The benefits Riordan can expect from this strategic decision are lower labor costs, a reduction in new systems time-to-market costs, reduced project timeline, increased IT productivity, and competitive advantages (Ware, 2003). The company already has an exiting plant in China therefore no large initial outlays of capital will be required. Riordan already has an established understanding of the Chinese culture and enjoys a respected business relationship.
Establishing the performance measures will be the next step in this journey. The measures selected are: 100% buy-in of agreements and proposals, 100% of the outsourcers technologically needs met, 100% of intended resolution solve business issues, 100% projects completed within the established time frames, employee satisfaction at 90% or greater from both counties, cultural issues resolved in a timely manner, and the investment has a return within the first eighteen months.
China�s performance standards will have to meet those expected of them by Riordan. Chinese technology companies competing for offshore outsourcing will have to meet and / or exceed their counterparts in other countries. Specific technological standards must be agreed upon during the vendor selection process, so that both the host country and Riordan are having the same understanding in all aspects of their business relationship.
The personnel required to accomplish the technological functions to be outsourced, will be project managers, software engineers, business and systems analysts, developers, and database administrators. The qualifications of the key players will consist of computer science, information systems, and business management degrees. The best skilled employees should be the choice to participate in offshore outsourcing.
Riordan manufacturing has decided to outsource the function of the call center overseas. This supports a trend noticed in the industry. �Of 111 large north American businesses surveyed, nearly a fourth plan to outsource their cal center operations this year� (Ramaswami, 2003). Riordan�a call center will be a small business-to-business operation employing seventy people. The call center will be expected to handle inbound and outbound call regarding customer service concerns. Operators will be in charge of product tracking, processing function, web based product support, and telephone support. The benefits expected from this decision are a reduction of labor cost and resources. This reduction in cost will help the organization achieve their goal to maintain profitability for sustained growth.
The cost reduction will be achieved through the decrease in wages paid to offshore workers as compared to workers in the United States. In order for companies to maintain a competitive edge and continue to demonstrate profitability it will be essential for all companies to consider outsourcing.
The time difference will make it convenient for customers to receive orders quickly and increase overall productivity for Riordan. The call center will operate twenty-four hours per day to accommodate customers in all regions of the world. China is thirteen hours ahead of the time in the United States. When a customer needs a rushed order, the turn around time will be fast since China is technically a day ahead. This will aid in improved customer service reputation. China has a global influence on the technology that will create an economic advantage for the telecommunications industry in the country.
Another benefit of offshore outsourcing for Riordan is the use of service bureau�s to employ qualified team members to staff the call center. This will decreased the demand on the human resources department and allow them to focus more on core operations and building employee satisfaction. These services assure Riordan that the operators hired will have the education level and skills to perform the job effectively. The turnover rate in offshore counties is extremely. The benefit to Riordan is less cost to hire and train staff (Read, 2002). The increase in employment opportunities in China will aid in improving international relationships.
Riordan does anticipate challenges associated with outsourcing. The language barrier could potentially be a cause of miscommunication and loss of customers if the receive inadequate help. Cultural difference cal also creates problems when comparing how the United States does business to China�s business practices. A sense of loyalty may be lost when dealing with employees hired by the service bureaus. Expectations of prospective employees include: bachelor prepared in business or computer science, and fluent in English. Knowledge about the plastics industry would be preferred.
The performance measures selected for this are consistent with the industry standard for evaluating the effectiveness of the call center. The key indicators that will track of the project are: availability, abandon rate, contact volume, average speed of answer, handle time, cost per contact by media, call resolution rate, and turnover rate (www.call-center.net/measurement.htm).
With the transfer of information technology staff, a powerful sales team and creativity of a dynamic marketing department, the company could rapidly implement a comprehensive multi-channel retail powerhouse. This powerhouse had the potential to increase sales and reduce marking costs by utilization of the internet. The process of internet ordering is straight line process therefore decreasing variation. The process consists of four steps:
� Order is placed
� A confirmation of order notification is received by the customer
� An online tracking system is automatically generated for customers to follow their order
� The order is received by the customer, a satisfaction survey is included to measure the processes success / failure rates
The sales department being outsources and order taken online can improve time to market and profitability. Other benefits included reduction in inventory costs, reduction in labors costs, and reduce call center volume by improved efficiency.
Timeframes Planning Steps Activities
3 Months Planning the Offshore Strategy � Assess risks
� Announce initiatives
� Form a project team
� Engage advisors
� Train the project team with latest information
� Identify potential barriers
� Develop a plan to address barriers
� Set objectives and goals
2 Months Exploring Strategic Implications � Understand organization�s vision
and values
� Determine decision rights
� Determine contract rights
� Termination date of contract
� Understand cancellation policy
� Align offshore initiative with
other internal initiatives
1 Month Analyzing Costs and Performance � Measure activity costs
� Project future costs
� Measure current performance
� Measure cost of poor performance
� Benchmark costs / performance
� Determine specific risks, asset values, total costs, pricing models, and goals
3 Months Selecting a Vendor � Set qualifications
� Set evaluation criteria
� Identify and screen providers
� Evaluate proposals: qualifications and costs
� Perform due diligence
� Perform a cost analysis for each proposal
� Shortlist providers
� Review finalist with senior leadership
2 Months Concurrent with previous step Negotiating the Contract � Plan negotiations
� Address high level issues and deal breakers
� Negotiate contract: scope, performance standards, pricing schedules, terms, and conditions
� Prepare agreements
� Implement internal communication plan and announce contract
6 Months Managing the transition � Adjust team roles
� Define transition plans
� Identify and address transition issues
� Meet with employees
� Make offers and begin terminations
� Provide counseling
� Physically move
3 Months Governance � Adjust management styles
� Create governance councils
� Communicate, communicate, communicate
� Design and define reporting requirements and establish performance measure dashboard
� Confront poor performance
� Build relationships
Total project 18 months � Celebrate success
Reference
Anonyms. (2003). Weighing the Benefits of Offshore Outsourcing. Retrieved on
December 31, 2004 from http:www.inforworld.com/article/04/03/01/10FE
Ramaswami, Rama (2003). An Easy Call to Make outsourcing of, offshore corporate
Call centers � Brief Article Operations & Fulfillment Retrieved on January 4, 2005 from
http://www.findarticles.com/p/articles/mi_mOKYT/is_5_11/ai_100956649.
Read, Brenda (2002). Riding the Wave eperformax Retrieved on January 4, 2005 from
http�//www.eperformax.com/riding the outsourcing wave.MB.pdf and www.call-
center.net/measurement.htm
Ware, Lorraine, Cosgrove. (2003). Offshore Outsourcing. Retrieved on January 3, 2004
from http://www.cio.com/staff/lcosgrove.html.
