5 C’s of Outsourcing

Assessing Geographic Risk

"Probability is nothing but common sense reduced to calculation."
Pierre Simon Laplace (ThÃorie Analytique des ProbabilitÃs, 1812)

Cost/ Benefit Analysis can be applied to Outsourcing, it is a matter of applying a calculation to the variables that affect the nature of what you are outsourcing:

Culture: When going global you cannot afford to neglect local and personal values. Cultural affinity affects communication and expectations not only between you and your Outsourcing Service Provider, but that of your customers as well.

Convenience: Local offices and contacts and service providers working the same hours of the day as you both provide availability

Cost: As the 5C’s collectively sum Total Cost of Ownership (TCO) the Cost Value here only incorporates per-time unit cost of service.

Complexity: Outsourcing involves a change in mechanics and organization structure of a company. Key support functions like HR and Legal must be engaged to redefine roles internally and externally.

Customer Satisfaction: You could argue that all the other factors listed are a means to customer satisfaction. Offshoring as opposed to Nearshoring customer facing responsibilities is resulting in angry customers switching services.

The 5 C’s	Onshore	Offshore	Nearshore
Culture	5	1	4
Convenience	4	1	4
Cost	1	5	3
Complexity	5	1	5
Customer Satisfaction	5	1	5

Source:  Bertelsmann AG