). E.g, the problems which were internal to the production center’s service group were necessarily not worth mentioning to the customers. Since the customer was aware of the relatively low expenditures of the offshore production, the customer could impose price pressures to the supplier (pO-L5,iL1). Especially, it occasionally was so that the customer expected and demanded much from the persons who were not being offshored and who thereby were relatively expensive and scarce resources.

One of the problems was the relatively high change rate of the employees (pO-L6,iL1); especially, changing of key-persons tended to cause the customers to have concerns and to raise questions. Nevertheless, overall, the Latvian group head (iL3) regarded the outsourcing relation as being excellent. This stance was positively affected by the fact that the customers’ representatives had visited the Latvian production center multiple times. The main problem of the Latvian employees was that they did not always have sufficient clearances and authorizations to work properly (pO-L7,iL3).

The Latvian employees did not regard the customer as being in an important role. Instead, they acknowledged the importance of the end users. Since the end-users were dispersed, the Latvians considered the location from where the service was provided as being inconsequential. The Latvian group head (iL3) neither had noticed any major problems between the involved Finnish persons and the customers. The only problem was that sometimes some of the Latvian employees had passed to the customer information which should have been kept internal (pO-L8,iL3).

The problems which were confronted related to the Indian production center included the following: Customers’ suspicions regarding whether they were given a truthful description of the production (pO-I1,iI1), customers’ prejudices about Indian work having a lower quality than Finnish work (pO-I2,iI2) and that the service which was produced offshore required overall increased time for managing the customer relations (pO-I3,iI2).

Difficulties in knowing what the customers’ specific intentions were may have related to the fact that the customers sometimes tried; in this context, to obtain information primarily only in order to compare the supplier to other Asian information technology suppliers (pO-I4,iI1). Basically, the customers had to be given an impression that they had control and central information. This may have; however, also inadvertently affected the situations in which the customer attempted to exceed its authority. E.g., sometimes the supplier did get an impression that the customer had not read the formal contract sufficiently meticulously (pO-I5,iI1).

This phenomenon manifested itself; for example, when the customer showed interest in the supplier’s internal matters; such as numbers of the involved persons and their names (pO-I6,iI1,iI2), even though that the supplier had only made a contract that quaranteed that the problems, which the customer confronted (related to the used information system) were solved within the predefined time. A related problem was that the customers sometimes wondered why they were paying for a service also when there were no open; i.e. currently unresolved, defects (pO-I7,iI1). This was inconsistent behaviour since the customer had earlier agreed on the criteria for paying. The paying was expected to be based on the quaranteed availability of the service; instead of being based on the number of the completed given tasks.

The supplier also had much implicit work to be completed related to developing the service. The customer had a tendency of attempting to have also such tasks performed by the supplier which were not part of a contract; even without extra compensation (pO-I8,iI1). The customer also easily did get used to having such extra service. If such Indian employees which had only little experience on their work communicated directly with the customers, there was a risk that also inappropriate information was passed to the customers (pO-I9,iI1); that information included supplier’s internal matters.

Philippines

Overall, there were not many problems related to the outsourcing relation as such for this case. All the interviewees related to the Philippine production center (iP1,iP2,iP3) regarded the customer relation as being excellent. For example, the Finnish group head (iP1) regarded the offshore production easy from the view-point of customer relations; the attitude was that the customer relation always had to be formed regardless; e.g., of the locales of the involved persons. One minor problem was that some employees in the production center may have incorrectly assumed that the Finnish persons working for the supplier were customers (pO-P1,iP1).

The Philippine chief (iP2) told that it was typical that the customers were very interested in who were involved in the service and who was doing what in the production center. That attitude and interest was natural since the offshore outsourcing was then still a relatively new model of production (iP2).

Appendix B Distributed Work

The primary problem in the distributed work was that even though the formal responsibility of completing the work was in Finland, the Finnish persons did not have full control over those who were doing the actual work (pD-L1,iL1). Controlling the workers too much is obviously not good for their working morals. However, in some cases it was impossible to avoid strict control to ensure progress of the work (pD-L2,iL1). Distributed work was complicated in cases when the offshore group had not been provided with a sufficient clarification of its task (pD-L3,iL2). Weekly meetings were often considered as a burden and the involved persons could not utilize them in full extent (pD-L4,iL2). However, the Latvian group head (iL3) did not think that there would be any specific problems due to the applied distributed production model, since the end users were in any case dispersed throughout the world.

