When a function can be readily understood in terms of inputs, outputs and tasks performed, and it can be extracted from the local area and transported, it is said to be compartmentalized. In other words, a function can be compartmentalized and moved when the organization can perform it productively wherever it is located.
The problem is that not all management teams have a perfect understanding of the requirements for the service that they want to outsource. Thus, when the contracts are drawn up with the offshore vendor they are inherently flawed from the inception.
As a result, not only does the organization fail to attain expected benefits but the offshore firm is also put in the difficult position of trying to deal with a flawed contract. Just imagine expecting 1,000 calls per week on 10 commercial off-the-shelf applications only to find out that there are really 20 applications and the extra 10 are all custom legacy apps and the group supporting them was dismissed because management felt they werent needed. Similar situations happen all too often followed by a mad scramble to recover.
In short, compartmentalization problems are difficult for all of the parties involved. In some cases, the situation can be salvaged while in others the damage may be irrecoverable in the context of an offshored function. Its very important that functions be thoroughly examined before any decisions are made. It may be that there are far more variables in play than what was expected and, given that additional knowledge, the decision to outsource or how to craft the contract may be radically different.
Root Cause & Re-Sourcing
Groups in the midst of problems with their offshore partners need to stop and look for the root cause(s) of their problems. The initiative may be salvageable based on what is learned, though in some cases hard questions must be asked about whether offshoring can garner the hoped for benefits given demands from customers and other stakeholders.
Due to poor customer satisfaction and other missed expectations, firms are re-assessing their offshoring strategy. Some are opting to re-source their functions and bring them back in-house or find new partners to work with in an attempt to leverage the lessons learned and still reap desired benefits.
In closing, not all organizations have successfully offshored targeted functions. There may be concerns over customer satisfaction associated with call centers. There may also be failures associated with fulfilling the mission of the function and so on. Regardless of the problems, groups need to review their efforts, establish the root cause of the problems and take corrective actions.