Composing a workforce is like playing chess. When it’s done well, every choice is calculated, made mindfully of both its short- and long-run impacts, and of the delicate balance in which it must hold certain key variables — cost, productivity, digital maturity, and the potential to build capabilities that last.
In striking this balance, digital and technology leaders have long optimized for cost, but so rapidly is business evolving that many of them are reconsidering that approach. Among such leaders is Barry Perkins.
From 2011 to 2023, Perkins led technology in various senior-level roles for global property and casualty group Zurich Insurance. Then, in September 2023, he became COO of the company’s North American outfit (ZNA), revenues of which exceeded $22 billion that year. Atop his tech-related responsibilities, Perkins inherited responsibility for ZNA’s operational functions, such as premium audit and call-centers, and for thousands of global IT workers. Of the latter, 70% to 80% were supplied by strategic partners.
“In many cases,” explains Perkins, “we’ve become supplier-managers. And while that can be good from a cost standpoint, it’s become a limiting factor to increasing our digital maturity.”
As Perkins explains, an IT organization will constrain itself if it depends too heavily on suppliers. It will struggle to act autonomously, meet evolving priorities, and innovate. It might even suffer atrophy in critical functions such as recruiting and career development, as the employees overseeing those functions are taxed increasingly by the burden of managing suppliers.
So how do you forge a different path? Perkins advises IT leaders to adopt three principles to strike the right balance between cost, productivity, digital maturity, and the means to build long-term capabilities. These principles, Perkins contends, can catalyze digital transformation when prioritized across the enterprise.
Expand your options
First, says Perkins, IT leaders should “differentiate very carefully the areas for which you’re going to focus on maturing your digital capabilities, and what they mean to the organization.”
Having aligned on this, you can examine your workforce to ascertain whether your onshore, offshore, and nearshore operations are optimized for cost, productivity, and digital maturity, among other variables.
Before he became the COO of ZNA, Perkins served in Europe as Zurich’s COO of group technology and operations, and as head of the company’s business technology centers. In this latter capacity, he oversaw the company’s nearshore competency centers, which would later serve as a blueprint for the one he would proactively establish in Mexico after coming to ZNA. Aside from sharing time zones with America, this center would cost less than US-based resources and provide access to more diverse talent.
Perkins warns CIOs not to underestimate the effort and complexity of building a nearshore capability. It took his team “two years just to get the basics of the center and management set up with a core set of 80 to 100 people.” After laying the foundation, Perkins filled roles by drawing on both ZNA’s internal recruiting muscle, and on vendors through a model of build, operate, and transfer. Vendors provided resources with specialized or rare skills. Internal recruiting handled the rest.
Perkins explains that there’s a benefit to placing key functions such as developers and strategic decision-makers in similar time zones. Doing so enhances collaboration and cuts response times relative to an offshore outsourcing model in India, for example.
With a nearshore operation in place, as well as offshore and onshore ones, Perkins and his teams could pull from the full spectrum sourcing models. His team was ready to start moving chess pieces.
Shift the right people
According to Perkins, one key to controlling your digital destiny is to bring your most strategic roles onshore. “You can reclaim autonomy over your key digital initiatives, build internal capabilities, and repatriate institutional knowledge all by reducing dependencies on suppliers.”
As for which roles should be upskilled and hired full-time, Perkins swears by the mnemonic “ABC”: artificial intelligence, big data, cybersecurity. Generally, he says, business stakeholders understand how important these capabilities are, and are thus more likely to invest what’s necessary to build them internally. “Given their importance in protecting as well as transforming the organization, these are not areas they would want to outsource,” Perkins says.
Transitioning individuals in house, however, typically raises labor costs, and as Perkins notes, that proposition will likely cause a few stakeholders to raise an eyebrow, despite their recognizing the strategic importance of digital operations.
“When your leadership has gotten accustomed to the highly outsourced workforce composition,” explains Perkins, “there are challenges in shifting the cost profile.” Therefore, he says, it’s imperative to have a strong business case and predefined criteria for shifting your resources. You’ll need them to justify such a move.
Bring your peers along on the journey
Finally, Perkins underscores the importance of including your peers in your workforce transformation journey. Whether you’re pitching for resources to be shifted to a nearshore captive, or for cloud to be more fully adopted, Perkins insists that the message should be delivered in business terminology, and that it should highlight the value proposition.
“Cost advantages, accelerating speed to market, and making better decisions will resonate with your peers,” he explains. “Reserve the three-letter technical acronyms for your IT colleagues.”
Equally if not more important to bring along on the journey is the IT workforce. The priority is to help “employees not just understand their responsibilities today but rather encourage them to actively participate in setting up a future roadmap,” Perkins says. By harmonizing mindset, skillset, and toolset, you’ll equip your employees to manage constantly evolving technology and innovation.
Get comfortable being uncomfortable
The thought of re-composing a workforce, uncomfortable as it can be, can paralyze even the most seasoned CIO. But given the pace of digital change, it can be even more detrimental to avoid the work and to push forward with a cost-above-all mindset.
Today, every company is a technology company, and thus, as Perkins suggests, you should get comfortable with being uncomfortable.
“Shifting your workforce composition is a major operational and cultural change,” says Perkins. “It’s not for the faint of heart, but it’s necessary if you want to position yourself for the future.”
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Source: News