Driven by platform changes, the COO of a very large European technology company foresaw the need for $60 million of outsourced product development and support work over a two year period. The company’s managers across 18 locations in Europe, Canada and the United States were seasoned in local outsourcing but had zero experience in outsourcing offshore, and were skittish about sending work to India and China. However, the CFO was keen to leverage outsourced relationships into possible eventual acquisitions.
Working with the product development heads of six of the 18 locations, Amritt defined two narrow skill areas where we could bring out over $52 million of the outsourced benefits. The other functions and skills would be untouched by offshore resources. We then culled a list of seven mid-sized service providers located in Shanghai, Bangalore, Delhi, Shenzhen and Rio de Janeiro, and we also recommended a vendor in Montreal who had most of its employees in a small city in Asia. We guided the client in negotiations, trials, visits, and subsequent ramp up with four of the seven candidates.
By the end of year two, the client had already outsourced $41 million of work in one skill alone. For the second key skill the client found that acquiring as small service provider was the most effective way to retain control of IP and address customer concerns about security. Upon completion of the acquisition, the client phased out the outsourced providers addressing this second skill, and the company was on track to grow its workforce for an impact of $50 million by the end of Year 3.