Convenience

business
process change
(reengineering)
The radical redesign
of all aspects of a
business to achieve
major gains in cost,
service, or time
204
Part 3:
Organizing
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TOUGH TIMES, TOUGH CHOICES
To Offshore or Not to Offshore
From computer programmers in the Philippines and
molecular biologists in Russia to customer-service
agents in India, the practice of
offshoring
is bringing
workers from around the world into the workforces
of U.S. corporations in a broad range of industries.
When U.S. firms “offshore,” they’re hiring foreign
firms and foreign personnel to perform their business
functions. In so doing, they’re not only increasing the
diversity of their workforces but also altering the pro-
cesses by which they conduct organizational busi-
ness. At Penske Truck Leasing, for instance, drivers
submit their paper logs for data entry to a facility in
Mexico, which forwards them to Hyderabad, India,
where they’re analyzed, and the results are reported
to Penske management back in the United States.
How does a company function with far-flung opera-
tions? As in most other decisions, companies choose
operational partners according to the value-creation
capabilities that they bring to the overall process.
Ideally, of course, offshoring should benefit the
contractor as well as the contracting firm. Take, for
example, the case of Wisconsin-based PCMC, which
designs and makes paper packaging. PCMC had a
problem with its engineering function: Although it
had a large base of potential customers, it often lost
them because its engineering group was too small to
create new designs fast enough to keep pace with
customer needs. Nor could the company afford to
expand its engineering department. To solve the prob-
lem, PCMC entered into an offshoring contract with
an Indian company that agreed to provide a 160-
member staff to support PCMC’s engineering func-
tion. The result? Not only 160 new jobs in India but
more orders and more jobs in Wisconsin as well.
Obviously, offshoring arrangements don’t always
work out as well as the one established by PCMC
and its Indian partner. For one thing, language and
culture differences can make communication diffi-
cult, especially when it’s conducted by e-mail or
phone. When 1-800-FLOWERS tried to expand its
customer-service operation by outsourcing customer
calls to India, the results were disastrous. Why?
When customers call, florists have to do more than
merely process orders: They’re often called upon to
ZUMA
Press/Alam
y
Many businesses today have offshored various operations to foreign countries.
These offshoring initiatives often involve call centers, and many businesses have
found this approach to be very effective. But others, like 1-800-FLOWERS, have
experienced problems with offshoring and some have even moved operations
back to their home country.
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continued
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