Outsourcing Success

This audio was created using Microsoft Azure Speech Services

It might seem sometimes that Outsourcing is a trend. Companies fluctuate in deciding whether to outsource or insource in an ever-changing way, usually characterized by criteria which often fail to adhere to established objectives. In this situation, one should consider the reasons that make what is accepted today an object of criticism tomorrow within an organization.

When a company opts to outsource, why, however, do expectations go unfulfilled in a large number of cases?

It´s because outsourcing is poorly executed in a high percentage of cases. The scope of the activity that can be outsourced is in many cases unclear because the implications in terms of other business areas are not analyzed beforehand or due to failure to define the indicators intended to be measured or a lack of proper evolutionary control and management, or because the effects on teams of personnel are not taken into account or in failing to select the right provider.

Once the causes of potential failure have been determined, only two alternatives remain: to stop outsourcing or otherwise take the steps needed to ensure a successful outsourcing process. Here we shall focus on the latter alternative.

First is defining what can be outsourced. This requires in-depth analysis of non-core business activities that are nevertheless subject to operational efficiency improvement thereof and to which economies of scale may also be applied to enable cost savings. Certain cases may give rise to improvement as the result of flexibility in obtaining resources; however, in these situations economic improvement must obviously be demarcated appropriately as part of project management. In other words, resources will prove more costly and this type of service therefore makes sense only in cases in which the project to be executed is highly controlled. Otherwise, we would be wasting our money.

The next point the implications involving the other business areas. All of the activities of an organization are interrelated and it is thus difficult to isolate one from the others without coming to terms with the fact that the activity will necessarily have to interact with the rest. This means that we must have a very clear understanding of the global process map, managing the procedures associated with each process and identifying roles and individuals in charge within the organization. Based on this, the next step is clear definition: of how the relationship model should be and which tasks are to be conducted through outsourcing support in order to ensure smooth service operation.

Third, we need to be very clear on the indicators associated with each procedure. That is to say, which elements are to be measured and what the objective values for ensuring service fulfillment are to be. These indicators are dynamic, as are the values assigned to assure compliance thereof. For this reason, it is essential to carry out rigorous control during service provision, with all parties involved demonstrating an open mind in order for the process to evolve effectively. This is achieved by establishing a relationship model which encompasses follow-up meeting planning, report typology and periodicity definition and level-setting in order to deal with potential contingencies. And thus we address the fourth “reason”.

The people involved need to feel they are part of the goal of achieving outsourcing success and thereby be incentivized to improve indicator results.

Finally, essential in choosing the right provider is to take into account the supplier’s experience and expertise, resource quantity and qualification, infrastructure and tools for providing service, sustainability strategy and certification backing the application of best practices.