How to make global sourcing work for your company

Global sourcing, outsourcing, or global teams as we refer to them, have come a long way since its beginnings in the 1970’s. Technology has progressed and the IT industry enhanced over the last five decades. We’ll investigate both the success and challenges for SMEs in the tech space and look ahead to the change needed for SMEs to thrive.

It began from small-scale offshoring partners who provided onsite services. These were not easy to achieve or sustain as they were limited, both in time and breath. They needed to be in person which came with travel, budget and effort requirements. As the years progressed and dedicated communication lines were set up, it became possible for offshore talents to work for onsite clients without travelling. This brought a little more flexibility and aided by massive developments in the communication and the technology sector, that is, the IT boom.

Speed of communication and speed of data transferring improved which increased the offshore-onshore efficiency. During this time, large companies grabbed on to opportunities to take advantage of outsourcing. Big companies have big budgets, more flexibility and more connections. They were able to recruit people in large amounts and at lower costs. As more and more talent was hired, offshoring increased. The services industry became more productive and a particular flow of communication and data hierarchy was established. These offshoring services being provided were mainly process driven, and so were the large companies. Even though offshoring services required miscellaneous costs, larger companies could absorb these costs. This made them a good fit and led to profitable collaborations. On the other hand, start-ups and small scale companies were not having such an easy time. With limited budgets and less resources, offshoring was not being viewed by them as a profitable option. Their need was immediate and long-term investment in offshore talent was not an option.

The challenge for start-ups and SMEs

What do SMEs and small scale companies need to succeed? Their difference is that they work with personalised systems which move at a faster per unit speed than larger companies. Such features require personalised attention, from the top down. They have a different operating model compared to bigger companies, which is their key differentiator. They’re able to be more agile and move from product development to selling in the market much faster. Therefore, their market  understanding, agility and movement are of great importance. This brings forward a different set of challenges since they compete in a highly volatile and fast-paced business environment.

SMEs need IT partners who can go the extra mile to understand their work and how they run their teams. Startups and SMEs are looking for partners who can offer them complete transparency in all levels of management. This can contribute to the escalation of existing projects and the birth of new ones. But, at the same time, this also helps in building relationships between customers and clients, prompting the two-way exchange of ideas. In our experience, the best way of working with an outsourcing partner is when you’re able to fit seamlessly in with the existing team.

Technology in the pandemic

Even before the pandemic, the online presence of companies was increasing at the speed of lightning. This has been a deliberate effort by all firms because the world knows that tech is the future. As things moved online, collaboration tools made exchanging information much easier than before. This resulted in a globalised workforce, with people working on the same deliverables from different time zones.

The two years of the pandemic forced the use of such collaboration tools because the external environment made physical proximity impossible. The comfort with online meetings and sharing platforms increased over this time. Every aspect of a company’s deliverables was digitised and there was a demand for better IT services within the company itself. This led to an aggressive need and hiring of IT professionals. As everything became virtual, SMEs and startups viewed this as a path to move towards outsourcing. This was because offshore talent became abundant. But as demand for IT professionals went up, larger companies snatched them from the market owing to their bigger budgets. The limited budgets of smaller companies block so many opportunities that can be availed otherwise. Moreover, the one size fits all, rigid customer approach by IT partners does not fit the vision of smaller companies, leaving them in a complete bind from every corner.

Global sourcing partners

Sourcing partners have changed their delivery models to keep up with evolving requirements of the market. They initially provided services and then productised their delivery models in a cookie cutter approach, to bring in operational efficiencies. But requirements from customers have also changed, over a period of time. IT systems have moved from a backend/infrastructure need to a front end, engine driven innovation for new business avenues. This has led to companies treating different roles for themselves and others to be outsourced.

Some global sourcing partners have kept up with the changes and have been nimble footed to be at the top of their game. However, not all are able to adapt because of the huge investments made in delivery models. The future beckons the companies who can provide flexible models, right global sourcing at the right time and be plugged into the success of the customers.

Looking ahead

The economy is slowing down, which has already affected many countries around the globe. Most are increasing interest rates as the inflation rates soar. High inflation is ultimately leading to lower spending. The quantity demanded for goods and services are decreasing and people are now holding money. As demand falls, the quantity produced by firms also falls, which leads to a decrease in the country's total output.  This change in the economy hits all industries right at the core. Companies will move towards global sourcing with full thrust to maximise output. And this time, the process will be easier since technology and communication are much better defined.

It all comes down to finding the right partners to collaborate with. This is the key challenge. But it needs to be kept in mind that this is much harder for smaller companies to do. These organisations need flexible partners who can engross themselves completely and become part of the company. Offshoring partners need to be more aware of the needs of their clients and change according to customer preferences. Startups and SMEs need direct access to management with clear cut  communication levels to work efficiently. In turn this will give these organisations better command of employees, access to one on one communication and constant updates on the flow of the product development. This will, in its truest sense, give rise to one team, one goal, one globe.