Outsourcing, immediately questions start to appear in your mind;
- Should your company outsource?
- What are the probabilities for success or failure with outsourcing?
- How can your business get started with outsourcing?
- How do we ensure quality?
- What makes Successful Outsourcing?
Ensuring there is complete clarity on goals and objectives and active inclusion, participation and communication by key stakeholders are key elements to the success of any outsourcing plan.
Creating these realistic goals can include internal staff and external team members as well as the outsource providers themselves.
There are five relatively common outsourcing difficulties to anticipate, eliminate or avoid whenever possible:
- Incompetent business and personal relationships: For example between the contract manager for the customer and the account manager for an outsourcing vendor.
- Not hiring the right contractor: This scenario is especially likely when cost pressures lead to selecting an inexperienced provider that provides an unrealistic “lowball” price proposal.
- Rushing to sign a contract: Two outcomes are especially likely, and both are usually unfavourable. Insufficient details (such as a statement of work or scope of work) in the contract and lack of contract flexibility are both serious outsourcing problems.
- Inadequate project management: This applies to both sides of the partnership. The client company and provider both need dedicated and capable managers in place.
- Establishing unrealistic goals: Choosing the wrong goals can literally impact everything that follows. This serious problem can frequently be eliminated by involving all stakeholders from the very beginning of outsourcing discussions.
According to research conducted by MIT’s Center for Information Systems Research and “CIO” magazine on a comprehensive study that involved 90 outsourcing projects in 84 different companies over 50% of outsourcing partnerships were successful in generating real change and achieving the company’s goals.
So what do we outsource?
A competitive marketplace keeps savvy businesses on their toes to provide needed services and products more quickly than the competition — selective outsourcing is one of the practical and cost-effective solutions for achieving what might otherwise be an impossible goal.
For the past decade, business process outsourcing (BPO) has represented a major use of outsourcing in IT and ITeS (IT-Enabled Services) functions. As technology has morphed, the demand for BPO has evolved into knowledge process outsourcing (KPO). The skill levels for KPO are more specialised than BPO because KPO providers offer a combination of in-depth business understanding, business processing, research, analysis and decision making.
The traditional view of outsourcing emphasizes transferring “non-core” services to a third-party provider that specialises in the task at hand. Releasing your business’s daily grind orientated tasks and non-core activities frees your time and your staff’s time to focus on growing the company.
Why and When to Outsource
Here are six criteria that can be used to shape a decision about when you should favour outsourcing:
- The task involves temporary or repetitive needs.
- Jobs that routinely waste time and labour resources.
- Specialised skill requirements make it impractical for existing employees.
- Assignments that are less costly internally but detract from higher-priority tasks.
- Activities that are less costly when performed externally.
- Requirements that do not contribute directly to competitive performance or profits.
Using outsourcing prudently means that you can take on new business opportunities even when faced with a labour shortage.
How do I outsource then?
Irrespective of your business size your decision to outsource can possibly be the smartest business choice you will ever make. But remember that the odds of success or failure with outsourcing are determined by what you put in and are little more than 50%. That is unless you follow a few essential steps that should include the following
- Perform market research — Ensure your provider has an expert team of professionals that guarantee the quality of their work. Do they adhere to outsourcing best practices?
- Make a list — Using criteria such as your preference for a city and country, develop a shortlist of two or three alternative vendors.
- Communicate and ask questions —Ask all of your hard questions to see how you are treated.
- Prepare a contract — Include a statement of work that spells everything out in detail.
- Plan the transition period — Ensure that knowledge transfer is complete. Remember to think about benefits, severance and timing.
- Management systems — A visible and trusted on-site leader should be available to address employee questions.
- Back-up plans — Always have a Plan B, a back-up vendor to maintain Continuity of Business (COB) due to unforeseen circumstances such as natural calamities.
Always run the numbers and know what you want to get out of it. Think about how you will measure cost savings and the success of your outsourcing journey. This will also help you to critique the process if something goes wrong and you need to start over again by selecting a new outsourcing company. Learn from any outsourcing mistakes you make along the way — some mistakes might be inevitable, but an experienced outsourcing provider should help you keep these mistakes under control.
Now get started
Saving time and money while also improving the quality of your work with effective outsourcing solutions. Enhance your ability to take on new work without adding new employees and give yourself a winning edge over your competitors who are locked in by their capabilities and resources.
The benefits of outsourcing can be substantial for business owners — if you find the right partner in the right location. Being able to access offshore talent and teams while interfacing with a local company would seem like a complete win – win scenario. If only there was such a company…..