My 5 advices on how to succeed with sourcing
Over the past 3 years I have managed a larger sourcing setup in India, as well as established a local subsidiary. Often this has been done by learning the hard way and I will therefore share my experiences, which I hope will make it just a little easier for you.
1. Define clear vision, objectives and strategies before entering into sourcing
2. Involve your home organization
3. Partner with a local provider
4. Make the sourcing setup accountable
5. This is India – Incredible India
Define clear vision,, objectives and strategies before entering into sourcing
– Too often companies start sourcing without knowing clearly what to source, how to source and with whom they want to work. As different areas may have different complexity it is essential for the vision to succeed that the goals have been defined and the strategy to achieve it outlined. It is like when you take your car you don’t start driving, before you know where you are heading, or do you?
Involve your home organization
– It is no secret that often sourcing fails due to resistance from the home organization. Jobs may be lost, employees feel insecure and key persons lose their position. The best way to avoid this is to ensure a clear communication from the start, why are we doing it, what are the goals, what will be sourced, what will happen to the people at home, will there be reductions or reassignment and what actions will be required.
– Another important part is to involve the organization by sending them to the off-shore site. Often people feel insecure when they don’t know the other side, but visiting the off-shore site does not only allow for knowledge transfer, it also creates the personal relations which are required for it to succeed. The initial costs may be high but my experience tells me that it will be your best investment towards sourcing
Partner with a local provider
– India, as well as other sourcing countries, are in many ways countries which have a high focus on sourcing. They are however also countries where things may not work quite the same way as in Denmark. Partnering with a local provider will ease your setup. They know the rules, they have the contacts, they have a local brand and mostly they know how to get things done, also when it seems impossible. In India we also say, “Everything is Possible in India, but it may not be easy”, so having a local provider just makes it a little bit easier.
– I know many companies debate if it is best to setup an own subsidiary (captive center). Due to the often high overhead you will have, as many processes are still performed manually, the recommendation in general is that the setup should have at least 3-5.000 employees before you get the financial benefit of an own captive center. This is debated by many, by my recommendation is why try if you don’t have too.
Make the sourcing setup accountable
– 90+% of all sourcing performed in India is done as Service Sourcing/Delivery Sourcing. The Indian providers often create the revenue by focusing on the efficiency in the delivery. To obtain the best possible productivity it is generally known that this goes along with a delegated responsibility, but even more accountability, so my recommendation is to go with a model where India is responsible for what is being delivered out of India, and your responsibility is to ensure that India deliver what they are responsible for.
This is India – Incredible India
– There is no doubt that India has many opportunities, while still having cost lower than Denmark. Many companies come to India with a mindset on how things works in the home country, this will fail. Laws are different, expectations are different and local conditions are different. People applying for new jobs often asking for 20-30% increase, the highest I have faced was 120%, expect promotion every second year while they would also want to have the conditions and benefits of that of the foreign company. To succeed you have to find a balance between having a setup where you operate a setup aligned with the company policies and CSR but also where you cater for the local market in respect to salaries, conditions, bands, titles, promotions, insurance, local compliance,,, and the list is long. Many employees here would like to work for Danish companies, we treat people with respect and we create a good level of work life balance.
So can it be done? YES. When people ask me for one advise I always state “If you want it to succeed you can make it succeed, if you want it to disappear it will never work” so all in all it is very much about attitude,,,, GOOD LUCK
During the past 3 years I have established a company in India, captive IT center, on behalf of a large Danish bank, while also heading a 850+ resource sourcing setup. I will soon be returning to Denmark and is looking for new opportunities within leadership of Sourcing, Product or IT Development. For more information please check out my CV at dk.linkedin.com/in/tonnyrabjerg/.
All comments, proposals and opinions expressed are personal and may not represent those of the companies for which I have worked, but are solely based on my own experiences in India and other countries in which I have lived and worked