Outsourcing may be one of the most complex topics in business today. Amazon.com lists almost six thousand book titles on the topic. In comparison, rocket science earns only 2,500 entries on Amazon’s list. If you are considering outsourcing or are on an outsourcing taskforce you must be wondering what the important bits are. You will be relieved to know that there are only six or so highly important items to understand in outsourcing, and this paper will explain the basics of them.
We won’t try to cover all of the intricacies of selecting your organization’s business processes, hardware or software to outsource, or how to negotiate an outsourcing contract or how to work your way out of an unsatisfactory outsourcing agreement. Your outsourcing advisors are well equipped to assist in all those areas. Instead, this paper will help you to understand the most often overlooked twists and turns in outsourcing—none of which are very complex but nonetheless often leave otherwise smart, bold and brave management team members displaying a deer-in-the-headlights stare when they realize that they were missed.
The handful of important topics to know about outsourcing:
- Counting your world: How many units (locations, processes, pieces of hardware, applications, business transactions, etc.) are included and how are they counted?
- Service Levels: How are service levels set? How do they compare to your pre-outsourced expectations?
- Transition: How will you and your outsourcer get from your current environment to the planned future environment? What’s most important and what’s not?
- Communication: How much information should be shared? When?
- Attrition: Like so many other things—attritions happens. How can you manage it?
- Cost: How do providers manage to deliver services at lower cost than I can internally? Why do I hear that so many outsourcing engagements fail to deliver savings? Why is my business case falling apart?
And a final ½ item…