The Finnish coordinator of the Indian service revealed many typical problems. Lack of exact and clear instructions was a central problem (pD-I1,iI1) for correctly performing work tasks. The Finnish coordinator noticed that it is necessary that more work can be constantly transfered to be performed by the Indian employees for that he himself could instead meet new challenges (pD-I2,sD-I4,iI1). The fundamental problem and risk of distributed projects was that communication was complicated (pD-I3,iI2). The Indian group member (iI3); however, did not identify any problems; instead he considered the production center to be able to fulfill all the set requirements. The Indian group members had only very little interaction with the Finnish persons and no knowledge of the future plans of the offshore operation (iI3).

The Finnish group head stated that a natural problem related to the distributed work was that non-local persons could not be met (pD-P1,iP1). Consequently, it was harder to recognize problems in the distributed case (pD-P2,iP1). In that case more interpretation of the messages was required to be potentially able to determine whether there were real problems. Customers had sometimes given negative feedback regarding the English language skills of the Philippine workers, but they were nevertheless very good as compared to the skills of the Indian employees in similar tasks (iP1).

One problem was that the persons of the supplier often considered the persons of the production center merely as tools and acted accordingly (pD-P3,iP2). Delocalization introduced some problems which were not met at all in Finland; these included massive natural catastrophes; such as typhoons and earthquakes (pD-P4,iP1). One of the problems for the Philippine group head was that in some cases it was not clear who had the responsibility over specific tasks (pD-P5,iP3). This was a problem especially in the beginning of the service. The production team had limited rights to some of the related information systems because of the data security rules set by the customer (pD-P6,iP3) and consequently; in these cases, the production group had to rely on the help from the Finnish workers. That was problematic since the involved Finnish experts worked only 8 h a day, whereas the Philippine production center operated non-stop in three shifts (pD-P7,iP3). The geographical distribution caused also problems related to the communication channels and performance of the technical systems due to the long distance between the involved servers (pD-P8,iP3).

Appendix C Scheduling

The Latvian and Finnish times zones are the same. Therefore, there obviously were no problems due to them. The exact working hours and days had been defined in the contract. Generally, Latvian employees tended to come to the working place later and also to leave from there later than the Finns. This did not cause problems. In matter of fact, this phenomenon has been beneficial since in this way the daily service could be extended. Even though that the contract stated that the service ends at 17.00 o’clock it was common that there was at least one person available until 19.00 o’clock (iL1). On the other hand, during the early morning hours there were not necessarily many workers present (pT-L1,iL2).

Unlike the Finns, the Latvians had their vacations in smaller pieces throughout the year. The Finnish coordinator (iL1) did not consider the Latvian timings of vacations as a problem. According to the Latvian group head (iL3) the national festivals caused problems since after returning to work there may have been 3-4 times more service requests to be handled (pT-L2,iL3). Some of the end users had gotten used to service within a day and the relatively slow service after the national festivals caused some wonder among them.

The Indian time zone is +2,5 h as compared to Finland during summer and +3,5 h in other seasons. Therefore, it was sometimes difficult to find common time during the working hours (pT-I1,iI1) for the Finns and the Indians. This problem was increased by the different timings for the lunch breaks (pT-I2,iI1). The Indian chief (iI2), however, regarded timing easy in practice, because the contract set the daily times for the service and there was nevertheless about 5 h common time. Also the vacations were regarded mainly as unproblematic (iI2). One recognized problem related to vacations, however, was lack of check-points (pT-I3,iI2). The Indian group member (iI3) regarded the differing timings for vacations problematic (pT-I4,iI3). The Finnish long summer break caused troubles to the Indian workers. In those times they did not necessarily know with whom to communicate and how to obtain the needed information (pT-I5,iI3).

Even though that the Finnish persons did have named substitutes, they did not necessarily know all their tasks (pT-I6,iI3) and they did not have access to all critical emails during the previous 11 months (pT-I7,iI3). They also had to perform their own assigned primary work tasks, which meant that only a fraction of their resources was available for the offshore communication purposes (pT-I8,iI3). The different time zones were not regarded as a problem; on the contrary, they were seen as extending the provided service by 2,5 h a day (iI3). A problem for the Finnish coordinator was that the vacations of the Indian employees caused extra work (pT-I9,iI1). Indians do not have long vacations, but they do have several separate public free days and optional vacations. The public free days vary according to the religious groups. This situation called for caution in order to avoid pressing anyone to work in such days (pT-I10,iI1).

The Philippine production center had the largest difference to the Finnish time; 6 h. Unlike the other services, that service produced by the center was provided 24 h a day in three shifts. The Philippine group head mentioned; as a former problem, obscurities in service during vacations (pT-P1,iP3). Another problem was that Finns worked only 8 h a day, whereas the Philippines worked 12 h. If the Philippines needed urgent help from the Finns; outside their formal working hours, problems could occur (pT-P2,iP3). The problems related to this main aspect were small.

