Offshore Opt-Out

By Larry Dignan Print this article Print

Giving customers a choice of where in the world to send work will require more-flexible outsourcing deals.

When online lender E-Loan Inc. said it would use processing agents in both India and the United States, it may have signaled a need to disclose how its work is managed.

Pleasanton, Calif.-based E-Loan last month launched a pilot program for its home-equity-line customers, allowing them to choose whether they want to send work to India via outsourcing firm Wipro or keep the work in the U.S. If the work is sent offshore, E-Loan shaves two days of processing time compared to the 12-day U.S. process. Call-center workers, who need to handle the nuances of personal finance, remain in the U.S.

"Some companies are deceiving customers by pretending that offshore workers are on the West Coast," says E-Loan chief executive officer Christian A. Larsen. "I think you have to do offshore and you have to disclose it. Consumers can decide for themselves."

Whether other companies will follow E-Loan's move is unclear. Nevertheless, technology executives need to consider what they would have to do behind the scenes to follow suit, says Amit Maheshwari, president of I-Vantage, a Cambridge, Mass., company that helps firms set up operations in India.

Consider the ramifications of emulating E-Loan. For starters, current offshore-outsourcing contracts, which typically span 3 to 5 years, would have to become more flexible about termination clauses and minimal-volume guarantees. After all, companies offering a choice of domestic or offshore processes ultimately would be reliant on consumers to decide how much of it is done abroad.

Project managers would also have to set up redundant operations across the globe and forecast labor levels based on what consumers choose. If a company wanted to induce its customers to use services in one part of the globe over another, it would have to dangle carrots such as quicker processing or lower prices.

This article was originally published on 2004-04-01
Business Editor
Larry formerly served as the East Coast news editor and Finance Editor at CNET News.com. Prior to that, he was editor of Ziff Davis Inter@ctive Investor, which was, according to Barron's, a Top-10 financial site in the late 1990s. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism.
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