Are you ready to outsource? You must be realistic about the state of the business and scale of benefit available from outsourcing.
The simplicity of handing off a portion of your business for someone else to run at a competitive cost base and increased service levels is appealing. It is tempting, under pressure to improve business performance, to try to make an under performing business function someone else’s problem - outsource a “mess”, hoping that someone else can fix it, or outsource under the seduction from a supplier that “everyone else is doing it, so should you”. In reality, delivering an outsourcing programme is
lengthy, time consuming and risky. You need to be certain that the scale of likely benefit is worth the time, effort and risk you will take. The most effective transformational outsourcing partnerships often cover multiple functions/service lines where the management overhead (for both client and outsourcer) is leveraged effectively. Any outsourcing relationship requires investment in management and oversight on both client and outsourcer sides.
There can be other factors you need to take into account relating to your organisation’s values and ethos. You may wish to keep employment local (or at least onshore) and so are prepared to trade lowest cost outsourcing for other considerations, these may reduce the potential benefit available and rule out outsourcing for some areas of the business.
Is there sufficient scale in the operation and sufficient likely cost saving (accounting for transformation costs and risk) to make a compelling business case?
Do you understand the operational KPIs and SLAs? Is TCO (Total Cost of Ownership) understood against the market to scale potential benefits? Are operational volumes and variability understood?
Scale and Benefit
Is the business operation sufficiently well contained that clear processes, hand-offs and KPIs, SLA’s can be defined to form an outsourcing contract?
Performance Parameters Understood
Contained
Operating Effectively
Is the operation already effective? Outsourcing a business with significant issues, where the real cost base and performance parameters are unclear is usually ineffective.
5.
Project One
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