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1. Plan your projects. To outsource is not as easy as 1-2-3 if you as a manager do not know which projects to prioritize and what the nature of these projects are in the first place. An ideal move would be to break down these projects into stages and assess which parts are ideally outsourceable and which parts are better off in-house. This way your company can make accurate estimates and can flexibly enter into various cost-efficient outsourcing projects.
2. Stick to one. It’s better to avoid a harem set-up when it comes to outsourcing projects. Josh Billings once said: “Be like a postage stamp. Stick to one thing until you get there.” The same is true when you’re thinking about large-scale business transformations. Stick to one partner until you get the hang of everything. Later on, you may extend the contract and start a chain of smaller contracts. When you do this, you are imposing changes step-by-step rather than drastically.
3. A contract is a huge deal breaker in several outsourcing relationships. Before you sign, make sure there is “a meeting of the minds.” Do not sign if you doubt any or some of the provisions. Talk it out with your subcontractor if you must. It would foster a disproportionate relationship if the parties involved will just sign without properly mulling over that which will legally bind both of them for a certain period. However big or small the outsourcing project, building a partnership entails a solid contract that clearly stipulates the roles, duties and obligations of each partner as well as designates the appropriate mode of payment.
Solid contracts should also be final and executory. The contract should have already gone a strict review process and that no party will try to change its provisions after signing. It should also provide proper ways to settle conflict in case disagreement arises.
4. Be picky enough. Learn to discern the best suppliers, the so-so suppliers and the bluffing suppliers from each other. When you require new outsourcing projects or services, it helps to be more flexible with your choices. In this way, you do not have to look back in regret when a project fails or when you happen to have a fall-out with your outsourcing partner. Do not be biased. Biased choosing of suppliers tends to make organizations less responsive to unforeseen necessities.
5. Commitment is an extraordinarily courageous feat which not many organizations are capable of. However, more often than not, non-commitment could very well be avoided if there is a strong governance mechanism that prevents any shirking away from responsibilities. A governance model also helps outsourcers to effectively manage the activities of their service providers. Make sure you choose a governance model especially customized to complement organizational peculiarities.
6. As aforementioned, be faithful to a single provider. Having multiple outsourcing channels dilutes the outsourcer’s focus. Single sourcing models are easier because there is a one-way flow with which you spend all your energy. Multiple sourcing models on one hand will cut down your energy reserves as you will have to distribute them as evenly as you can to several service providers.
7. Get to know your processes well before you outsource any of them. Outsourcing may backfire if the outsourcer is not well-oriented with its own business processes. Either keep a process flow or map out the processes beforehand. As stated in number 1, verify which parts are outsourceable and which parts are not. At best, have diagrams and illustrations. This will also make things a lot easier for your chosen vendor. Knowledge of the process flow, for instance, exposes the strengths and weaknesses of the outsourced process/processes. The service provider could provide the appropriate countermeasures to improve weak services or reinforce already strong processes.
8. Maximize and strategize on information technology (IT). Your service provider, on one hand, shall serve as fiscalizers and facilitators who will help you fine tune the use of IT. Together with the chosen provider, you can strategically deploy IT to unleash untapped outsourcing potentials.
9. Outsourcing is not an all or nothing venture, where you have to transfer every process offshore or somewhere else other than in your own company. If you do this, who will be left to manage the relationship you established with your vendor? Only outsource time-consuming backoffice activities that would only pull your company downwards without enough financial backing. If you cannot afford to put up departments to handle specific processes (i.e. creating an accounting department to handle bookkeeping and financial reports), then just keep a single personnel for the mean time as a representative of each envisioned department. Let the in-house staff take care of and maintain outsourcing relationships to avoid overlooking important details.
10. Before you outsource, be vigilant enough to consider the price. Survey and then pre-calculate the possible costs incurred when you outsource. Compare these costs with the costs incurred in maintaining a pure office-based business. If outsourcing gives you more value by a large margin, then there is no need to ask the provider to lower the price all the time. Doing this will only hurt the established relationship. Bear in mind that lowering the price more than what was already agreed upon will only upset the balance. Your chosen service provider will suffer. Ideally, service providers should have a stable source of income to fund its operations, including IT maintenance and the hiring of top-notch agents and virtual staff. Constantly lowering the price will prevent them from providing you with quality outsourcing services.
A partnership is a partnership. Take advantage of the benefits of outsourcing but do not take advantage of your provider’s good will. Outsourcing works best when there is synergy or when no one tries to get the ahead of the other party. Most established providers nowadays come from developing countries, so respect and reward their efforts. It will surprise you how much generosity can actually work to your advantage.