The global delivery model is something of a Holy Grail for most IT service companies. Everyone wants to be considered a global player, yet being able to offer global delivery is not just a function of how many offices a company opens around the world, so it’s interesting to see a new paper from outsourcing advisory firm Equaterra on how to design a global delivery model. Equaterra makes some interesting observations in the opening section of the paper, including:

•    An Economist Intelligence Unit survey of 300 executives worldwide found that when asked what country would be the best overall location for their firms’ R&D work, outside of their home country, India was the country most frequently cited, followed by the US and China.

•    Organisations also continue to tap into offshore resources via the captive route. Equaterra counts over 300 major captive operations of Western firms in India alone. Use of captive operations are sometimes transitional, as over time, the parents of the captives (for example, General Electric, British Airways and Citigroup) opt to spin them off to not only make a profit but also to rid themselves of the challenges and operating overhead.

•    A 2006 Offshoring Research Network survey (led by Duke University and supported by Archstone Consulting and Booz Allen Hamilton) of 537 buyers in the US and Europe, 70 per cent of which were Fortune1000 and larger firms, found that over 50 per cent of respondents have now undertaken offshore outsourcing.

•    The same study found that while IT outsourcing remains the leading offshore functional area, product development, general and administration, and call centre/helpdesk have also been outsourced offshore by 25 per cent or more of the survey respondents. Procurement, a functional area less frequently outsourced to date, is one of the leading areas targeted going forward.

The Equaterra commentary is useful and worth reading because it synthesises a lot of key commentary into a single short paper. It is a fact that business process and IT outsourcing has become far more global in the past decade – just look at the regions now trying to enter this market from all corners of the world.

The real key to success in global sourcing is addressing service delivery in a continuum – or thinking of the outsourcing value chain in much the same way as a product is assembled from raw goods on a production line. Though we have not really seen it yet, as sourcing becomes more global and more fragmented into smaller ‘best of breed’ contracts – rather than the big single-supplier deals – it is likely that  users who excel at outsourcing can start considering this skill a competitive advantage in their industry.