Appendix D Cultural Differences

According to the Finnish chief (iL2), there were very few identified cultural differences between Finland and Latvia. The involved Finns and Latvians had similar cultural mentalities (iL2). However, due to the former Soviet influence, the Latvian business culture was generally not optimally inclined to service (pC-L1,iL2); Latvian employees could sometimes be a bit blunt. Lack of proactivity was sometimes viewed as a weakness of some of the Latvians (pC-L2,iL1). For some it was necessary to define precisely what ought to be done, and when and what was expected. Some of the employees brought forth boldly new solutions, whereas others implemented only what had been specifically requested.

Sometimes, the Latvian employees did give a too positive view of the progress of their work (pC-L3,iL1). Consequently, detailed surveillance was necessary (pC-L4,iL1). Sometimes, some of the Latvians were too timid to tell about the problems (pC-L5,iL1). None of the group members in the production center neither had the best possible English skills (pC-L6,iL2). E.g., they were not always able to make proper summaries. According to the Latvian group head (iL3) there were no actual cultural differences between the Latvians and the Finns, but the organizations differed from each other.

Latvians were in this context usually technical developers, whereas Finns were consultants, coordinators, or chiefs. That phenomenon sometimes made understanding each other hard (pC-L7,iL3). For example, when the Finns asked in a teleconference whether some task would be dealt with, the Latvians started to describe how the related problem can be solved by using many technical details in their descriptions (pC-L8,iL3). That is, the Latvians immersed in this case more into technical language and did not abstract conceptually as much due to their more technically oriented background. The Finns had to tell them precisely what kinds of answers were expected (pC-L9,iL3). That problem, however, did not mean that the Latvians would give too much technical details, but the Finns sometimes did not give them enough (pC-L10,IL3). Nevertheless, overall, the Latvian group head (iL3) felt that the cooperation was easy and was proceeding well.

According to the Indian chief the Indians and the Finns had different communication cultures. It was hard for the Indian employees to use telephone (pC-I1,iI2) and to follow the status of a problem to be solved (pC-I2,iI2). They merely sent an email and if they did not receive an answer they tended to forget the whole thing (iI2). This in turn was very frustrating to the involved Finns. Indians also tended to have too much optimism and indifference towards their tasks (pC-I3,iI2). When they noticed a problem they assumed that they were capable of solving it and let time pass (pC-I4,iI2). They usually noticed only after the deadline that they after all were not capable of solving the problem (pC-I5,iI2).

According to the Finnish coordinator, there occurred each week situations in which some issue which had earlier been agreed on had nevertheless not been properly dealt with (pC-I6,iI1). On the other hand, in some cases Indian employees tended to avoid risks excessively (pC-I7,iI1) in which cases they focused heavily on meeting the deadlines. For this reason their own effort estimates contained typically too much slack and consequently the service based on those estimates could not be sold successfully (pC-I8,iI1). They did not necessarily pay attention to the issues which self-evidently should have been checked (pC-I9,iI1). Consequently, there was a need for active work control.

The directness of the Finns raised wonder among the Indian employees; and could even be considered very aggressive by them; especially in the beginning of the service (pC-I10,iI2). The views of the Indian group member (iI3) differed from the views of those who worked in Finland, since according to him there were not many differences between the countries. He also mentioned that the Finns did not master the English language particularly well (pC-I11,iI3).

The policies of the company were followed differently in India and in Finland. In India it was customary to perform quality checks amply and the checks were usually performed by others than the person who had done the work. According to the Indian group member, working only in one service becomes boring (pC-I12,iI3); Indian engineers wanted primarily to be involved in creating something new instead of fixing something old (pC-I13,iI1).

The Philippines appeared to have a cultural need to please others; especially the involved Finns (iP2). Thereby, it was hard for them to reveal if they did not like something or if they had a differing opinion (pC-P1,iP2). Practically always, when a Philippine was asked how his or her work was proceeding, the answer was “extremely well”. However, this was not always a true statement and a challenge was to get correct information about the actual problems (pC-P2,iP2).

