‘I wanna be close to you’ - The benefits of proximity to outsourcing
by Rupert Hodgson, editorial staff, sourcingfocus.com
Thursday, April 12, 2012
I’m trying to get hold of the company website designer to upload content, I suddenly realise that for my Sri Lankan based developer its 4am. From communicating with companies in different time zones to organising meetings with far off business partners, distance in many circumstances hinders cooperation. Many of us will are familiar with the frustrations in the workplace caused by issues of proximity. Being close to those we rely on in business will increase communication, efficiency and savings, the same is true in Outsourcing.
One of the most promising economic developments within London and the UK as a whole has developed from multiple small businesses situated within a single area. Technological hubs as exemplified by the success of Silicon Roundabout, have proven the potential of the UK IT industry and the advantages of creating a collection of upcoming start-ups in close proximity to one another.
Canary Wharf is attempting to replicate the successes in Shoreditch. The move is due not to the generous inherent nature of bankers but from the expectation that by attracting multiple up and coming firms to its doorsteps, the financial institutions of E14 will be able to provide funding to SMEs while reaping the benefits of those that hit the big time.
The potential of allowing businesses to grow together in close location has been identified and copied by Canary Wharf as they look to gain similar success. The government has earmarked the IT industry as an area ripe for investment, providing tax incentives and low interest loans to kick-start business growth and economic recovery.
Outsourcing and shared services benefit from the same ideas. Proximity of similar businesses allows mutual benefit in attracting creative minds to within the area, sharing resources, in stimulating ideas by likeminded individuals and facilitating cooperation and communication.
Attractive offshoring destinations, such as India and China present complications. Both countries are far out of UK time zones, collaboration can be is hindered by visa requirements and expensive and long flights can make the prospect of direct contact costly.
Offshoring can be heavily hindered by the lack of a localised relationship. With recent research pointing to an expected downturn in offshoring over the coming years coupled with the strong public opposition and negative press to the practice, ‘local sourcing’ represents a stronger choice.
Outsourcing between businesses in close proximity or ‘local sourcing’, allows for flexibility from project approaches to adapting to rapidly moving developments. Outsourcing projects including such examples as Capita’s emergency contact centre contracts, Hampshire local authorities shared IT services and IBM’s program to develop high performance computing in the UK have all benefited from having a company presence in close proximity to that of their business partners .
Outsourcing by companies in proximity to their new service providers enjoy the benefits of cooperation and communication. Even in a world of globalisation facilitated through communications technology, where software such as Skype makes long distance communication free and simple, the benefit of gaining proximity in outsourcing is apparent in facilitating trust, avoiding cultural miscommunication and in rapidly resolving of obstacles.
While some times long distance relationships work out and can bring mutual success, e.g Calvin Harris and Dizzee Rascal collaborating while in different countries, the best examples come from the likes of the Osmond brothers, where it becomes clear that outsourcing like the Osmonds works best in close proximity.