Sourcing, Outsourcing, Offshoring – what differentiates them?

Many a times when “Sourcing” is mentioned, people tend to think of it “Out-sourcing” or “offshoring”. The truth is that “Sourcing” is a much more holistic strategy that defines how an organization sources a unit of work.

Companies practice many different Sourcing models like In-Sourcing, Out-Sourcing, Staff Augmentation, GDC, ODC etc. Out of all these models, “Outsourcing ” and “Offshoring” have become famous due to its cost effectiveness, diverse educated labor pool, and timing zone advantages. Offshore Outsourcing is an increasingly popular business strategy. Let’s look at definitions first –

Off-shoring is mainly about sourcing specific IT functions to lower cost regions that are different from your corporate headquarters

Outsourcing means corresponding with the service provider/expert within his area of expertise and getting the work done for the same

Types of Offshore Models:
There are several offshoring models, some listed below:

  1. Onsite resource with Offshoring: Few service provider resources “onsite” and large team offshore, in countries like India, Brazil. Onsite resources used mostly for coordinating the development activities betwene client and offshore
  2. Total Offshore: Service provider takes and implements the work in totality. This model works if the scope is well-defined and the work is discrete enough to be done remotely with little supervision
  3. Global Delivery (Onsite/Offshore) Model: Similar to “Onsite resource with Offshoring” above, but at a much larger scale. Service provider effectively runs the project/program with minimal resources onsite woring with clients and pushing much of heavy lifting offshore. Most of Indian firms like Wipro, TCS, Cognizant, Infosys follow this model
  4. Multisourcing: Clients Outsourcing work to multiple vendors to reduce risk
  5. Build-Operate-Transfer (BOT) Model: Here’s how it works
      (a) Build. The service provider provides a complete solution for building a dedicated centre for a client in a particular country
      (b) Operate. The service provider provides a comprehensive set of operational management services
      (c) Transfer. The client has the option to buy the entire operation after a fixed period

    Conglomerates like GE have BOT models with companies like TCS, Wipro and others

  6. Dedicated Development Team: Service provider operates as an extension of Clients’ Development team

Three common Engagement & Billing Models are prevalent in Offshore Outsourcing – (a) Time-and-Materials (T&M) with Not-to-Exceed clause (b) Fixed-price contract (c) Milestone based engagement

Companies are spending upwards of 7% on Outsourcing and is projected to trend upwards.

Selecting a right offshoring model is a crucial aspect of developing company’s outsourcing plan. Selection depends on several factors like clients’ appetite for risk, core comptencies required for business vs. what can be commoditized, cost, professional skills, culture compatibility, timezone differences and such. Evaluate the benefits you stand to gain in terms of cost savings, process efficiency gains, quality improvements, and competitive advantages and choose a place that offers the maximum strategic benefit at the minimum risk.

What is your company doing w.r.t Offshoring?

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One thought on “Sourcing, Outsourcing, Offshoring – what differentiates them?

  1. Richard Parker June 11, 2013 / 9:59 pm

    The continued economic insecurity is fuelling the upward trend in outsourced model and this seems to be particularly true for recruitment function and human resource outsourcing.
    Many companies, forced to slash overhead and generate more revenue from their primary products or services, now have a better understanding of what functions are core to their success and which are context.
    Payroll processing is context, for example, because it is a common and necessary function across all companies. No matter how well payroll is processed, it gives the company no competitive advantage. Similarly, hiring top-performers is core, but the process to find, recruit and manage the function is context. Companies use the same antiquated methods, job boards, applicant tracking systems and people. Outsourcing the Sourcing represents a departure from these traditional options, but finding, selecting and managing the right one for your company may be challenging.
    Outsourcing of the generalist functions, including payroll, benefits administration and employee relations, has considerable momentum today. The recruitment function, however, is now taking the lead
    Outsourcing the sourcing is a growing practice and defined as a specialized service that allows clients to outsource some or all of the recruitment function. In the Outsourcing the Sourcing function the provider leverages the combination of strategy, technology, resources and vendor management to improve the recruitment process. Operating as the client’s internal recruitment function and strategic partner
    At Fiddich Consulting we work closely with the client to improve the recruitment efficiencies of quality of hire, speed of delivery and cost containment. The end-to-end recruitment process for many companies encompasses more than just the sourcing and on boarding of resources. It consists of three key elements designed to build and sustain a robust talent pool. These are workforce planning, talent acquisition and engagement and ongoing talent management.
    Why Outsourcing the Sourcing?
    Organisations outsource recruitment and hiring practices for many different reasons. According to a recent Survey, three business priorities, they are:
    “Executing business strategy”, “reducing operating costs” and “recruiting, retaining and developing a great workforce”. All of these have shaped the needs and triggers for the adoption of Outsourced Sourcing Model
    Key Benefits of Fiddich Consulting Outsourced Sourcing Model
    Any evaluation of whether to outsource must begin with a clear understanding of the intended benefits and how the features of an outsourcing company will generate the benefit. This is important to ensure the benefits can be monitored and managed.
    To maximise the overall value of outsourcing, the cause and effect logic must constantly be applied. At Fiddich Consulting we provide features.
    Access to a wider talent
    One of the key drivers for outsourcing the recruitment process is to improve access to talent. An outsourcing provider should be able to demonstrate the ability to attract a larger pool of quality candidates for an organisation over their internal recruitment team. At Fiddich Consulting we have a comprehensive range of attraction channels which reach a wide pool of talent. This is due to the frequency we undertake talent acquisition for multiple clients and build comprehensive databases of active and passive candidates.
    Continues innovation and increased expertise
    Organisations looking to outsource their sourcing function often look for a provider to help them enhance their employment brand and value proposition as well as offer innovative talent acquisition and mobility strategies.
    The demographics of the general workforce are complex and a major impact to hiring top talent. There are currently different distinct generations working together making up a workforce that have a wide range of ideas and motivations. In addition, workforce demographics are constantly changing which can significantly impact talent acquisition and management success. Many organisations look to their sourcing providers to assist them in navigating this confusing and ever changing landscape by utilising their market insight and strategic recommendations to help them stay ahead of the curve.
    Improved supplier management and process
    Another significant benefit organisations look to achieve by outsourcing recruitment process is the efficiencies and cost savings gained from the transfer of supplier management.
    At Fiddich Consulting we enhance the outcomes by assisting organisations in achieving the optimal recruitment supplier structure for their business.
    Sourcing providers should also be able to assist organisations to identify recruitment process pain points and recommend improvement initiatives. Outcomes from improved process management can be measured against service level agreements such as time to fill, quality of hire and candidate satisfaction.
    Half the cost half the time
    Whilst cost is not the primary factor driving many organisations to outsource it is certainly an important consideration especially in this economic climate. Industry data suggests that savings of 15-25% per hire are achieved from successful outsourced sourcing adoption. The results vary due to initial scope for improvement, success of the implementation and the methodology and timeframe calculating savings. At Fiddich Consulting we provide best in class outsourced sourcing model and have following cost savings
    Indirect Cost Savings
    Reduced Human resource and hiring manager interaction with agencies
    Reduced Human resource and hiring manager involvement in end-to-end administration tasks
    Efficiency gains from process improvement enhanced reporting and control
    Productivity gains from a higher quality of candidate attracted and reduced time to fill Productivity gains from better candidate fit and reduced retention
    Direct Cost Savings
    Reduced salary rates from improved market comparison and a more rigorous exception approval process
    Reduced salary rates from enhanced non-salary employee value propositions
    Reduced recruitment volume from increase retention and candidate fit
    Reduced volume via agencies due to increased internal mobility and pre identified candidates
    Reduced agency fee per hire by reducing agency effort in the process. At Fiddich Consulting we believe in half the cost half the time business model