The Philippine employees were afraid of “loosing their faces” which also tended to cause them not to tell all of their problems (pC-P3,iP2). They were also perfectionists. This caused them e.g. to answer to the service requests by any possible means; even though that the service level agreement did not require 100 % performance. If there was a need to analyze those service requests which had not been dealt with within the recommended time limits; they should not be related to individual Philippines, because they may feel themselves being accused of the situation and “go into panic” (pC-P4,iP1). On the other hand, the Philippine group head (iP3) did not feel or admit that there would be major problems which would be due to the cultural differences. The noticed cultural differences, however, included the issue that the Finns involved in this case were extremely straightforward, whereas the Philippines considered meticulously what they themselves were saying related to their work tasks (iP3).

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Koskinen, J., Halttunen, V., Mansikkaniemi, J. (2015). An Exploratory Case Study of Offshore Outsourcing: Problems in Multicultural Settings. In: Elleithy, K., Sobh, T. (eds) New Trends in Networking, Computing, E-learning, Systems Sciences, and Engineering. Lecture Notes in Electrical Engineering, vol 312. Springer, Cham. https://doi.org/10.1007/978-3-319-06764-3_18

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Making decisions on offshore outsourcing and backshoring: A case study in the bicycle industry

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Small and medium-sized enterprises (SMEs) are expected to generate new innovations, as well as future growth and employment for the European economy. In the last two decades a large number of European manufacturing companies have offshored their production operations to low-cost countries outside of the Eurozone. However, also bringing back home the once offshore outsourced manufacturing, i.e. backshoring, has become a notable phenomenon even if it has received less attention in research until very recently. This paper reports research on consecutive offshoring and backshoring decisions of a Northern European bicycle manufacturing company. We identified an over 30 percent cost advantage from offshore outsourcing that turned, over a two year period, into an advantage for the firm's own manufacturing in the home country. The main reasons for the rediscovered advantage of in-house manufacturing were (1) the increasing accuracy of cost allocation procedures, (2) changes in external factors, such as exchange rate variations and supplier costs, (3) growing sales volumes and the simultaneous requirement for shorter lead-times resulting from the redefinition of the product, and (4) the network-level learning to combine factory and network-level operations. The contribution of this paper is the insight that it provides into how companies can overvalue the cost benefits of offshore outsourcing, as well as highlighting factors to be considered and the sensitivity analysis to be carried out in evaluating such decisions. (C) 2015 Elsevier B.V. All rights reserved.

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• Backshoring Business & Economics 100%
• Offshore Outsourcing Business & Economics 77%
• Outsourcing Engineering & Materials Science 69%
• Bicycles Engineering & Materials Science 68%
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T1 - Making decisions on offshore outsourcing and backshoring

T2 - A case study in the bicycle industry

AU - Gylling, Michael

AU - Heikkilä, Jussi

AU - Jussila, Kari

AU - Saarinen, Markku

PY - 2015/4

Y1 - 2015/4

N2 - Small and medium-sized enterprises (SMEs) are expected to generate new innovations, as well as future growth and employment for the European economy. In the last two decades a large number of European manufacturing companies have offshored their production operations to low-cost countries outside of the Eurozone. However, also bringing back home the once offshore outsourced manufacturing, i.e. backshoring, has become a notable phenomenon even if it has received less attention in research until very recently. This paper reports research on consecutive offshoring and backshoring decisions of a Northern European bicycle manufacturing company. We identified an over 30 percent cost advantage from offshore outsourcing that turned, over a two year period, into an advantage for the firm's own manufacturing in the home country. The main reasons for the rediscovered advantage of in-house manufacturing were (1) the increasing accuracy of cost allocation procedures, (2) changes in external factors, such as exchange rate variations and supplier costs, (3) growing sales volumes and the simultaneous requirement for shorter lead-times resulting from the redefinition of the product, and (4) the network-level learning to combine factory and network-level operations. The contribution of this paper is the insight that it provides into how companies can overvalue the cost benefits of offshore outsourcing, as well as highlighting factors to be considered and the sensitivity analysis to be carried out in evaluating such decisions. (C) 2015 Elsevier B.V. All rights reserved.

AB - Small and medium-sized enterprises (SMEs) are expected to generate new innovations, as well as future growth and employment for the European economy. In the last two decades a large number of European manufacturing companies have offshored their production operations to low-cost countries outside of the Eurozone. However, also bringing back home the once offshore outsourced manufacturing, i.e. backshoring, has become a notable phenomenon even if it has received less attention in research until very recently. This paper reports research on consecutive offshoring and backshoring decisions of a Northern European bicycle manufacturing company. We identified an over 30 percent cost advantage from offshore outsourcing that turned, over a two year period, into an advantage for the firm's own manufacturing in the home country. The main reasons for the rediscovered advantage of in-house manufacturing were (1) the increasing accuracy of cost allocation procedures, (2) changes in external factors, such as exchange rate variations and supplier costs, (3) growing sales volumes and the simultaneous requirement for shorter lead-times resulting from the redefinition of the product, and (4) the network-level learning to combine factory and network-level operations. The contribution of this paper is the insight that it provides into how companies can overvalue the cost benefits of offshore outsourcing, as well as highlighting factors to be considered and the sensitivity analysis to be carried out in evaluating such decisions. (C) 2015 Elsevier B.V. All rights reserved.

