Comments on: Backshoring-Reverse Globalization http://outsourceportfolio.com/backshoring-reverse-globalization/ A portal to share and learn about Outsourcing Fri, 30 Jul 2010 21:11:30 -0500 http://wordpress.org/?v=2.8.3 hourly 1 By: Steve Cunningham http://outsourceportfolio.com/backshoring-reverse-globalization/comment-page-1/#comment-1711 Steve Cunningham Mon, 15 Feb 2010 17:46:01 +0000 http://outsourceportfolio.com/?p=2843#comment-1711 As a supplier of outsourced sales & marketing solutions for complex sales in North America. We are seeing the trend mentioned in this article. Corporations that sell complex products/services such as technology solutions and bio-tech solutions are experiencing two main factors as the result of going offshore for sales services. 1) The quality is not sufficient due to the cultural barriers which go beyond the ability to speak the buyers' language. There is a gap in understanding the buyers needs, expectations, and desired next steps. 2) Burning up the prospect list. Corporations selling complex/products and services are realizing that they may be burning up their prospects by portraying a compromising initial image that deminishes trust and relationship. There is no way around the fact that a relationship is truly one of the most important factors of a complex sale. As a supplier of outsourced sales & marketing solutions for complex sales in North America. We are seeing the trend mentioned in this article. Corporations that sell complex products/services such as technology solutions and bio-tech solutions are experiencing two main factors as the result of going offshore for sales services.
1) The quality is not sufficient due to the cultural barriers which go beyond the ability to speak the buyers’ language. There is a gap in understanding the buyers needs, expectations, and desired next steps.
2) Burning up the prospect list. Corporations selling complex/products and services are realizing that they may be burning up their prospects by portraying a compromising initial image that deminishes trust and relationship.

There is no way around the fact that a relationship is truly one of the most important factors of a complex sale.

]]> By: Johnny Daugaard http://outsourceportfolio.com/backshoring-reverse-globalization/comment-page-1/#comment-1698 Johnny Daugaard Thu, 11 Feb 2010 08:27:38 +0000 http://outsourceportfolio.com/?p=2843#comment-1698 Companies increasingly consider communications and trust being important parameters when evaluating their outsourcing strategy. The cultural differences are now recognized as being a major factor to why outsourcing agreements succeed or fail. In this context is is important to look at how individual companies act and market themselves when offering their outsourcing services to corporations abroad. And it is important to accept that countries build up a reputation, which in fact is very fragile. A very comprehensive study was made a couple of years ago by Stefan Maard in how trust and confidence effects decision taking in IT outsourcing. It was very clear from this study that trust had a major effect in who corporations initially selected as potential suppliers, but when it came down to the wire when contracts were signed trust was no longer an issue. Expectations, control mechanisms and penalty clauses had replaced the softer considerations behind the choice of supplier. When subsequently +65% of all outsourcing agreements are considered not meeting expectations by neither the customer nor the supplier the main argument is that they no longer trust each other doing the utmost to deliver according to the promises which originally were the reason for choosing each other for a partnership. Trust comes back as a hot issue. So its all about communications and managing expectations. No outsourcing agreement will ever turn out successful if the parties only act according to the words of the contract. No supplier will ever be successful if he only delivers according to specifications. In this context cultures are so extremely important. Look at the asian countries. The "smaller" countries have the advantage that culturally they never were able to live in "their own world". The were forced to listen and to adapt. Contrary to especially China, who never really listened to anybody. Therefore low prices on labour is no longer enough. Therefore, after the first euphoria, corporations looking for outsourcing partners are looking towards a broader spectrum of countries. Therefore backsourcing will be a hotter and hotter theme until a new equilibrium is being reached. And therefore the articles in the economist or in any other magazine or newspaper are NOT symptoms of reverse globalization. They are symptoms of much more mature corporations, who have recognized low price does not equal high quality. When all this is said it cannot be ignored that in the so called financial crisis situation a lot a companies have excess production capacity, which can be filled by backsourcing. The conclusion made from this is that buying outsourcing services is still to a high degree considered a operational method of increasing flexibility rather than a strategic sourcing decision. Companies increasingly consider communications and trust being important parameters when evaluating their outsourcing strategy. The cultural differences are now recognized as being a major factor to why outsourcing agreements succeed or fail.

In this context is is important to look at how individual companies act and market themselves when offering their outsourcing services to corporations abroad. And it is important to accept that countries build up a reputation, which in fact is very fragile.

A very comprehensive study was made a couple of years ago by Stefan Maard in how trust and confidence effects decision taking in IT outsourcing. It was very clear from this study that trust had a major effect in who corporations initially selected as potential suppliers, but when it came down to the wire when contracts were signed trust was no longer an issue. Expectations, control mechanisms and penalty clauses had replaced the softer considerations behind the choice of supplier.

When subsequently +65% of all outsourcing agreements are considered not meeting expectations by neither the customer nor the supplier the main argument is that they no longer trust each other doing the utmost to deliver according to the promises which originally were the reason for choosing each other for a partnership. Trust comes back as a hot issue.

So its all about communications and managing expectations. No outsourcing agreement will ever turn out successful if the parties only act according to the words of the contract. No supplier will ever be successful if he only delivers according to specifications.

In this context cultures are so extremely important. Look at the asian countries. The “smaller” countries have the advantage that culturally they never were able to live in “their own world”. The were forced to listen and to adapt. Contrary to especially China, who never really listened to anybody.

Therefore low prices on labour is no longer enough. Therefore, after the first euphoria, corporations looking for outsourcing partners are looking towards a broader spectrum of countries. Therefore backsourcing will be a hotter and hotter theme until a new equilibrium is being reached.

And therefore the articles in the economist or in any other magazine or newspaper are NOT symptoms of reverse globalization. They are symptoms of much more mature corporations, who have recognized low price does not equal high quality.

When all this is said it cannot be ignored that in the so called financial crisis situation a lot a companies have excess production capacity, which can be filled by backsourcing. The conclusion made from this is that buying outsourcing services is still to a high degree considered a operational method of increasing flexibility rather than a strategic sourcing decision.

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