The 8 Steps to Successful Outsourcing

Outsourcing offers plenty of potential business benefits however like any venture, there are also potential wrong turns and potholes.

Avoid the pitfalls associated with outsourcing off-shore with these eight actions.

More after the jump!




1. Uncover hidden costs and factor in the differences in operating models. Do not expect immediate results aligned to business prospects. Results can improve the longer and stabler the outsourcing partnership gets, as clients progress up the learning curve and modify operations.

2. Always confirm a service provider’s security and professional indemnity insurance practices, to ensure these as robust as required. One can never be too cautious when it comes to protecting intellectual property or proprietary information. Address privacy concerns up front and manage them all along the way. Document your requirements and define in detail the methods and integration with service providers.

3. Always plan for contingencies. Even when a service provider has specific skills and means to reduce risk, it pays to be prepared with potential risk analysis and assessment of project failures.

4. Care about cultural differences. Corporate cultures are unique to each company, even those in the same industry. Add in an entirely different culture of an offshore services and solutions provider, and the potential for cultural clashes rises exponentially.

5. Track down the turnover rate of key personnel of an outsourcing project, as key personnel are in demand for new, high-profile projects, thus, may be recruited by other offshore vendors.

6. Always account for knowledge transfer costs. The time and effort to transfer knowledge to the outsourcing service provider is a cost often overlooked by client companies. Most client-provider partnerships use videoconferencing (to minimize travel expenses) and classroom scenarios (one-to-many transfer) to improve the efficacy of knowledge transfer. In addition, employee turnover often places a burden on the client organization to continually provide additional information for new team members.

7. Approach the potential partnership with an outsourcing services provider as a strategic investment, not as a purchasing decision. Invest however much time it takes to truly understand, and align, the interests of both parties. Establish objectives, and means to evaluate performance, in advance to use it as a foundation for governance and monitoring.

8. Assign qualified and eager people to manage the relationship—people who have outsourcing certification, the professional skills and personal commitment to define the process for addressing problems and negotiating changes, and make it part of the relationship management process.