How to make outsourcing a strategic pillar of your business success
Many business owners dream of achieving seamless process support that will drive their vision for revenue growth, profit and process improvement, but feel frustrated by how to resource and fund the investment in time and people this requires.
In recent research by Bain and Co, of 2,000 companies over 10 years found that only one in 10 companies achieved sustained, profitable growth. One activity that sets such winners apart is that they often use capability sourcing in more innovative ways than their competitors. Outsourcing and offshoring began as cost-cutting measures, but companies that create real sustained value routinely use them for far more strategic ends–to gain capabilities that they don’t have in-house or to strengthen capabilities they do have.
Outsourcing of a process or function feels like something only big companies can do. This article will give you the tips and tricks so you can access this game-changing strategy now.
We have experience doing this every day for Australian business, we can guide you through the process, to ensure your dreams become your business reality and your success.
Be clear on your outsourcing objective
“Efficiency is doing things right; effectiveness is doing the right things.” – Peter Drucker
For any outsourcing venture to be successful, you must have a clear measurable objective for the initial process or project outsourcing. Make it measurable, communicate it to everyone involved and measure how you go in simple steps. This will ensure your current staff are clear about what needs to be achieved and work together with your new resource to help make the project successful. It is critical you bring your current staff on the journey as they will be vital in:-
- Training your new offsite resource
- Supporting the transition
Existing staff can be confused if objectives are not clearly communicated.
Know your company culture and communicate it
“A company’s culture and a company’s brand are really just two sides of the same coin. What goes around the office comes around to the customer” – Zappos
The biggest asset in your current business is your staff, and your culture. Well executed, your investment in outsourcing will mirror the culture and values of your current business, providing seamless support to your current team to achieve more with less. However, this will not be achieved without an investment of time to:
- Communicate your business purpose, company culture and values
- Investment of time to integrate the new off-site function into the business culture, and people.
Everyone works at their best when they buy into the “why” of a business, if you can engage your new resource into the why of your business you will be amazed at the new energy and support this will give your local team energy.
Operate with a simple commercial agreement you can live with
Too much legal wrangling on the details of the agreement will bog you down in unnecessary cost and time. Not enough detail and you may find yourself left high and dry when things do not go as planned. Simply put, make a commercial legal agreement you can live with, have clear terms of agreement for performance standards, service levels, payments terms and exit clauses, try to plan for the worst outcome and then manage for the best. Make sure your legal agreement covers what you need to have protected if it all falls apart (your service levels, IP, customer contracts), but don’t get too bogged down in the detail.
A good contract will enable the business owner and outsourcing company to understand the risks, rewards and interests for both sides. That, in turn, will make it clear what should be on and off the table in the relationship.
Clearly define your process
“If you can’t describe what you are doing as a process, you don’t know what you’re doing.” – Edwards Deming
Being able to define and train the process you are outsourcing is critical to the success of the venture. The business owner needs to be able to train the process, define clearly who is responsible for each step and make sure that this can be carefully managed and checked in the early days of the project. Think of it like you are teaching someone to ride a bicycle for the first time. Initially you make sure you help them by holding the back of the bike, then they take small rides on their own (sometimes they fall off!) before you know it with the right support, patience and practice they are off on their one and you can’t keep up with them!
Manage the process
Your local team managers need to work with offshore teams on process-improvement plans and also ensure that they are treated as part of their extended team, by conducting joint development and training activities. This effort and integration with the local team builds an invaluable sense of team and partnership, which is what all great success is built on.
Start small, build and learn
“Its fine to celebrate success, but it’s more important to learn the lessons of failure, it’s the path to success”. Bill Gates
In any new venture, there are going to be mistakes and thus learning opportunities. As you build your outsourcing venture, there will be learning for you the business owner and your outsourcing partner company. With time, partners learn to communicate better, leading to more efficient coordination and fewer mistakes. Business owners and outsourcing companies learn about each other’s needs and are able to negotiate better contracts focusing on value creation. Companies with greater experience have greater success implementing more-complicated models and face fewer problems in their outsourced and off shored activities.
In today’s challenging business environment, the need to find new and flexible solutions to business resourcing and process improvements requires new ways of looking at problems. Well managed outsourcing gives you the opportunity to flex up your resource to power you to achieve those business dreams. Like all new projects it requires time, planning and management to get the most out of your investment.
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