Jacquelyn Cayon examines the risks organizations face when offshoring decisions are driven primarily by cost reduction. She argues that successful offshore strategies require a clear understanding of business objectives, operational dependencies, supplier
Organizations that view offshoring primarily as a cost-cutting exercise risk
creating bigger problems than the ones they are trying to solve, according to a
senior vendor management executive who believes the most important question in
any offshore strategy is a simple one: why?
Speaking during a discussion on offshore operations and vendor management,
Jacquelyn Cayon, a sourcing, vendor management and oversight executive and
expert with over 15 years of experience and currently serving as Vice President
of Global Supplier Services for Loan Services at JPMorgan Chase, argued that
organizations often become too focused on headline savings and fail to properly
evaluate whether an offshore model is delivering meaningful business outcomes.
During the exchange at CeFPro’s Vendor Risk Dallas conference, Cayon said
the rationale behind an offshore decision should determine everything from
location selection and staffing models to oversight frameworks and long-term
strategy.
“I think the biggest thing you have to consider if you’re going to
offshore is the why,” she said. “You need to understand the why and what your goals
are in relation to offshoring.”
Those objectives may include creating a 24-hour operating cycle, increasing
flexibility, improving resilience, or generating efficiencies.
However, she cautioned that organizations frequently become fixated on
projected savings without fully understanding whether those savings translate
into improved performance.
“My biggest thing that I always work with my business partners with throughout
offshoring is your why. What’s your goal?” she said. “I can make it look pretty
on paper. I can make it look like you’re going to save money.”
For Cayon, offshoring should never become an alternative to automation or
process improvement. She recalled one instance where a business partner suggested
replacing an automated data feed with offshore personnel manually gathering and
entering information.
“I would never replace an automated data feed, no matter the cost, with
people augmentation,” she said. “That doesn’t make sense.”
While cost pressures remain an important driver, offshore strategies are becoming
increasingly complicated by geopolitical developments and
economic uncertainty. According to Cayon, organizations must now evaluate
not only the capabilities of suppliers but also their long-term sustainability.
“If you’re truly third-party outsourcing in an offshore, are they going to
be able to maintain and stay through the new changes in the political
environment?”
