By Thomas Dolan (Co-Founder, 28Stone)
When it comes to driving innovation and competing in the financial services industry, it has never been more critical for companies to control costs, gain (and maintain) access to talent, and deliver the highest possible levels of service. With digital transformation at the forefront, this is of particular urgency for companies delivering best-in-class, cutting-edge technology services. Technology has accelerated competition among businesses looking to elevate their clients’ processes and capabilities while firmly establishing their own reputations as innovators and industry leaders. This competition has raised expectations for service levels and put pressure on margins for providers.
For some time, companies have used “off-shoring” to work with wider pools of top talent while keeping costs down. Tech companies have been reaping the benefits of working in countries such as India, the Philippines and Poland. However, off-shoring presents several challenges.
Time zones and language barriers can get in the way of smooth and timely business operations. A focus on one country can restrict access to the right people for the task or project. Not all processes are suitable to be run remotely or might at least require tighter collaboration with headquarters or closer proximity to customers. Furthermore, some of the popular off-shoring markets are seeing increases in operating costs, including wages, or growing competition for available talent. So some firms are realizing that off-shoring their operations – lock, stock and barrel – to another location often produces a “one-size-fits-all” solution that neither meets their clients’ expectations nor proves as cost-effective as hoped.
“Right-shoring” – blending on- and off-shoring models – offers a more flexible approach that strikes the balance of achieving the desired technology and business results along with cost and time savings. Some processes and capabilities are moved overseas (which might be in multiple locations depending on the needs and skills required and the related costs), and other processes automated. However, services that require closer supervision and customer engagement remain “on-shore.” This balanced approach reduces costs but delivers a service that is a perfect fit, satisfying clients’ expectations. It can also decrease risks, particularly around operations and data security, as well as simplifying back-office issues such as tax regulations. Off-shore benefits, such as a “follow the sun” model for managing projects, remain intact.
However, right-shoring is so much more than cutting costs and balancing processes to reduce risks. With new tech centers booming across the globe, talent of various skill sets and backgrounds can add diversity in thinking, idea generation, and innovation. This can mold new possibilities in what a company is able to provide clients while ensuring they can flourish with the fast-paced world of technology. Thoughtful decisions that expand a company in a positive and purposeful direction can ensure they get the best out of right-shoring.
Right-shoring can also aid company culture and add even more vibrancy to the life of the business. At 28Stone, our teams celebrate across cultures and backgrounds, building unity within the company. From volunteering at animal shelters to sharing customs and traditions to paddling through rivers for our annual kayaking event, our teams find more ways to learn and grow from and with each other. It’s easy to focus on the benefits for budgets and expansion but the effects of right-shoring can make a team unique, motivated, and a stand-out among many competitors.
While companies' reasons to on-shore, off-shore, or right-shore may vary, to stay at the cutting edge in delivering the services that their customers require, at the right costs, there needs to be a shift in thinking. Right-shoring not only offers flexibility and cost-savings while ensuring that high-touch processes are properly serviced, it brings a new level of possibilities and can help ensure business adaptability and longevity in an ever-changing industry. It represents the sweet spot organizations are looking for and should be considered more frequently to achieve real business results.