Outsourcing can be a difficult strategy to execute well and still avoid unintended consequences. Many lessons have been learned on how to and how not to do it. Experienced companies consider the total cost of ownership rather than just the reduced hourly rate. The desired benefits do not always materialize as additional management overhead is incurred along with communication gaps and quality issues diminishing cost savings.
Companies are left with difficult and critical decisions to make:
• What to out-source?
• How to define it?
• Where to out-source to?
• Which vendor to use?
Scorpion has been involved in out-sourcing projects for over a decade and can guide you through this process so that complex in-company functions do not become out-of-control off-shore ones.
Out-sourcing and Off-shoring Strategy: Out-sourcing and off-shoring strategies need to be compared and their relative benefits assessed based on analysis of quality, standardization and expected cost reductions. Companies today consider different options including: In-sourcing, shared services operations, off-shoring, and out-sourcing.
Effective in-sourcing requires evaluating return on investment for a company to bring common services into the organization verses the cost of out-sourcing those services. Shared services encompass centralizing common services utilized by multiple departments into a central team servicing the whole organization. An example of shared services operations would be developing a centralized project management office or development team. Off-shoring and out-sourcing focus on identifying common services and transitioning those services, such as development, to another organization worldwide.
Many companies are now using a “hybrid model,” containing elements from all approaches, depending on what fits best with different marketing, sales, operational and administrative needs.
We can assist you in any of these areas through a four step process:
(1) Identifying key competencies which should not be outsourced because they are core to the business
(2) Establishing of the key functional, process and performance specifications for the area to be serviced (Key Performance Indicators or KPI’s)
(3) Refining all processes and systems targeted for out-sourcing or centralizing to ensure they conform to corporate objectives and standards. Further, providing support for these functions with common software platforms
(4) Carefully transitioning centralized or off-shored services so all personnel are trained to operate these processes and systems. This critical phase ensures adherence to common company-wide procedures, and ensures management carefully monitors performance on a periodic basis.
Example: Internet Service Provider Company
One example of outsourcing is demonstrated by an internet service provider whose goal was to out-source their customer service support function to India. This led to a 75% cost saving per call, saving over $20m in call center costs. This was a one year initiative that included sanitizing customer data to ensure compliance to appropriate customer privacy laws. Centralizing customer service tools for call and incident management ensured quality of service by:
• Improving customer service skills with training initiatives
• Ensuring adherence of the off-shore call center to the company’s quality of service objectives through monitoring key performance objectives
• Reporting on call center performance based on these key performance objectives
Q: How do you ensure on-going success and quality of service in off-shoring scenarios?
A: This is done through standardizing processes, systems, and key performance indicators (KPIs). We ensure your off-shoring partners meet or exceed service quality expectations by monitoring and reporting against your KPI’s. This oversight process continuously monitors performance so that any gaps are quickly identified and remedied.
Q: Are software packages placed with outsourcers done so with proper instruction as to how they should be used?
A: Ensuring outsourcers understand how to use the company’s software is one of the key success factors for any outsourcing implementation. This is achieved through proper system documentation and training of outsources.