With the slowness of the economic recovery, pressure to increase earnings has moved the focus of organizational leadership to driving down costs more aggressively. The recently published Conference Board CEO Challenge survey for 2013 found that the number one and two priorities for this year are human capital and operational excellence. Operational excellence is seen as a critical ingredient in driving down costs while improving quality and service.
In the operations areas of banks and insurance companies, the temptation to outsource and offshore many jobs has been hard to resist, with the promise of a “quick” labor-cost arbitrage savings. But is there a better way that can achieve as good or a better outcome? Can one avoid the downsides of offshoring, where one must deal with the tyranny of distance, communication challenges, cultural differences and more? Can operational excellence be applied right here onshore and in-house and achieve cost savings as good or better, while avoiding the less attractive aspects of offshoring?
In the area of back- and middle-office operations of insurance and banking organizations, new metrics and methods can produce remarkable sustainable shifts in performance. Until leadership has optimized operations, offshoring simply results in a transfer of those same inefficiencies to the overseas partner, while unnecessarily damaging the local economy and employee morale and loyalty. Read More
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