KW - Manufacturing

KW - Make-or-buy

KW - Offshoring

KW - Backshoring

KW - Reshoring

KW - Action research

KW - INTERNATIONAL MANUFACTURING NETWORKS

KW - LOCATION DECISIONS

KW - SITE LOCATION

KW - SUPPLY CHAIN

KW - CAPABILITIES

KW - PERFORMANCE

KW - CRISIS

U2 - 10.1016/j.ijpe.2015.01.006

DO - 10.1016/j.ijpe.2015.01.006

M3 - Article

SN - 0925-5273

JO - International Journal of Production Economics

JF - International Journal of Production Economics

Home · bpo learning center · Outsourcing Case Studies: Lessons Learned From Successful and Failed Outsourcing

Dion Jay Tality

• January 21, 2024

Outsourcing Case Studies: Lessons Learned From Successful and Failed Outsourcing

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Running a business is taking a risk. Sometimes entrepreneurs win; other times, they fail. Either way, the outsourcing case studies outlined below share some knowledge to guide you through your business decisions.

Business process outsourcing (BPO) is a double-edged sword. It can help you save time and money while improving your overall efficiency and business productivity. However, it might also lead to disastrous outcomes if not managed properly. So outsourcing is a calculated risk.

Explore the outsourcing projects below to learn more about successfully implementing the strategy.

Lessons Learned From Successful Outsourcing

First off, what is BPO ? It entails delegating non-core tasks to third-party service providers instead of handling them in-house. Companies of all sizes outsource both front-office and back-end operations.

Outsourcing has long been a popular strategy for scaling operations and reducing costs. The industry grew further due to the pandemic. The global BPO market size could grow from nearly $262 billion in 2022 to $525 billion by 2030 at a 9.4% compound annual growth rate (CAGR).

These facts and figures speak volumes about the industry’s market growth. Check out the BPO case studies below to learn how to make the most of outsourcing.

1. Slack: Accessing Experts To Grow a Business

Businesses, regardless of their size, have embraced Slack as a digital epicenter for fostering employee collaboration. What began as a humble messaging startup has rapidly evolved into an indispensable tool for facilitating seamless business communication.

The remarkable ascent of Slack owes a substantial debt to the strategic use of outsourcing. Early on, they enlisted the services of MetaLab, a distinguished Canadian design team, to craft the beta version of their business concept. MetaLab’s invaluable feedback paved the way for a user-friendly tool that swiftly gained widespread adoption.

Through astute decisions such as outsourcing logo design, engaging external teams for mobile application development, and investing in external website development expertise, Slack managed to secure a staggering $250 million investment, culminating in a total valuation of $5 billion in July 2017.

As of 2021, Slack’s valuation had soared to an impressive $27 billion. In 2020, it boasted a user base exceeding 10 million daily users, with projections indicating potential growth to nearly 80 million users by 2025, as reported by Statista. The Slack success narrative serves as a compelling testament to the potent impact of outsourcing on business expansion.

2. WhatsApp: Offshore Outsourcing for Market Expansion

WhatsApp is among the most popular messaging apps globally. It started as a small company with a capital of $250,000 in 2012 and had only 30 full-time employees and five part-timers. As of April 2022, it had over 2.44 billion users in more than 180 countries.

We can attribute WhatsApp’s success to using offshore developers from Russia. Its co-founder, Jan Koum, recognized the engineering talent in this country. Outsourcing allowed the company to focus on core operations and customer support while the BPO team handled the app development services . 

WhatsApp’s offshore outsourcing endeavor helped it reduce costs and build a successful product. Later in 2014, Facebook acquired the company for $19 billion. But while it relocated its third-party contractors to the United States , offshore outsourcing played a crucial role in its business growth and success.

3. CuriosityStream: Integrating Onsite and Offshore Teams

The successful experiences of its industry competitors inspired CuriosityStream, a global media company known for its video-on-demand streaming services, to begin an outsourcing journey.

In 2019, the company made the strategic move of enlisting the services of a team comprising six proficient programmers, entrusted with developing a new feature for its streaming platform. The collaboration with this BPO team not only contributed to an upsurge in viewer engagement but also substantially reduced operational costs.

