04.16.07
Governance - Too Much is Not Enough
A short entry in Baker & McKenzie’s March 2007 Outsourcing LegalBytes entitled “Governance: A Key to Offshoring Success” offers an interesting perspective on the importance of governance:
A comprehensive study by A.T. Kearney offers surprising insights into the reasons for successful offshoring. Results from offshoring varied widely among surveyed companies, with cost savings ranging from zero to 75%. Overall, performance tended to improve, but some individual metrics actually declined. According to the study, this surprising variation was not a reflection of differences among industries or particular functions. Instead, the study found that performance was more likely to improve with greater management attention. Companies that invest more in managing their offshore programs achieve significantly better performance. The best performers among the surveyed companies cited CEO commitment; a strong offshore management team with centralized, dedicated resources; and high quality, detailed implementation plans as key drivers for success. The best performers erred on the side of more management resources rather than less.
