Menu
The Road to Better Outsourcing

The Road to Better Outsourcing

Have you ever heard the expression 'Any road will take you there if you don't know where you're going'? When it comes to outsourcing, it can sure cause long term problems if you don't invest in strategy development, goal setting and planning.

Thankfully, 'worst' practices in outsourcing strategy are becoming less common. One that is still surfacing takes place even in really well-run companies. When they step back to take a closer look at what they've got, they find a dizzying array of outsourcing relationships on their plate, rather like a messy mound of spaghetti. An elegant name for this is multi-sourcing, but don't be lulled into complacency by a nice name for a challenging situation.

Let's face the facts, all business processes eventually overlap at some point, both within and across business lines. In practical terms, in the absence of a company-level plan, the business units and departments will outsource their processes to the 'best' provider. Understandably, there is often little or no consideration for the consequences at the all-company level of this 'best-of-breed' strategy -- or of the impact on established outsourcing relationships.

Business leaders are there to maximize their business or unit's profitability and efficiency. They are likely unaware that a substantial part of the cost benefit and efficiencies are wiped out at the company level. The total cost of managing quality, service delivery, technology, and processes across a large pool of providers is something that can only be seen when measured at the macro-level.

I searched for stories of companies facing the challenge of rationalizing a long list of outsourcing service providers, but apparently this isn't the type of story that gets aired in public. Let me instead share a personal experience: an HR executive showed me a long list of service providers and asked where to head next. The list included just about every provider you could think of, so a lot of analysis was needed before we could talk about rationalization strategies.

The first thing I did was to assess switch costs, which can end the conversation right there. Eventually, the discussion turned to implementing the switch process. Entering an outsourcing arrangement is a long, costly and sometimes risky process. But changing providers raised another legitimate concern: they no longer had an intimate operational knowledge, which didn't feel too comfortable.

A 'best' practice is to invest time in creating an integrated destination strategy, with a phased implementation plan. This allows you to create a long term road map while managing pace.


Follow Us

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags outsourcing

Featured

Slideshows

Meet the leading female front runners of the Kiwi channel

Meet the leading female front runners of the Kiwi channel

Reseller News honoured the leading female front runners of the New Zealand channel at the 2018 Women in ICT Awards (WIICTA) in Auckland. The awards honoured standout individuals across seven categories, spanning Entrepreneur; Innovation; Rising Star; Shining Star; Community; Technical and Achievement.

Meet the leading female front runners of the Kiwi channel
Meet the top performing customer-centric Microsoft channel partners

Meet the top performing customer-centric Microsoft channel partners

Microsoft honoured leading partners across the channel following a year of customer innovation and market growth in New Zealand. The 2018 Microsoft Partner Awards recognised excellence within the context of the end-user, spanning a host of emerging and established providers.

Meet the top performing customer-centric Microsoft channel partners
Reseller News launches new-look Awards at 2018 Judges’ Lunch

Reseller News launches new-look Awards at 2018 Judges’ Lunch

Introducing the Reseller News Innovation Awards, launched to the channel at the 2018 Judges’ Lunch in Auckland. With more than 70 judges now part of the voting panel, the new-look awards will reflect the changing dynamics of the channel, recognising excellence across customer value and innovation - spanning start-ups, partners, distributors and vendors.

Reseller News launches new-look Awards at 2018 Judges’ Lunch
Show Comments