Andre Silva, the company’s Chief Technology Officer, observed firsthand the transformative impact of outsourcing on their business scalability. Recognizing the potential synergy, Silva advocated for the integration of offshore teams with the in-house workforce, aimed at optimizing operational efficiencies.

Lessons Learned From Failed Outsourcing

BPO can be a valuable tool for companies looking to reduce costs, streamline operations, and grow their businesses. But outsourcing also presents unique challenges and risks that you should carefully manage.

Here is the truth: half of the outsourced projects fail outright or do not meet expectations. Three-fourths of businesses report management issues and hidden costs as culprits for this failure. About half were unhappy with their hired vendors’ performance, while 30% encountered communication problems.

The outsourcing case studies below reveal how some companies had to learn the hard way. You can also learn from them in your pursuit of outsourcing. Check out the BPO case studies below to learn how to maximize outsourcing and minimize risks.

1. Klout: Staying on Top of Privacy and Security

Launched in 2008, Klout was a social media analytics company that measured an individual’s influence. Its founder, Joel Fernandez, launched it through bootstrapping—starting a business with meager capital from personal finances. He already had an offshore team in Singapore, and joined them there for a while to cut operating costs. Three months later, he returned to the U.S. with a working prototype.

Later on, Klout faced a lot of controversy due to its role as a social scoring service. A software vendor, Lithium Technologies, eventually acquired it in 2014. But according to the software company’s CEO, Pete Hess, Klout was not aligned with their long-term strategy as a standalone service. So they had to shut it down.

In hindsight, there were a few reasons Klout failed as a business. For one, it outsourced user data management to third-party vendors and raised concerns about privacy and security. The company could have tapped into expertise and technology to improve its flawed scoring system. 

Lastly, it could have hired a reputable provider to create a more sophisticated tool capable of competing with other analytics tools such as Hootsuite and Buffer. Instead, it submitted to Lithium Technologies and saw its demise due to long-term goal misalignment.

2. PatientDox: Core Operations as the Primary Focus

PatientDox was a cloud-based startup that supplied healthcare providers with software-as-a-service (SaaS) technology. This platform offered secure messaging, appointment scheduling, and patient education tools to improve patient communication and satisfaction.

Despite its promising start, PatientDox’s downfall was due to its outsourcing case . Unfortunately, none of its co-founders had a software engineering or technical background, which led them to outsource. 

However, most of its outsourcing expenses went to product development, depleting its cash reserve and hindering its progress. The company’s third-party teams were also working on several projects simultaneously. They could not prioritize and meet consumer needs.

Further, PatientDox faced competition from other healthcare technology companies. Its poor outsourcing strategies, market changes, and stiff competition contributed to its unexpected demise.

3. JPay: Maintain Business Control

JPay was a technology company that provided services to incarcerated individuals and their families. Its services included electronic messaging, video visitation, and money transfers. This technology became a game-changer for affected individuals.

However, JPay’s success was short-lived. Initially, external developers helped build its infrastructure, technology, and resources. The company hired people in India for quality assurance, Israel for engineering, and China for hardware supplies. Ultimately, offshore outsourcing aided in its business growth and expansion. 

Unfortunately, such rapid growth and expansion overwhelmed Ryan Shapiro, the CEO. He could no longer take control of his company to navigate it in the right direction. In 2018, Securus Technologies, a company providing telecom services to correctional facilities, acquired JPay. However, the acquisition led to job losses and service disruptions for customers.

Unity Communications: Proof of Successful Outsourcing Cases

Unity Communications is an outsourcing company that operates globally, offering different solutions to businesses of all sizes. Since 2009, we have grown to provide front-office and back-end outsourcing services to companies across various industries. 

But as with any business, we also have our fair share of outsourcing failures and successes. What’s important is that we have grown and learned through all these years. We are proud to say our BPO case studies now showcase how proper outsourcing works. 

Explore the following case studies demonstrating how outsourcing can help your business meet its goals.

1. Wireless Watchdog: Developing a Custom SLA for Outsourcing Success

Wireless Watchdogs is an award-winning wireless management company. It faced operational challenges such as staffing and human resources (HR) issues. As its business grew and referral business increased, the need for responsive support staff became evident. 

Unity Communications developed a custom service-level agreement (SLA) to address the abovementioned issues. This contract included key performance indicators (KPIs) to measure outsourcing performance and track task efficiency. Our call center staff also underwent proper training and received management support to meet the target metrics.

