Global sourcing model comes of age

The global sourcing model has finally arrived as the decision to offshore or outsource is no longer taken in isolation, according to a survey of 62 senior (CXO level) respondents from the largest banking, financial services and insurance companies.

The Indian School of Business (ISB) held a research presentation on 'The global sourcing model in financial services' recently. Phanish Puranam, professor of strategy at the ISB and at London Business School and Suresh Gupta, partner, Capco, were the co-directors of this research study.

The study says that companies have begun to outsource and offshore not just horizontal generic processes, but also vertical business-specific processes.

While cost savings continue to be the dominant motivation, quality improvements and flexibility are rapidly catching up as important drivers.

This apart, companies are beginning to prefer managing a multi-vendor, multi-geography sourcing framework rather than handing over the entire set of functions to a single vendor, it adds.

Sourcing options are determined by process characteristics and are, therefore, not decided in isolation.

However, the study adds, that the most significant management challenges in global services sourcing are often at the operational level, thus making good project management capabilities the most important ingredient to a global sourcing capability.