Key Strategies for Successful Outsourcing Implementation
Basics for a Successful Outsourcing
1. Review the Structure of the Company.
A. Have proper administration of the procurement process: The process of outsourcing should have a defined mission: to increase the product value perceived by consumers.
B. Identify key skills and identify bottlenecks: Identify which activities are central or main for the business.
C. Change the organizational culture: Members of organizations should understand the fundamentals of this separation of activities, the reasons behind it, and the benefits it can bring to the company.
D. Have adequate technology: It is important that the company has the technology needed to maintain a relationship of this kind.
2. Determine Which Activities Apply to Outsourcing.
1. Activities that make intensive use of resources: Using this technique, companies can enter a new market without the need to immediately incur substantial investments in equipment.
2. Activities that use specialized services: Outsourcing offers companies great flexibility in their systems because they may have the support of another specialist.
3. Relatively independent activities: One way to identify activities that are not part of the core skills of a company is to observe those tasks that have relative independence from other functions of the company.
3. Select the Supplier.
• Analyze the cost/benefit: If you get a positive result, it means that the company has identified an activity that is not part of its main skills.
When the result is negative, we can deduce two things:
• The company is trying to break an activity that is part of its core skills.
• The supplier selection is poor and does not have sufficient capability to provide service to the company.
• Carefully select suppliers: Companies should look for vendors that focus on the industry in which they operate and understand the management of products to be outsourced.
• Develop a written contract: One of the basic points to look for in outsourcing is to have a written contract that clearly establishes all the elements necessary for the third party to comply with the delivery of the product and/or service.
Outsourcing Risks
• Do not negotiate the right contract.
• Unsuitable selection of the contractor.
• The company can be left halfway if the contractor fails.
• Increased dependence on external entities.
• Non-existent control over contractor personnel.
• Increased costs of negotiation and contract monitoring.
• Rejection of the concept of outsourcing.
Methodology for Assessing a Company’s Outsourcing
Phase “0” – Home
• What do you do? Identify the scope for outsourcing.
• How long? Approximate time of delivery.
• Who is involved? This phase is initiated by the manager.
• What is delivered? A document that establishes the scope of the project.
• What is yours? Browse (or not) the strategic benefits.
Phase “1” – Review
• What does? Examines the feasibility of outsourcing.
• How long? Four to six weeks.
• Who is involved? A small team led by the sponsor.
• What is delivered? A feasibility study or another.
• What is yours? Decision about whether to proceed.
Phase “2” – Detailed Planning
• What does? Establish criteria for the award.
• How long? Eight to ten weeks.
• Who is involved? The team formed during phase 1, plus one representative.
• What is delivered? A plan for the bidding process.
• What is yours? Who is invited to participate.
Phase “3” – Recruitment
• What does? Select a preferred contractor.
• How long? Three to four months.
• Who is involved? The core team from the planning phase.
• What is delivered? Invitation to bid.
• What is yours? The contract award.
Phase “4” – Transition to New Service
• What does? Establish procedures for administration.
• How long? Two to three months.
• Who is involved? The core team and the manager.
• What is delivered? A transition plan.
• What is yours? Termination procedures.
Phase “5” – Administration and Review
• What does? Check the contract regularly.
• How long? From one to five years.
• Who is involved? Representative of the contractor responsible for delivery.
• What is delivered? A managed service.
• What is yours? Annual verification of the validity of the original assessment.