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| 10 Commandments of Outsourcing |
Cut-throat competition in developed countries resulted in looking for venues for reduction in costs, more flexibility, keeping pace or even faster to technology innovation, process improvement, looking for specialists or expertise, and concentrate in core business areas. Now, starts the idea of outsourcing IT and Business Processes to specialists. Here, we briefly look towards pillars for successful outsourcing for a win-win situation and long-term relationships between client and vendors.
1. Assess Readiness: For small and medium-size companies, it is beneficial to outsource at any stage, for various reasons, however, if it is a very large organization with complexities in processes and procedures, it is better to evaluate the following factors to assess whether the organization is ready for outsourcing:
 Streamlined and organized Applications are easy to be outsourced
Structured tracking and control systems are essential
Well-defined business plans
Clarity of processes and work-flows
2. Define Goals: Irrespective of the size or industry of the organization, it is essential to clearly define the goals for outsourcing, before pen-down the engagement intricacies. Key factors are:
Capabilities to be achieved
Technology innovation required
Resource savings (monetary, people, facilities)
Process improvement level
Time factors
3. Top Management Involvement: Since off-shoring/ outsourcing is a key change in the process for a long-term and lots of impacts in the competencies, and chances of un-wanted chaos, it is essential to have top-management involvement, and:
Involvement of empowered CIO
Formalized and detailed documentation
Room for improvement and changes
4. Strategy and Control: Success and smooth running of any long-term business partnership depends on near perfection in strategy and mechanism for control, review and willingness for improvement at every stage:
Administrative structure in place
Defined milestones and periodic assessment
Appropriate, and multiple vendors if the organization is large
5. Team Building: Every outsourcing decision should be preceded by setting up and building appropriately sized and organized team to monitor, analyze, and improve the outsourced activities to ensure a win-win situation to both the parties and smooth relationships, for years to come:
Well defined processes in place
Focus on relationship management
Improved core competencies
6. Vendor Selection: Probably the most crucial decision is selecting appropriate vendor. As we all know cheaper is not always healthy nor the size, because vendor should also make profits for quality of deliverables and smoothness in long-term relationships. Better way is to look at certain factors about the vendor:
Track-records and References
Value proposition, practices, and vision
Senior management profiles and Organizational structure
Access to and Attention of the top Management
Flexibility and Openness at various stages
7. Long-term Relationships: Outsourcing of IT or BPO is generally not for an assignment or two, but for years to come, and for smooth and sustained one, for mutual benefits of both the parties. And, it is essential that the parties understand and appreciate that:
Goals achieved as per the set milestones
Vendor also makes profits and quality of service is maintained
Flexibility to situational issues and openness in approach
8. Quantify Returns: Every top management see the activities through the facts and figures that sets the pattern for evaluating trends and facilitate forecasts. So, it becomes essential for any successful outsourcing, to pen-down the facts and figures before outsourcing, and measure the returns at every stage in comparison to the base-indices to ensure that:
Every milestone confirms to set goals
Increases productivity
Encourage healthy culture
9. People Management: Outsourcing by its very nature is looked upon as a serious threat to related professionals, at any organization. So, it is necessary to manage the professionals with care so that the required talents and know-how is not disturbed:
Open and regular communication
Appropriate change management strategy
Career plan and smoothness for professionals
10. Cost and Deliverables: Changes and improvements always bring its costs and risks in various forms. Analysis and corrective measures to reduce cost factors and mitigation of risks are required before the start of the process and at every stage of the functioning:
Evaluate and define the risk factors
Control on overhead and hidden costs
Access to and attention of top management of vendor
Test and accept every deliverables.
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| "In dealing with firms for over 30 years, DataTransit was the only one I ever dealt with that brought the requirements to me in a matter of hours. These guys know how to keep your business!" |
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| Views |
| "Inside Outsourcing in India" - by Stephanie Overby (source:CIO) |
| 10 Commandments for Outsourcing to ensure that a win-win situation is guaranteed |
| Fall Guy: US Immigration and myth of offshoring: by Gary Endelman |
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