Plan before you Outsource
Outsourcing is not new to the world and initially companies used this tool when they faced scarcity of resources locally. Then outsourcing became the tool to enhance the productivity and performance levels to become competitive in the marketplace. In late 90's, what started as investments going into internet and telecommunication networks worldwide to bring the countries and people much closer and reachable, actually carved the way for another revolution. Outsourcing got replaced by offshore outsourcing and with the rapid spread of the Internet and drastic fall in telecommunication costs it became much easier to procure services from an offshore destination with minimal management.
Today Offshore outsourcing can be termed as the third version of outsourcing strategy. Some even term it as global sourcing where services are procured not from one but more than one offshore destination. Today global sourcing is not a fashionable phenomenon but a business necessity to become competitive and productive in the market place.
Though outsourcing is a proven strategy; but it can fail if you do not plan it thoroughly. There is no short route to reaping benefits of offshore outsourcing, and without doubt it requires thinking, planning and execution on your part. Here is what we identify as the key steps before you outsource -
| Step by step approach |
how and what to do |
| identify your objectives |
- If cost is the only objective then out sour all labour intensive and non core function
- Always plan with long term view if you have as objectives access bigger resources.Be agressive but seletive on a provider
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| Take management buy-in |
- Outsourcing is a change which is bound to be resisted as employees will naturally feel insecure thus giving way to rumors. Senior management needs to be proactive in resting rumors and realigning employees to bigger company goals.
- At the same time management needs to be patient and should not expect cost savings overnight. It is not just savings but increased flexibility and scalability which should also be the yardstick to measure success in the offshore outsourcing strategy.
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| Identify work to outsource |
- For immediate short term cost savings always outsource non-core labor intensive work.
- To ensure zero failure always outsource work which is less dependent on knowledge transfer and people.
- Always start by outsourcing easy and non core functions and then follow up with more complex work going offshore so that provider gets time to pick pace.
- Also try to start outsourcing work which requires minimum of your team interaction. Thus giving your team time to adjust to the change.
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| Search & Select provider |
- For short term cost savings, it is imperative to focus on a provider with lower rates and resource availability.
- For long term outsourcing strategy, it becomes equally important to focus on experience, references, people quality and work ethics of the service provider.
- For long term outsourcing strategy selection of offshore destination becomes equally important. Study and compare the time overlap, political stability, resource availability, and cultural compatibility of the offshore country.
- Search, shortlist and select provider company by visiting them and never forget to take a customer reference.
- Always visit the offshore company and try to meet as many people as you can from each rank to analyze the work culture of the country and provider compan
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| Prepare company for change |
- When going in for short term outsourcing, educate in house team honestly about strategy so they do not feel insecure.
- When outsourcing is your long term strategy, it is imperative that you align employees to company goals.
- Outsourcing is a change which will be resisted and will lead to rumors. Thus the senior management should be proactive in resting all rumors and to address employees.
- Treat the supplier as part of your extended organization and not merely as a contractor. Encourage your project teams to interact and familiarize themselves with supplier teams. This will close cultural gaps and lead to better working relationships.
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| Start operational readiness |
- Upgrade your network and security policies before you start giving access to your network and servers to the offshore outsourced team.
- Upgrade your internet and telecommunication backbone to enable a smooth and reliable communication between your team and offshore team.
- Study the preparedness of the provider company to enable a reliable and smooth communication with your team onshore.
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| Start the engagement small |
- If you have time it is always recommended to start with a pilot in which not only you assess the provider company but you also prepare yourself for the changed working environment.
- Never outsource complex and core technology functions immediately, but always start outsourcing with easy, labor intensive and non core functions.
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| Scale outsourcing to maximize benefits |
- If possible, always start with what the provider company does very well and slowly outsource more complex functions thus giving provider the time to adjust.
- When successful with the outsourcing strategy do not hesitate to maximize the outsourcing and reap more benefits of cost, productivity and enhance performance levels.
- Economies of scale always work well and will always help in attracting more competitive rates from offshore provider company.
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Dreamreal, in partnership with e-Healthcare Systems, Inc.
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