Don't Just "Lift & Shift" When Offshoring

If you're looking to offshore your AP operations, you can dramatically improve the cost savings by improving processes before the move. That's the main point in new research from The Hackett Group, a strategic advisory firm and an Answerthink company.

Hackett says that companies can potentially increase the savings from offshoring by over 50% by strategically combining "Lift & Shift" efforts, which move back office processes overseas without first improving them, with "Transform & Shift" initiatives, where processes are optimized and then taken offshore. Hackett's research finds that the key to generating these savings is careful planning and analysis to determine which processes to offshore and whether or not to integrate transformation, and a staged approach to offshoring over a five to ten year period. In some cases, Hackett's research shows that the potential exists for companies to capture the majority of the available cost reduction through process optimization alone.

"As offshoring has matured as a business strategy over the past few years, the discussion has shifted, from 'Should We?' to 'How Should We?'" explained Hackett Chief Research Officer Michel Janssen. "But it's a complex long-term process, with the potential for spectacular successes as well as real failure that can cause companies significant setbacks. Companies that try to take the easy way out and rely solely on a simple 'Lift & Shift' approach, will significantly increase their risk, and are likely to capture only a fraction of the value that's out there."