April 26, 2004

Real cost of offshoring!

{I posted this as response to another blog. Thought relevant to post in my blog too}
The main issue while offshoring tech support is calling for stricter SLAs and faster turnaround times. Above all, key checkpoints at important levls in the process and a tighter integration with all entities is very much needed. Maturity of the process also needed.
Let me give you an example. I am a Business analyst for an MNC automotive company. They have resorted to typical offshoring model by having their different entities at different places for cost-cutting benefits.
A typical scenario - MNC's customer facing website in Australia suddenly gets a 'Page not found' error. The Aus business people report it to India Help desk who are doing Help desk support. Their SLA time is 1 working day for this. Find out its not problem with application, but with infrastructure/hosting environment. The hosting environemtn is once again outsourced to another entitty in Singapore for the MNC. But the follow-up can be done only by this Indian application helpdesk. But the help desk wold have already taken close to 3/4th of day trying to figure out the issue. Now they escalate to this Singapore facility. This S'pore facility has again one day turnaround time according to SLA. They work on it, and found out this happened due to a particular patch from a vendor whose turnaround time is min 3 working days. Business owner has to take a decision on this. This they informed the caller, ie, India help desk, and closed the call. India help desk promptly informed this to Aus business owner and closed their calls too. Technically, each one responded within their own SLA time. Since India help desk escalated at their EOD, technically fulfilled their SLA of one day response time, to S'pore, business has lost a day. Then S'pore worked on it for a day, sent response back. Business lost another day. Now the ball is in business owner's court, who has to call respective vendor - another day lost. Vendor will take 3 days. Essentially business lost close to 6 days of issue resolution and the impact of cost loss is huge.
The cost gained due to offshoring, is offset by such issue resolution cost impact.
Perhaps a case of penny wise, pound foolish.
And probably, with maturity and stability, they will learn to have tighter integration checkpoints or give up so soon like 'Jesus Christ' solution...

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