Low Cost Country Sourcing for Knowledge Based Services

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Paula Charles
6 years ago
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1 Low Cost Country Sourcing for Knowledge Based Services By Subroto Roy Ph.D. University of New Haven Web and Blog:

2 Overview Products vs Services sourcing Knowledge Based (KB) Services Embedded nature of services Identifying the services at outsourcer Low cost countries-finding KB suppliers and negotiating (not in this presentation) Effective transition tips Realizing the savings and improving project cycle time Letting your management know!

3 Why is modularity essential for effective sourcing? If your user can cut and define a product or service Your user (internal client) can help you estimate your buy volume You can make an RFP and find suppliers Procure the product or service Receive it, check quality and pay for it Merge it to your value chain And everything is great!

4 Services vs. knowledge based services Travel, lawn, facilities, cafeteria, are relatively lower end knowledge services They are modular and the supply side is local, well developed and if the food is bad Your colleagues will let you know- rather quickly!

5 Knowledge Based (KB) Services KB services are relatively high knowledge end services Examples: High end tech help call centers, Software development, Research for Finance, Marketing, Legal, Pharmaceutical Product development, Engineering drawings They are embedded

6 What is Embedded? Face sculpture embedded in wall in Cuba. Source : Wikipedia Commons Difficult to separate from context not modular Quality check on receipt is a challenge Seamless integration to value chain needs advance work Generally KB services are handled by functional folks i.e. CIO, Research Head etc. and supply management are involved only at the order stage

7 So why should supply management care? Functional managers need not/do not fully understand the sourcing and supplier management However forced to outsource for lower costs Unable to foresee the embeddedness, quality, integration issues Volume/savings/speed become difficult Opportunity: Supply Managers can dare to lead and earn the C spot in the company!

8 So where do supply managers need to focus? Supply managers are great once requirements reach them However for KB services supply managers need to get involved at the early stages of Requirement definition with functional dept. and HR Transition with provider and user

9 KB Transition and context KB Transition KB Context RFP Bids Negotiation-Contracts

10 Who s doing the KB now- no one? Estimate present - potential volume How close to the core competence of your organization? How tacit/embedded is this? Before the RFP How will you do the integration once the KB service is delivered?

11 Friendly and personal contacts between the persons doing the job and those receiving it Immediately after the contract Effective KB Transition with periodic review Web based reporting system for all key metrics depending on the core/tacit evaluation

12 Summary and further steps Modularity vs. embedded Before the contract identify Tacit and Core elements After the contract Friendly contacts between actual people on both sides + Rigid web based reporting of key metrics in real time

13 Further Steps 2 Create a well oiled low cost KB service machine Do 10 prototypes than one today Hypercharge your KB value chain Let your management know Report metrics that count like: Savings + project turnaround metrics in the provider reporting Submit the metrics at internal operations reviews and build a buzz around the metric

14 Thank You! Further info: Web and Blog:

What s The Difference Between Procurement & Sourcing?

What s The Difference Between Procurement & Sourcing? Much like procurement vs. supply chain management, procurement and sourcing are two related, but different terms that are often used interchangeably.