"The Classic Way to Assess Geographic Risk of an Outsourcing Location
The classic criteria for assessing geographic risk in an outsourcing location have been geopolitical stability, the general business environment, the quality of human capital, the legislative and regulatory environment, and the broader IT landscape. That's a good starting point, says Green. But it's too simple. The location analysis needs to feed into an analysis of specific vendor risk to be truly useful, according to Green.
The Right Way to Assess Geographic Risk of an Outsourcing Location
By combining location-based risk analysis with vendor viability information -- and weighing that against internal needs, tolerances, and capabilities, companies can make better overall offshoring decisions, says Green. "For example, if a location is evaluated as having high risk, there may be mitigating factors such as whether you already have a local presence in the country, the importance of the engagement (and whether it will touch your customers), as well as your vendor management capabilities," he says. "The concept acknowledges that there is a healthy degree of risk which companies should be willing to take depending on the engagement, rather than taking an approach where the lowest risk is the best option."
In addition, many IT service providers are now multinational with the ability to shift work between delivery centers, so looking at location in conjunction with supplier specifics provides a clearer picture of overall risk.
IT leaders can't afford to continue to look at location-based risk in a vacuum, according to Green. While every service provider is, in part, dependent on its local environment, "the quality and maturity of the provider will work to mitigate or exacerbate location dynamics," says Green. "Providers can take a number of actions to help mitigate the influence of geography, whether it is cultural training, process expertise, to having a network of delivery centers and partners so work can be shifted from one destination to another."
In addition, many IT service providers are now multinational with the ability to shift work between delivery centers, so looking at location in conjunction with supplier specifics provides a clearer picture of overall risk.
IT leaders can't afford to continue to look at location-based risk in a vacuum, according to Green. While every service provider is, in part, dependent on its local environment, "the quality and maturity of the provider will work to mitigate or exacerbate location dynamics," says Green. "Providers can take a number of actions to help mitigate the influence of geography, whether it is cultural training, process expertise, to having a network of delivery centers and partners so work can be shifted from one destination to another."
It was a whole new point of view for me. The classic way was obvious and has been taught in school. This era outdated and we have to look at the outsourcing location finding as a more complex thing and associate different risks with different aspects of the business. IT can point out those differences.
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