Over the past few decades, global sourcing of technology talent has enabled geographically distributed companies to build a workforce that gives them the capacity and capability to launch new businesses, roll out new products, expand into new markets and significantly improve their overall value proposition.
To date, this global workforce has been made up of internal, retained organizations, captive operations at low-cost locations, contractors and third-party partner ecosystems. While cost arbitrage has been a key motive for this kind of footprint, enterprises today are more and more interested in a global workforce that can drive disruptive innovation to create new value networks and business opportunities.
With digitalization at the top of today’s transformation agenda, enterprises are under mounting pressure to create an operating model that boosts their agility and their ability to be innovative. However, the operating model in place at most global organizations today was not designed to cope with the current degree of unplanned digital disruption, and it is impeding transformation. At the same time, organizations operating in highly regulated sectors have been under added pressure to comply with increasingly stringent regulations.
These trends—together with the emergence of cloud computing, automation and analytics—are changing the expectations of what constitutes the ideal global workforce, making it necessary for organizations to invest in building new workforce strategies to set themselves up for success.
To design a workforce that meets these changing expectations, enterprises should consider the following Top 5 principles:
1. Get your operating model right first. A workforce strategy cannot be designed in isolation—it has to be a derivative of your operating model. Key inputs to a forward-looking workforce strategy include sound business, IT and sourcing strategies. The workforce strategy also needs a well-designed investment plan, location strategy and service design and transition methodology. If these are future-proofed, your workforce strategy will be future-proofed, too.
2. Plan for a workforce that touches your whole ecosystem. Your investment plan for the next three to five years should cover all resources that deliver services, including employees, contractors and service provider resources. To build an effective workforce, it is important to get the right mix of these resource types at each location. While some services are better delivered by service providers within your ecosystem in a managed services model, others may be best managed by an internal or captive workforce. Leveraging specialist skills from contractors must be balanced with the risk of those resources leaving without capturing or documenting their specialized knowledge.
3. Plan to build an environment that enables agility and innovation. Create collaboration between multi-disciplinary teams by building co-located agile environments. While offshoring and near-shoring may be cost effective, the key to achieving value beyond cost arbitrage is to co-locate entire functions that are aligned with the lines of business in these locations. This will not only foster agility, innovation and domain expertise, it will also greatly improve productivity and accountability. Some enterprises have had significant success setting up innovation labs to encourage design thinking and creativity by partnering with a local science and technology university.
4. Chart your technology roadmap. A key driver of workforce strategy, your technology roadmap will determine the skillset and capabilities you will want to develop over the foreseeable future. Horizontal services, such as human resources and customer relationship management, are increasingly adopting Software-as-a-Service delivery models that require fewer programming skills and more skills in business analysis and project and vendor management. Keep in mind that robotics and automation are eliminating the need to plan for manual intervention in repeatable jobs.
5. Collaborate with the business. With the persistence of shadow IT, the boundaries between the business and traditional IT have blurred significantly, and, in large enterprises, the proliferation of IT tools and systems has created the need to ramp up support and maintenance teams on an ad-hoc basis. Partners from IT organizations must work closely with their business counterparts to understand their present and future requirements and build a forward-looking workforce.
ISG helps enterprises design and implement optimal workforce strategies. Contact us to discuss further.About the author
Suresh Payapulli is a Director with ISG, and is a subject matter expert in emerging operating models for Application Development & Maintenance (ADM) with a particular focus in the Banking and Financial Services sector. He has taken a leadership role in many large scale IT transformation programs through strategic sourcing―both from the “buy side” as well as “sell side.” He effectively combines this experience with real industry insight to bring thought leadership to his client engagements. Email: [email protected]