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With great outsourcing comes great responsibility

21 Jun 2012 12:00 AM | Anonymous

The connection between outsourcing client and supplier is often fraught. Misunderstandings, miscommunications and disappointment are a frequent feature of the relationship, with both sides becoming frustrated by problems. One client-side industry insider believes that as many as 80 per cent of clients feel dissatisfaction with their outsourcing. Given the critical role outsourced functions deliver for businesses, this is an alarming figure.

While suppliers absolutely need to address this issue, there are some straightforward but crucial steps that clients can take to maximise the value of their outsourcing contract, as well as making sure it doesn’t become a time-consuming and toxic relationship.

Viewing an outsourcing contract as an ongoing partnership rather than a straight handover is an important first step.

A report published this year by Accenture into how to achieve high performance in business process outsourcing validates the importance of this partnership approach. It found that nearly 85 per cent of high-performance businesses consider their outsourcing provider to be a strategic partner. This contrasts with only 41 per cent of typical performers having this mindset. Clients need to be more realistic about sources of value and what role they’re going to have to play to get that value. By consulting with their outsourcer as more of a partner than a supplier, clients can tap into their specialist knowledge for the benefit of their business. This will deliver the value creation, or transformation, that many clients want to see from outsourcing contracts.

It’s important to look at the effect outsourcing will have on the business as a whole; it cannot be seen as a process in isolation as business units are interdependent. Monitoring and measurement are essential to the success of the contract, especially if your company is using more than one supplier.

Trends in outsourcing have seen contracts getting smaller, as well as fragmenting, as companies look for the ‘best in breed’ in each field. Some outsourcers are forming consortia made up of a range of companies - each with different specialities - that allow them to tender for contracts.

Having specialist suppliers provides great flexibility and efficiency for the client, but it does present complications. As the number of parties involved goes up, it dramatically increases the amount of processes and ‘moving parts’ that need to be monitored.

It is crucial for the client to know how each is contributing to the business. But how can they keep tabs and track each process? How to tell where efficiencies could be made? And how to fix a small problem before it becomes a big problem?

Software available now allows minute by minute tracking of outsourcing results. No longer do businesses have to rely on slow, expensive reports that are out of date by the time they are issued. This technology offers a relevant and effective means of tracking all the moving parts of a business to give a greater control over the multi-layered processes. Monitoring software allows several providers to be tracked. Not only does this empower businesses to get better results from using multiple specialist outsourcing providers, it offers an efficient way to manage risk.

Software that provides a central dashboard to monitor all the elements offers clients a way to manage risk when moving their business from a single big supplier to multiple specialist providers.

A final important consideration for clients is to be very clear about what you are hoping to achieve. Often clients can assume that their outsourcer has understood something that they haven’t clearly outlined, and assumptions are never safe. Clearly defined objectives at the beginning set the contract up for success. If something is not working out as planned, articulate this to your supplier and work together to find a solution. Don’t wait until something has gone really wrong to address it.

In summary, clients should see outsourcers as an extension of the business. It is not enough to assign a contract and then expect the outsourcer to run with it independently. Put in place a tool that can drive and measure the value obtained from an outsourcing contract. The more the relationship is seen as a partnership and the more open the communication, the more successful and valuable results will be for you and your company

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