In just a week, we managed to move many repetitive tasks to the offline team. This step allowed Wireless Watchdogs’s in-house team to free up their time and focus on core business operations. Ultimately, we exceeded the SLA terms by increasing service efficiency and work quality, not to mention having payroll savings on the side.

2. IT and Telecom Company: Establishing a Back-office Team

A well-known information technology (IT) and telecommunications company contacted Unity Communications. Due to a growing customer base, the company sought help for its back-office operations . It was facing operational challenges, limiting the company’s efforts to acquire new customers.

To address these challenges, Unity Communications helped them establish a back-office team consisting of three members and a project manager. The BPO team handled administrative tasks such as data entry, order processing, proposal creation, and overage reconciliation. 

Further, we tracked the team’s productivity through well-defined KPIs. Ultimately, the company’s productivity and customer satisfaction increased by 70% and 92% respectively in just two months. The company now has a streamlined back-office process that efficiently delivers quality work.

The Bottom Line

Outsourcing is a viable option for improving your business operations. But using this strategy with extra caution and a solid plan is crucial. Consider the case studies of different companies presented here to learn a thing or two.

Remember to weigh the potential benefits and risks of outsourcing. Examine your current business operations and search for outsourcing partners. More importantly, hire the BPO service provider best suited for your business. With these, you can avoid the pitfalls of failed outsourcing and reap the benefits of successful outsourcing.

Ready to take advantage of outsourcing without risking your business? Reach out to us, and let’s connect ! Unity Communications is ready to handle the nitty-gritty tasks while you focus on achieving your goals and growing your business. 

We Build Your Next-Gen Team for a Fraction of the Cost. Get in Touch to Learn How.

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Topics: Offshore Recruiting, Offshore Recruitment Services, Offshore RPO, Offshore RPO Services

5 Successful Outsourcing Case Studies You Must read

Posted on September 25, 2023 Written By Sakshi Sharma

Did you know that according to a report , 63% of marketers consider case studies to be an effective content marketing tool? The present-day constantly changing business environment demands successful outsourcing to achieve growth. QX Global Group, a leading outsourcing firm, has a proven record of transforming businesses across various domains. 

In this collection of case studies, we explore successful outsourcing examples a nd how their expertise and technology drive remarkable results in diverse industries. 

Case Study 1: Engineering Staffing Agency Secures 654 Placements in 10 Months with Outsourced Recruitment Support

Client’s challenges.

• Delay in covering all the open roles  
• Limited bandwidth for the onshore team to cover all the open roles  
• Limited pool of candidates for locations with high open roles  
• The onshore recruitment team was unable to meet critical hiring deadlines

Solutions Provided

• Identified and set up a team of 15 offering Offshore Recruitment Services to deliver this project
• Trained the team to bring them up to speed with the client’s process, systems, and roles in under 30 days
• Weekly progress review call with the hiring manager to discuss
• locations with urgent hiring needs,
• focus for the coming week,
• upcoming roles for the team to pipeline candidates, etc.
• New jobs covered within 24-36 hours
• Built pipelines for repetitive roles to ensure the swift flow of candidates
• Open roles advertised on job portals and social sites to attract more candidates
• Streamlined the candidate application process into the client ATS
• Identified best practices from success cases, applying them to other openings as part of the continuous optimization process
• Kept track of the interview offers and started to keep a check on the success cases and gauge our submittal and turnaround time process

Case Study 2: GBS Model Implementation for Global Recruitment Agency

Business challenges.

• Transitioning from a long-withstanding region/entity-based structure
• Build a plug-and-play model to integrate services for newly acquired brands easily.
• Ensure continuous improvement of current processes to increase team efficiency, implement smart automation and
• build a scalable business model.

QX Solution

In order to bring about organisational transformation for the client, QX followed

a unique Transition-Improve-Transformation model:

• Transition: For the first six months of our partnership with the client, the QX team worked on process mapping, identified client requirements, did an in-depth risk analysis and did a comprehensive process baselining.
• Stabilise & Improve: In the 6 to 18-month period, the QX team focused on introducing ISO, monitoring processes, collecting feedback and ensuring continuous improvement.
• Transformation: 18 months into the partnership, QX moved into the transformation phase – bringing about smart automation, benchmarking and continuous process improvement.

Tools and technology implemented:

• Bank Download Tool – This tool has helped the process of downloading daily cash receipts from over 20 bank accounts
• PO Update Tool – This tool has helped clients eliminate manual efforts of updating the PO number on invoices.
• VMS Timesheet Tool – This tool has helped our client to automate the “Timesheet Download and Upload” process

Case Study 3: Optimising O2C Process for a Leading Recruitment Firm through Bank Download Automation

The client, which has a network of more than 40 brands that it has expanded via mergers and acquisitions, is one of the largest recruiting experts in the world. The client, one of the fastest-growing organizations in this market, concentrates on combining recruiting businesses servicing various sectors.

