If you want to be successful in your business, you need to ensure that you hold on to a successful partnership with offshore outsourcing, using the help of improvements in process, talent pool, reduction of costs, improving the focus on core business and so on. But there are some risks attached to an offshore business and one must tread carefully to minimize the risks associated with offshore outsourcing. It helps if you take things slowly at the beginning and then make informed decisions.
Nine steps to help your outsourcing Services
If your company is venturing into business process outsourcing services, keep the following objectives in mind and then steer ahead.
1.Do research and establish goals-You will outsource for the sole purpose of earning money, and if the basic idea is not fulfilled, that is if you are not able to select the right business provider, you will fall short of reaching your goals. You have to implement a bidding system to know whether you have selected the right provider and also a tracking system which will enable you to track the performance of the provider. If you do a lot of research and remain focused, you can avoid higher IT costs, resource wastage and lose out on business opportunities.
2.Set realistic expectations- After setting your goals and objectives, you need to reconsider them to make sure they’re realistic and achievable. You should not aim for forty percent savings or more because it is not realistically possible. Also, vendor selection costs, the cost of communications, redundant oversight, the cost of infrastructure and a number of other costs which are seemingly not visible, will lessen your first-year earnings considerably. This doesn’t mean that outsourcing has been a total failure, it is just that if have your goals in sight, you will reach there sooner than later. Rather than hurrying up to achieve your goals, moderate your expectations so there will be fewer chances of you being disappointed for your failures.
3.Count the costs- Apart from maintaining a realistic goal; it is also important to keep a tab on the expenditure. Senior management executives want skilled offshore laborers, and for that reason, the costs can spiral way beyond expectations.
- Selecting a vendor: This takes quite a lot of time.
- Shifting work and business processes: This means knowledge transfer and loss along with process refinement.
- Attrition of existing workforce: Expenditure of removing existing staff.
- Handling with cultural differences: Cultural training is obviously needed, especially when it comes to offshore clients.
- Ramping up: Initial projects can help with your learning curve.
- Having superfluous management, infrastructure, and communications costs: At the beginning, there are many layers of servers, and communications systems which need to be bought and installed, on top of that there is infrastructure expenditure.
- Maintaining an offshore contract: The expenditure of maintaining a finished contract can indeed really be tough. Hidden costs can prove to be a real drainer, but careful analysis and management can reduce it considerably.
4. Risk Management- A successful offshore strategy is not only anticipating the risks associated with outsourcing but also preparing yourself as to how you will mitigate the problems coming your way. It is best if you keep up-to-date mitigation strategies ready, and take measures to ensure that risks do not materialize.
- Though you are all up in arms against any unforeseen problems coming your way, you must fall back upon your plan to handle it well, by considering the following points:
- Effect: How can a particular risk affect your strategies?
- Probability: Do you think that there is a probable chance of the risks materializing?
- Ability to control: Even if the risk materializes is there any possibility to mitigate the risk?
Productiveness: Is the team able to effectively deal with risks? An effective strategy will help lessen the impact of risks and effectively stop the risks from materializing.
Though there are some risks like political upheavals which cannot be controlled, most of the risks to a successful offshore outsourcing strategy like selecting the best vendor, hatching up a favorable contract, getting good quality deliverables, and controlling expenditures as well as controlling schedules can be managed with the help of careful management, strategies, and planning
5. Measuring and tracking the benefits-The natural consequence to counting expenditures is to measure the benefits. Let the benefits or results speak for themselves. Rather than overdoing or downplaying the benefits, say it as it is, and if they are lesser than the estimates, do your best to measure and track the benefits and also to increase the benefits.
5. Measuring and tracking the benefits-The natural consequence to counting expenditures is to measure the benefits. Let the benefits or results speak for themselves. Rather than overdoing or downplaying the benefits, say it as it is, and if they are lesser than the estimates, do your best to measure and track the benefits and also to increase the benefits.
If you segregate overhead costs from regular project costs, it’s important to add them together to find out the real costs. Some organizations prefer the average results which prove to be misleading and erroneous. You need to add the best practices to get the correct results.
6. Use an effective outsourcing model- Another important factor in running a successful outsourcing process is choosing an outsource model which suits the circumstances and your company best. You can choose from different outsourcing models, each unique, depending on their strengths and weaknesses. Offshore vendors may put up an outsourcing model for your reference, but you have to think about it to see whether it suits your company’s needs or that of the vendor.
There’s no dearth of models, quite like the number of vendors and companies. An outsourcing model has different variables, such as the distribution of responsibility, scope, flexibilities of contract, and duration, but the main variables can be the scope of outsourcing effort and tuning between the company and the outsourcing provider. The primary outsourcing model can be the following:
- Staff augmentation: Here you hire contractors to perform a particular role or job. The contractor gets the work assignments directly from your company, and then the job is done remotely.
- Project-outsourcing: This model is a self-contained one where a reliable outsourcing team is held responsible for submitting the complete project. A small, well-etched out, the isolated pilot project makes a good beginning of an outsourcing partnership.
- Dedicated development center: This model has a pool of resources co-located at a vendor’s offshore site, resources that are there for your company’s use.
- Functional outsourcing: This model outsources an entire business function, process, application, or department. This tends to be risky but it also earns you rich dividends.
7. Choose complementary business partners- It is important to select an appropriate business model, but more important than that is choosing a good business partner to execute it. Many vendors have a pre-thought out plan, new-customer initiation model and want to rush through the process of preliminary rules and sign a contract without taking into account your outsourcing objectives.
8. Slow and steady is the best way to go- With a little help from the outsourcing team, the senior management plans how swiftly you can move forward and set the ball rolling. The senior management's decision to move forward should be determined by the success rate. Begin small with pilot projects and then start from there to get bigger projects. Do not expect that you will get a big return in the first project itself, instead aim big but start small.
9. Keep a track of your progress- As a company starts an offshore engagement, it’s imperative to keep a track of the guidelines to understand whether you are successful or not. To do this, you must begin with an estimation of current performance using the same process with which you should analyze outsourcing performance. Choose the metric that measures the aims and objectives of your outsourcing program, and find out who is to measure them, how to measure them, how would you report them and how to audit them. Before signing on the dotted line of a service-level agreement (SLA) or Statement of Work, make sure that the metrics are clearly mentioned and both the parties agree to it.
While there are numerous hurdles and problems, expenditures and risks involved in an outsourcing strategy, the benefits are huge, far more than the risks attached to it, in fact. Understanding the hurdles of offshore outsourcing provides the key to success. Success is then at sniffing distance for many companies not currently taking advantage of the benefits of outsourcing. Once they prioritize their plans and follow some of the strategies mentioned here, they will soon see the face of success.
If large-scale offshore outsourcing is not on your cards and you are not ready to consider it, setting targets for outsourcing can provide an effective solution for your existing predicament and broaden horizons as far as meeting various demands are concerned. They have to cater to an increasingly global business scenario. If you think the benefits of outsourcing are far beyond your capabilities, think again, because now it may seem more feasible and you can do it pretty successfully. So go for outsourcing and script your own success story.
