A US-based PE accelerated innovation by increasing its offshoring intensity

Client’s challenge

A major US-based Private Equity firm wanted to accomplish the ambitious goal of increasing overall offshoring intensity across its portfolio companies. Their primary aim was to strategically optimize costs and increase innovation.

For this process of strategic offshoring, the client wanted to collaborate with competent offshoring partners, structure & negotiate contracts and, manage the overall transition effectively by prioritizing critical long-term goals.

They wanted Zinnov to come in and provide them with outsourcing advisory expertise as well as Product engineering strategies.

How Zinnov helped

In response to the client’s ask, we started with the assessment of offshoring requirements from the port-cos and suggested 7 mid-tier providers for the initial meetings. Out of the 7 available options, 4 vendors were further shortlisted for the RFI process. After thoroughly evaluating the responses, 2 vendors were finally selected for the partnership. This multi-staged process was critical to satisfy the priority business requirements and to match the fitment of vendors.

Further, we structured PE-level strategic partnership agreements and in addition, drafted portfolio company-specific MSAs and Centre of Excellence SoW. The clear contract structuring was beneficial to the client in managing partnerships and running offshoring operations. Our team also negotiated critical business terms like employee transfer, governance, risk-reward KPIs, etc. as well as pricing to bring it down by 20% from the list price.

In the next stage, due diligence was performed for a new acquisition and an offshoring transition modeller was designed, based on job roles to assess cost take-out opportunity. This was crucial in determining the risks and financial commitments for the client. We also partnered with them in planning the entire transition of the resources from the in-house and existing vendor to the preferred vendor to ensure a smooth and risk-free transition process.

Zinnov program managed the overall transition plan for 18 months while also delivering structured communication plans and communication papers to the client’s leadership team. Another critical component that was managed was the transition of existing offshored resources to the new vendor.

Impact created

Our partnership with the client succeeded to achieve high-margin business victories for them. Firstly, the client was able to negotiate the pricing of offshoring down to ~20% from the list prices, which was a huge cost-benefit.

Further, through strategic planning and robust implementation of the offshoring process, there was an expected achievement of ~75% offshore intensity for the transition plan in a span of just 18 months. The client will also see an estimated savings of ~35% to be generated in 12 months’ time.

Finally, the client’s ambitious goal of increased offshoring to drive innovation was operationalized with the offshore lab, which will have 52 talented people and be fully operational by the third month after the project’s commencement.