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
- 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.
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.
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.
