Off Shore Operating Model Selection

- Confidential Client

The Challenge
Being part of an industry characterized by low margins and ongoing downward cost pressures, Client leadership was seeking to understand the opportunity to further reduce the cost of its Selling General and Administrative (SG&A) activities by migrating operations away from an outsourced offshore operating model to a captive operating model.

The lack of transparency into the Captive vs. Outsource decision motivated Management to examine the merits of each and to seek visibility into:

- Structural operating costs
- Labor market conditions
- Operating environment
- Trade-offs

This approach was designed to provide the information and integrity of data required to support Executive Management decision-making.

Our Impact
Developed an approach to provide Executive Management with necessary data to make informed decisions regarding the selection of a Captive versus Outsource offshore operating model:

- Transparency into operating conditions
- Transparency into prevailing structural operating costs
- Transparency into prevailing labor market conditions (costs and availability of talent)
- Transparency into the reputation of outsourcers in the market

The Outcome
Leadership elected to pilot a new captive center in the Philippines and migrate outsourced operations to the new captive operation at the termination of the outsource contract. Depending on the set of assumptions applied to the program, a two to four year payback was associated with the initiative. Management is enthusiastic about the opportunity to create a sustainable cost structure for its back office operations while simultaneously improving upon the quality of the operation.

For more information contact:

Thomas Bomba
(212)841-5002
thomas.bomba@cushwake.com

Services:

Global Business Consulting

Real Estate Consulting

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