Outsourcing Mentor, SME, project, success

Contact Details

Email : NewThinking@outsourcingmentor.com

Initial Pointers

Some initial pointers when deciding to outsource.

Start the outsourcing project with an overall goal. Without this is it impossible to correctly measure success
The relationship should be a partnership not customer – supplier
Invest in the ongoing governance of the relationship or it will fail
Don't always go for the cheapest vendor. They may not be the best for your organisation
Working practice and cultural fit is as important as price. The relationship has to work in the long term
Spend time in the vendor selection process. Don't be fooled by their sales pitches. Get into the detail on process fulfilment
Work out if the sales team will continue on the project. If not, meet the project team
If the process you are outsourcing has issues. Resolve them first, then outsource. Don't expect an outsource vendor to resolve them. They won’t know the detail of your company and may offer an inadequate solution through no fault of their own
Include as much flexibility into the contract as possible. Things may change in the intervening years after the contract is signed
Keep the score cards and SLA as simple as possible. Measure a few key indicators rather than scores of potentially unimportant ones
Ensure you dedicate adequate resources to the management of the relationship
Don't let issues spiral out of control. Have a clearly defined escalation processes and communication plan, and stick to them
Regular updates with your vendor keep everyone informed and stop any surprises
Provide the same service to your vendor as you would expect. If you get sloppy then they will follow suit

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Glossary of Outsourcing Terms

Exit plan
The plan developed for coping with the end of the contract -- whether because the term is up or because termination clauses have been invoked. It's best to assume you'll be moving to a new service provider rather than simply renewing the contract. Think about what the organization will require to maintain service levels and to make a smooth transition to the next provider. This is often missed out and in the past has lead to contracts being renewed out of necessity rather than desire to continue in a partnership
Cost Based Outsourcing
A sourcing relationship in which the focus is on efficiency of operations -- primarily in the form of cost reduction or cost control.
Escalation procedure
The process set up to define the steps taken when service levels don't meet upon standards. This may involve determining fault for missed measures, reporting, problem resolution within a specified time and -- when the problem still isn't resolved -- executive intervention on both the client and service provider sides.
BOF
Back Office Functions - Business processes such as finance & accounting, human resources, administration, etc. That are generally not customer facing and are usually not core to the companies business
Issue Resolution Process
Clearly defined procedures to attempt to resolve differences amicably and avoid costly litigation. The procedures would include escalation paths and milestones to resolve the issue

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Outsourcing Facts

Over 19Bn was spent in outsourcing agreements last year
The Outsourcing industry grew by 15% last year
90% of all companies outsource something
SME outsourcing grew by 50% last year
70% of outsourcing goes to companies onshore
Outsourcing as a term is over 30 years old