Is There an Upside to Outsourcing?

Companies of all sizes, most notably IT developers and other technology organizations, find outsourcing as a way to cut costs, leverage expertise from a diverse talent pool and quickly gain competitive advantage. That’s a definite upside.

In fact, outsourcing has been considered by some in the IT industry as “the magical key to successful growth”.

What’s the Downside?
Outsourcing is not without controversy, especially in our region’s manufacturing arena, considering that relocation of operations overseas has proven to negatively impact regional employment and economic health.

The impact of outsourcing is played out in the political arena, with past legislation introduced by the Michigan Senate designed to discourage business outsourcing.

The Technology Sector
For technology providers, though, today’s companies are challenged to work “virtually” with the dramatic expansion of human capital disbursed through offshore operations, distributed teams, and remote locations.

It has been my professional mission to provide insight, education, and a feel for best practice techniques to prepare organizations for this virtual world.
Global companies with offshore operations face a unique set of complexity, risk, and communications challenges. The management of offshore and vendor relationships poses a unique set of challenges and the key is to develop and execute a realistic plan to manage these operations.

Top Considerations
Here are some of the top considerations to maximize that upside to outsourcing:
§ Lock the process down before outsourcing: Many times a customer will expect the service provider to ‘fix’ a broken process. This is a costly mistake. Make sure the process is efficient and internal roles are clear before beginning the transition to one or more vendors.
§ Identify the touch points: Detailing expectations surrounding the documents being exchanged between you and the outsourced vendors will clarify the work being performed by the service provider. Do not leave to chance the point where formal hand off of documents is transacted. Define the touch point and train the person in communications techniques that promote healthy vendor relations.
§ Implement a vendor governance system: Design measurement tracking and reporting that ties into a well structured communications plan. Set a tone for vendor performance. Hold the vendor to the contract and resist the urge to let some things slip because of a desire to avoid conflict.
§ Give help to succeed. Workforce environments are rapidly changing and the playing field is unrecognizable. Expect people to be uncomfortable with the outsourced relationship, especially if they are new to vendor management and working virtually. Many times the vendor is struggling internally with process and service quality issues. Help for both the vendor and the customer come from providing role clarity, enforcing standards and developing relationship skills.

----Michelle Pallas, Managing Partner at Lighthouse Consulting Partners, www.lighthouseconsultingpartners.com