What is Outsourcing?
International outsourcing (off-shore, near-shore, far-shore), a type of business process
outsourcing (BPO), is the exporting of industrial activities from developed countries to
areas of the world where there is sufficient political stability, sufficient infrastructure,
availability of skilled people (fit for the job), and lower labor costs or tax savings.
Outsourcing is an arrangement in which one company provides services for another company
that could also be or usually have been provided in-house. Offshore simply means "any
country other than your own." And outsourcing simply means “executed by any company other
than your own.” The Internet and high-speed Internet connections make it possible for
outsourcing to be carried out anywhere in the world, a business trend economists call
globalization. In general, domestic companies interested in offshore outsourcing are
not only trying to save money in order to be more price-competitive against each other,
but also to enable them to compete with businesses in other countries or enable them to
more easily penetrate a foreign market though being present in the region and providing
some employment to locals.
Critics of offshore outsourcing worry that if too much IT-related work is farmed out to other countries, home-grown IT talent will "dry up." They point out that once a company begins outsourcing overseas, they will find it difficult to reverse the trend and justify paying more in salaries, taxes, and job benefits for the same work they used to outsource. Proponents maintain that the judicious use of offshore outsourcing will help make all IT workers become more productive and allow companies to develop more agile and responsive business models, which in turn, will raise salaries for domestic workers in all countries.
More and more, organizations in developed countries are investigating and exploring the
option of using offshore capabilities (in India, China and many other countries) to
perform parts of their business operations, product development efforts, business support
functions (back office services) or IT functions. In addition to the obvious cost savings,
this option also improves the availability and turn-around times (due to time-zone
differences) and quality (due to easy availability of highly skilled, trained and
While many large organizations have taken this plunge and are reaping the benefits of offshore operations, there are still a number of organizations who have are hesitating or have not started to integrate offshore options into their operations thus putting themselves at a disadvantage compared to their competitors who are aggressively pursuing these options. This condition is especially prevalent among small to medium organizations which currently do not have the required expertise and resources needed to either set up their own offshore operations or to select or manage the right offshore partners (vendor management, international procurement, contract management) that can match their needs. Other companies lack the in-house experience and expertise in order to properly manage the quality of the products and services delivered meeting the required qualitty levels of the outsourced products and services. Sometimes, any possible gain in cost is completely lost due to a poor cultural match between the remote site and the company, processes that are not adopted in order to cope with the outsourced component, misunderstandings caused by inadequate communications and too many assumptions causing inefficiencies, re-work, non-productivity, loss of business and customers.
With its extensive onshore and offshore experience and resources, PGS is ideally suited and fit to help such organizations and companies to explore the offshore options, devise the optimum and custom offshore scenarios and set up the necessary infrastructure, processes, coordination, resource recruitment and management.
For a start, all of the services and capabilities described here are available to our customers at Onshore or Offshore locations. PGS can help customers with devising the right mix of Onsite, Nearshore, Offshore and farshore resources to execute their projects or business processes in a cost-effective manner while maintaining high quality and quick response/turn-around times. Through carefully selected partners, PGS has access to facilities and local expertise around the globe.
More specifically PGS is able to provide the following Offshore services to its European customers. Of course, PGS can also customize and extend these services to suit a customer's specific needs.
Offshore Project Services
PGS provides access to professional engineering, production, back-office services, IT and/or embedded systems skills to help customers develop, enhance, maintain and support their products. Depending on the requirements, chosen technologies and project frameworks, and customer's comfort level, PGS defines the best country, region, location and partner to work with and PGS assigns the right mix of onshore, nearshore and offshore resources to meet the customer's cost, lead-time, quality and milestone requirements or expectations. Based on customer preferences, PGS can either deliver the project on a fixed-price basis with PGS providing Project Management, provide a service in a managed way (in a managed services approach) or provide resources (people, facilities, network bandwidth etc.) under a Time-and-Materials basis to work under the customer's Project Manager(s). If the latter option is selected, PGS will assign (and train) an onshore Project Coordinator to facilitate the communication and enhance the customer satisfaction.
Under this service, also called the Offshore Branch Service, PGS will set up captive offshore unit(s) dedicated to a specific customer. This includes the acquisition of offshore facilities, setting up the administrative, technical and network infrastructure, recruitment of offshore personnel meeting the customer requirements, appropriate training in customer's products, methodologies and tools, and placing into service the unit as a natural extension of the customer's development organization, production line or business process. While this unit will operate under the direction of the customer manager(s), PGS will assign an onshore client manager to train the customer, to adopt its business processes, to monitor and resolve issues related to communication, cultural background differences, schedule and quality. Often, these units will be initially set up under the legal ownership of PGS or a trusted partner minimizing the risks for the customer (risk management). After the unit(s) is in satisfactory operation, processes are well aligned, the transition has been completed both at onsite and offshore for some time, the customer may elect to absorb the unit(s) as a legal part of its organization.
Offshore Staff Augmentation
For customers who are setting up or operating their own offshore operations, PGS provides contract personnel of all disciplines on a temporary or indetermined basis to work under the customer's supervision. Typically, the work is performed at the customer's facility but PGS offers a value-added feature in which it can provide even floor space and facilities at sites of reliable partners to carry out the work.