Smart-shoring is a method of offshoring from price-competitive locales.
To cut operational costs and retain leadership position in the global business processing outsourcing market, Indian companies are resorting to a new model, smart-shoring.
"This is a method of offshoring from price-competitive locales, that too, without compromising on quality. It is an emerging delivery mode and is important to contain costs and provide quality services," Nasscom president Kiran Karnik told Business Standard.
For example, German language skills can be processed from Poland, due to the country's hold on the language and competitive labour skills and not from Germany, he said.
Smart-shoring is a preferred mode among global majors, including Microsoft.
IT majors like Tata Consultancy Services, Intelenet Global Services, Integreon Managed Solution, Lionbridge Technologies and Xansa India, the Indian subsidiary of British computer service major Xansa Plc, are some of the companies who have already begun to reap the benefits of smart-shoring.
Lionbridge executive liasioning officer (India) and vice-president (worldwide solutions) Robin A Lloyd said, "Under smart-shoring, Chinese language skills could be executed well from mainland China, while English language skills can be done from India and not England. Going forward, this would be a way for delivering even localisation and engineering models."
According to Integreon Managed Solutions president (Knowledge Services) Hema Gandhi, "Smart-shoring refers to providing optimum and sustainable
solutions to clients using a mix offshore and onsite deliveries. While pure offshoring has its benefits, it is always not optimal. This approach will help clients derive maximum benefits from offshore resources and through local expertise and presence."
According to Xansa chairman and Nasscom chairman emeritus Saurabh Srivastava, "This is a global delivery model and Indian BPO companies have begun tapping its potential by setting up centres in China to service countries like Japan and Korea."
"At present, this is a small section of the whole BPO industry, but going forward, this will be a major segment as the present $20 billion BPO industry is slated to become a $100 industry in the next one decade or so," Srivastava added.
Indian companies have begun investing in this model, with companies like Intelenet even forging an alliance with a European Customer Relationship Management specialist company, Transcom WorldWide SA, in July 2005.
Intelenet CEO Susir Kumar said, "If Transcom were to get business from a customer who wants BPO services in English, then Intelenet would deliver them from its India centres. The arrangement is mutual and would work both ways, meaning if Intelenet's customers (existing or potential) need services in European languages, Transcom would provide them."
TCS CEO and managing director S Ramadorai said, "We have been investing continuously to build a global delivery model and best-in-class execution abilities. We have developed our Networked Delivery Model with centres across the globe including China, Latin America, Europe and Australia."