    About Fiddich Consulting
    Fiddich Consulting is a consulting, technology and outsourcing company. Combining unmatched experience, broad capabilities across all industries and business functions. Fiddich Consulting team up with clients to help them become great performance businesses and governments.
    True success comes from working with a partner you trust to provide the insight, support and expertise that will propel your business forward. Experiencing certainty with Fiddich Consulting means you can count on results, partnership and leadership.
    When you work with us, your long-term success is our motivation. This is why we can offer you the ability to meet every challenge and the agility to capitalize on every opportunity. That’s the power of certainty and it is our promise to every client.
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    We promote a customer-centric culture that emphasizes outstanding service and meets our commitments at every level of our organization.
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    In today’s fast paced world, categorized by dynamic technological evolution, High Information Technology enterprises are managing with challenges such as reduced time-to-market, technological obsolescence and constant pressure to control IT infrastructure / support costs.
    Fiddich Consulting is working with technology companies to create outcomes that matter by addressing challenges in different areas: IT transformation, HR and Recruitment transformation, IT Innovation, and efficient operations. Our solutions helps you realize operational excellence and achieve higher profitability.
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    Fiddich Consulting helps travel, transportation and hospitality companies better align their IT strategy and initiatives to their business goals, and takes responsibility of implementing strategies, delivering great level of certainty of results no other firm can match. Partnering with us will result in the following benefits like improved ROI on IT capital expenses, ability to integrate IT and Infrastructure services to create truly innovative solutions, reduction in IT operation expenses by up to 50%
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    Globally, Manufacturing companies are trying to reduce operational expenditure, invest in process improvement, utilize existing capacity optimally and increase efficiencies, while maintaining product quality and meeting safety and regulatory norms. Our innovative solutions provide you the bandwidth to innovate on business models, leveraging contemporary technology solutions.
    We at Fiddich Consulting provides multi-dimensional services spanning IT led business transformation, design, development and support for IT solutions, and value-added services such as outsourcing, infrastructure management and consulting. Each solution is carefully crafted to drive competitive differentiation.
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    Today’s entertainment enterprises are navigating from some of the biggest shifts ever witnessed in technology, culture and business models–from adoption to preference, from fragmented audiences to convergent industries, from emerging economies to game-changing new players.
    Today, some of the most creative minds in media and entertainment around the world leverage our expertise in consulting, technology and sourcing to create long-term value for their customers. With relevant strategies, solutions and services, we address their unique challenges
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    With the years of experts in consulting, technology, and outsourcing, we can help unlock the value levers of your enterprise in different ways like business transformation, accelerating innovation, and efficient operations.
    Contact Us
    We appreciate your interest in Fiddich Consulting!

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    Fiddich Consulting always seeks a diverse range of professionals to deliver specialized capabilities and solutions to clients across all industries.

    By working on diverse projects with cutting-edge technology, at Fiddich Consulting you will gain an incredible amount of demonstrated expertise quickly.

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    For careers, please send your resume to careers@fiddichconsulting.com

    Business Enquiries
    At Fiddich Consulting, we team up with you to help you become great performance businesses and governments.

    True success comes from working with a partner you trust to provide the insight, support and expertise that will propel your business forward. Experiencing certainty with Fiddich Consulting means you can count on results, partnership and leadership.

    For all consulting/ business queries, please contact our business development team at business@fiddichconsulting.com or Visit us http://www.FiddichConsulting.com

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