XII Commandments for Successful Outsourcing

Outsourcing is more than just a fad now. It’s a strategic decision made by enterprises to realize business goals. During the initial days, outsourcing found its high in the obvious cost savings it delivered. But apparently this cost cutting turned out to be the nemesis of enterprises as they were left high and dry by their cheap service providers with no business results on hand. And the market realized that outsourcing was more than just cost containment. Today, outsourcing is powered by a new philosophy that stresses on quality, reliability, and dependability in addition to cost reduction.

12 commandments for Successful Outsourcing

Now when we say outsourcing is a strategic decision, it means your company’s top brass has to consciously deliberate over it. The decision-makers have to weigh the pros and cons of outsourcing. There is no foolproof method of successful outsourcing. But you can certainly go wrong if you do not have your groundwork covered up. We have identified the following 12 practices, more so commandments for us, which can make a difference in your outsourcing strategy.

(1) Know Thy Raison D’etre Right

This is the ‘Why’ part of deliberation. Ask yourself why you need to outsource. An enterprise should have a strong enough reason to back the outsourcing decision. You cannot outsource just because your competitor is doing so. Try to identify what you want to gain from outsourcing. Are you aiming for cost reduction? Are you trying to get quality support for business critical functions? Are you interested in risk mitigation? Are you looking for specialized knowledge base? What role will your outsourcing vendor play for you? Knowing this will help you justify your decision and selection of an IT outsourcing partner.

(2) Plan Your Roadmap

This is where the ‘How’ part comes in. Now that you know your destination with outsourcing, you define a roadmap as to how to reach there. You set your priorities and end goals for outsourcing. You can define milestones for the engagement and map your progress against it. This will enable you to identify any gaps on the implementation front and rectify them in a timely fashion.

(3) Drive Constructive Change Home

We said earlier that you should not outsource just because your competitors are outsourcing. Similarly, you should also not abstain from outsourcing just because your competitors are not doing so. You do not always need to follow the market. You can lead the market. It’s highly possible that your competitors have not tried out outsourcing because they do not have the right resources available or the volume to justify outsourcing. So do your own unbiased homework. Try to see if you can gain a competitive advantage by outsourcing. The important thing is you as a leader are convinced and committed to the outsourcing cause.

(4) It’s All About Team

Outsourcing is never a one man show. It is a process that demands contributions from different avenues. It requires a charismatic leader who can rise to the occasion and inspire enterprise people. At the same time he needs to be backed by people who can actually perform. One weak link in your outsourcing chain can set you back a few steps. So identify your process champions and nurture them. Encourage the experienced guys within your system to spread knowledge. Promote collective growth in your enterprise for successful outsourcing.

(5) Make Your People Feel Confident

‘Outsourcing’ sounds scary to enterprise employees. In most places, outsourcing is wrongly associated with layoffs. Yeah that’s right, outsourcing does not always cause layoffs. It can also bring about a change in job roles. Your technical guy who was initially implementing a process may now be required to simply monitor the flow of it. But he might perceive it as a threat to his bread and butter. You do not want rebels in your enterprise. So try to educate your people on how outsourcing is for their greater good. Get them talking about their insecurities and counsel them. The more support your outsourcing engagement draws from inside, the better it is for you.

(6) Take It as Marriage

Marriages are built on faith, empathy, compatibility, and flexibility. These are precisely the qualities you should look for in your outsourcing partner. At times, the benefits of outsourcing may accrue over long run. In times like this you need to have faith in your vendor and his capabilities. Similarly, share your concerns with your vendor and align your vision with his for compatibility reasons. At the same time, be patient and accommodate a few hiccups during the initial stages. Remember, your outsourcing partner’s success depends on your success. So he would not sabotage your business.

(7) Be Involved

Outsourcing does not mean that you can now sit back and turn a blind eye to the outsourced processes. Although outsourced, these are still your business processes. You have not given them up. So your involvement here is equally important. Dig in for information, voice your concerns, and when appropriate laud your outsourcing partner with praises. This will only spur him further to perform better.

(8) Maintain Records

The importance of maintaining detailed records of success and failures cannot be undermined in outsourcing. These records are your reference points for future endeavors. They will let you know what worked for you and what didn’t in the past. Preserve them as valuable learnings and draw strength from them going forward.

(9) Analyze your Acts

Like any other business decision, even outsourcing needs to be strategically analyzed. Review your outsourcing engagement periodically and compare it against the industry benchmarks. If needed revise your milestones to make them more realistic. These reviews will also let you know if your processes need remodeling for a more beneficial outsourcing.

(10) Care to Listen

This holds true for both, the outsourcing service seeker and service provider. Clear and unambiguous communication is critical to a successful outsourcing relationship. And given the cultural chasm that opens up in outsourcing, communication becomes all the more important. But communication is a two way street. Only one person cannot, or rather should not do all the talking. So be the listening ear in the outsourcing relationship to make it successful.

(11) Make Informed Choice

Today’s versatile outsourcing vendors have multiple business models for customer engagement. Each engagement model involves different technical skill sets, pricing options, involvement levels, etc. So you need to be smart and choose the model that best suits your requirements. Study the models if required beforehand and then make your choice.

(12) Always Look for Balance

This is the tricky part. Our experience shows that at times enterprises get so revved up with process excellence, innovation, or even cost containment that they lose sight of other business objectives. You need to do the tightrope walking here. Do not let your outsourcing engagement overshadow your other undertakings. At the same time, maintain balance between your outsourcing goals as well. Do not pursue innovation at the cost of profitability. Do not chase cost savings by sacrificing excellence.

Apparently, an outsourcing decision can take you long ways if it is balanced, reasonable, and result oriented. Keep your head in the game and you will see that outsourcing can really turn the tables.

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