Midsized businesses frequently have the same challenges that larger organizations have. At some point, they have to standardize their internal services, like HR, in order to scale or control costs. Enter outsourcing benefits.
Outsourcing the build and then taking it back after some time (Build Operate & Transfer) or by outsourcing the operations in an ongoing basis may be the key to standardizing and improving shared services.
Why do midsized companies outsource
Often, if the company has a few rings in its tree, it may have a set of tools that were either custom-built and legacy or purchased for a particular idea in mind, but overlooking its overlap with other tools in the company’s set.
At some point, standing up a call center in support of their products and services while balancing the costs and benefits of location, can prove daunting to do in-house.
Lacking the expertise to centralize and optimize a set of back-office services can also lead to a longer transformation window than necessary, as well as costing way more than what it could have if that had either a) bid it out to a provider of these services, or b) found a company that could Build, Operate, and Transfer that shared services center.
Service provider selection
By bringing together an internal, cross-functional team to evaluate the request for proposal (RFP) responses, either with or without an advisor, can provide insight in what to do next even if a buyer holds off on selecting anyone at that time.
For instance, it may reveal a country or city that the buyer likes but doesn’t necessarily align with the provider itself. But if the right provider is found, and the benefits of a lasting relationship with this provider can be identified ahead of time, then a contract that is built to last should be implemented.
Better outsourcing options for midsized businesses are available today
If the relationship is not built to last, it will likely be revealed in the first 6-12 months of the contract. At this point, the cost of the 3-5 year contract could be higher than anticipated if, for example, a provider that low-balled the RFP has outs to nickel and dime the buyer in order to meet the SLAs.
Realizing the finer points of a provider’s solution before signing on the dotted line is paramount. Incorporating clauses that produce win-win scenarios, like performance improvements, will help foster a provider that is incentivized to improve its operations.
Utilizing the expertise that a provider has in geography, for a set of services gained by cross-skilling across various customers and industries, can produce results that would likely not be realized from within.
The obvious factor of cost is also at the top of the mind of any executive on the buying committee, but a balance of price to the value received by the provider would need to be factored appropriately.
What are the outsourcing benefits your company has reaped?
About the Author: Ben Trowbridge is an accomplished Outsourcing Advisor with extensive experience in outsourcing and managed services. As a former EY Partner and CEO of Alsbridge, he built successful practices in Transformational Outsourcing, BPO, IT Outsourcing, and Cybersecurity Managed Services. Throughout his career, Ben has advised a broad range of clients on outsourcing and global business services strategy and transactions. As the current CEO of the Outsourcing Center, he provides valuable insights and guidance to buyers and managed services executives. Contact him at [email protected].