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One can outline a long list of benefits of outsourcing, but what really makes a difference and
passes the so what test is that outsourcing enables the executive team to focus on the core
business, the things that really matter to achieving success and getting ahead, or, as Professor
Oren Harari puts it breaking from the pack.
In this world of a copycat economy, executives and manager really need to be on the ball and entirely focussed on
customers, business strategy and competitors including the ones that may emerge from the left field.
The question of whether to outsource is a rhetorical one. The question today is: How to manage outsourcing smoothly for
a successful outcome?
Outsourcing is no longer a trend. Rather it is an embedded business model that is growing and gathering momentum,
with the split being 60 percent on information technology and 40 percent on business services. With massive integration
over the last few years, there has emerged a new industry with complexities for the uninitiated, whose charge it is to select,
contract and manage disparate service providers in everything from human resources, engineering, finance and information
technology.
The corporations who have approached outsourcing from a real business world perspective, have done well by focusing on
a number of critical success factors outlined above to ensure business outcomes are achieved. It is not surprising that the
worlds most successful companies are continuing to leverage outsourcing and are making a success of it.
2. Make sure the commercial deal is sound and it results in a win-win scenario. It is simple: you get what you pay
for. Ensure there is enough opportunity for the vendor to make a profit and return on its efforts through a bonus
scheme or results driven incentives.
disasters
People may not admit it, but most of outsourcing disaste rs are driven by cheap deals where nave management
coerced the service providers to deliver Rolls Royce service at Holden prices.
3. Do not outsource a problem without at least understanding whats involved in solving it. You dont have to solve
the problem fully before outsourcing. An outsource service provider may well be better placed to help solve the
problem but you do need to have a clear understanding of the problem,
problem whats needed to fix it including skills,
resources and investment. Only then are you in a position to talk to the service provider. Do not hesitate to get
other specialists involved.
4. The trend has well and truly now shifted towards making smaller deals and breaking the overall operations into
chunks, using multiple suppliers if necessary.
5. Implement sound governance process and a comprehensive management framework with people who are
experienced in outsourcing leadership and not contract management.
Lateral leadership skills are what make for a successful relationship with service providers.
providers. These skills cant be
taught or handed down through management manuals. Take away the buzzwords and very few understand this
illusive skill even less posses it.
it
6. See outsourcing as an extended web of evolving relationships rather than a set and forget model. Ensure these
relationships have a cultural fit with your organization and their longer term objectives are aligned with yours.
7. If innovation and value creation are on the agenda, as opposed to acquisition of commodity type services, make
sure there are appropriate mechanisms and processes in place in your organization to achieve this through your
own work that leverages the service providers capabilities and knowledge. No matter who your service provider
is, innovation doesnt happen automatically
automatically.
omatically
8. When developing a contract, take control and lead the legal team.
team The dynamics of rapidly changing operations
such as IT do not lend themselves to be written up as a detailed contract in a traditional sense. It needs a creative
approach that involves flexibility, a broad framework for collaboration and working with vendors on the basis of
business and operational plans that are likely to change constantly.