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Outsourcing Fundamentals

Independent guide to Outsourcing: BPO strategy, Service Provider selection, contracting and implementation projects. Assessing and improving your current service.

Strategy > Alternatives

What sort of alternatives should you consider?

We are assuming that you can achieve, or at least further your business objectives by making changes to the skills, technology, process and organisation of the activities under question. This section is about deciding the broad brush nature of the organisational solution.

At this stage you should identify an organisation structure to use as a start point for developing the sourcing strategy, but in order to do so, you do need to have a business area in mind. This should be at a relatively high level, for example Purchase to Pay activities or HR administration. A more detailed scope will be defined later.

The reason for keeping at a high level is the cross dependency between the selection of activities in scope and the targeted solution. The target organisation structure will support the scope refinement, and the process of refining the scope may challenge the decision on the organisation structure.

Consider at least the following alternatives as part of formulating your strategy:

  • How should in-scope activities best be distributed:
    • Across countries and companies
    • Centralised within a global head office or country head offices
    • Grouped into one or more shared service

And where shared services are an option, think through:

  • How many delivery locations would be necessary to provide the services?
    • A single (global) delivery location
    • Multiple (regional)locations
    • One for every country
Review Alternatives
  • Where there would be multiple service delivery locations, how would they best be organised?
    • Onshore vs. offshore delivery
    • Service split by time zone
    • Service split by service language
  • What will the nature of the service be?
    • A narrow set of activities
    • A broad service of all the activities required to achieve an outcome
    • The process and supporting technologies
  • who carries out the activities
    • A captive internal shared service
    • A service bought from an outsourcing provider

These options are considered in more detail in the following sections, but start by outlining a picture of the target structure.