• The crew put in a good deal of time and effort each month to download more than 4,000 payments.
• Manually carrying out this procedure for several manufacturers increased the possibility of mistakes, such as missing downloads and duplicate downloads.
• The staff had to pay close attention to make sure that each payment was downloaded, handled carefully, and posted in accordance with the client portal’s specifications.
• The staff would struggle to separate IDF and current payments because to the huge payment volume, significantly increasing the chance of human mistakes.

How QX Helped

As a part of our solution, we performed the following activities:

• Created and built a bank download program that downloads and keeps all incoming payments from bank portals in a certain folder automatically.
• Initially, 20 organizations used the technology to automate bank downloads; as time went on, more companies did the same.
• Automation increased team productivity and download accuracy, which eliminated the potential for manual mistakes.
• To greatly reduce suspense balance, establish a smooth communication route between cross-functional teams.
• A highly adaptable system that can be simply adjusted to any changes in the bank site has been implemented.

Case Study 4: Streamlined Loan Approvals for Global Recruitment Giant Through IDF Automation Services

For the client, QX has worked on a number of projects, including end-to-end F&A transformation for crucial processes, including pay & bill, accounts payable, and accounts receivable, delivered using a Global Business Services model.

• When inputting bills manually, the QX team would invest a lot of time and energy.
• Manually separating invoices for the many customer brands raised the possibility of mistakes. This was a cause for worry because any uploading fault may result in the customer suffering a financial loss.
• The compliance staff had to exercise extra caution and frequently struggled to adhere to regulations. Fund flow leakages might be caused by any disagreement.
• The team had to pay additional attention to make sure that the requirements of the financial institutions were satisfied and that the data was posted properly in the required formats on their portal.
• IDF Automation technology was created and used to automatically separate intercompany and non-intercompany invoices on an account level.
• After that, non-intercompany accounts undergo the second stage of invoice level segregation based on criteria such as GBP & foreign currency invoices, credit notes, self-bills, and perm invoices. The system then creates the whole file, which the team may check and publish to the bank site.
• Successfully deployed the solution across 11 businesses to allow IDF process management.
• Configure the system to produce a consolidated report that aids the team in completing month-end reporting and reconciliation tasks promptly.
• The client’s quarterly audits may now be carried out more successfully thanks to the implementation of several persona dashboards with audit trails.

Case Study 5: Automating Data Parsing for Recruitment Agencies with Email Parser

Six of the top ten healthcare staffing agencies are among the top recruiting firms QX works with in the UK. These organizations frequently deal with a lot of emails with the same or similar material. Manually processing this data may result in a loss of time, money, and labor.

• The customer had to keep a team of 15 employees on hand to transfer job openings from their inbox to their front-end system due to the client receiving thousands of job posting emails from various Trusts.
• The organization’s competitiveness and turnaround time were influenced by the time it took to create the vacancy in the front-end system and deliver it to the recruiting consultants.
• Sometimes, two data entry personnel would select up the same opening, leading to duplicate opening entries in the front-end system.
• Closing openings that were filled requires tedious and time-consuming manual updating.
• Human mistake risk rose considerably when data was entered manually.
• Arranged for more than 30 Trusts to deliver vacancy alerts in organised formats (during the first two to three months) by configuring their email addresses and vacancy information structures.
• Create a system such that configuring any new Trust email address or accommodating any modification to incoming email or vacancy structure only takes 15 to 30 minutes.
• Set up a quick notification mechanism for the appropriate team members for any system exceptions.

In conclusion, these successful examples of outsourcing by QX Global Group serve as compelling examples of how strategic outsourcing can drive operational efficiency, cost savings, and business growth. These case studies showcase the tangible benefits that businesses can achieve by partnering with QX Global Group, from streamlining financial processes to expanding their global reach. 

Q. How successful is outsourcing?

Ans: The success of outsourcing varies depending on various factors but can be highly successful when executed strategically.

Q. What is successful outsourcing?

Ans: Successful outsourcing involves achieving cost savings, improved efficiency, and maintaining quality while delegating tasks to external providers.

Q. Why is outsourcing successful?

Ans: Outsourcing can be successful due to reduced operational costs, access to specialised expertise, scalability, and the ability to focus on core business functions.

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Originally published Sep 25, 2023 04:09:30, updated Sep 26 2023

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