What Is Outsourcing?

Outsourcing is a strategy that companies employ where the contract outside their core teams functions to specialised efficient service providers who ultimately become valued business partners. Outsourcing can be defined as “the strategic use of outside resources to perform activities traditionally handled by internal staff and resources.”

So Why Do It?

The reasons for outsourcing are wide and varied but eventually, comes down to what your company values and needs. It is not always about the money either.

Some of the most common reasons include:

  • Reducing and controlling operating costs.
  • Improving company focus.
  • Gaining access to world-class capabilities.
  • Freeing internal resources for other purposes.
  • Streamlining or increasing efficiency for time-consuming functions.
  • Maximizing use of external resources.
  • Sharing risks with a partner company.

However, these reasons are not enough on their own! You need to ensure that when accessing outsourced services, you are achieving more than one of the above list and are also ready for the requirements needed to make for a successful outsourcing program.

What Requirements Do You Need?

In the good old days, “cost” or simple “headcount reduction” were the main drivers to outsource functions of your business. But the times have changed and the key drivers now are more often strategic and focused on enabling companies to leverage senior in-house staff strength and using outsourcing as a way to extend teams to meet demands and market expansion.

Nowadays, the areas for a successful outsourcing program include:   What requirements do you need

  • Clarity concerning company goals and objectives.
  • A strategic vision and plan.
  • Vendor selection.
  • Relationship management.
  • Properly structured subcontract and vendor agreements.
  • Open communication with stakeholders.
  • Senior leadership support and involvement.
  • Careful attention to personnel issues.
  • Short-term financial justification.

Two aspects of the above are key, so let’s look a little further into these:

  • Open communication; and
  • Executive and senior management support.

Open Communication

Everyone concerned should be involved in this process. Having open channels of communication to determine stakeholder requirements and having executive support is critical for a successful adoption of an outsource strategy. Whatever the final outsourcing arrangement looks like, there will be a need to carefully manage the change focusing on the key reasons and outcomes that should be achieved.

Executive Support

Any senior manager should be able to articulate the goals and objectives of the organisation. Strategic objectives like outsourcing must be a top down approach with clear communication about how the initiative will benefit the organisation.

Like all things considered, choosing an outsourcing partner is not the end of the executive’s journey, they must be looking ahead and recognise their own responsibility for the success of the outsource program.

Ensuring outsource successEnsuring Outsource Success

Ongoing management and open communication are vital to the success of the outsourcing relationship. An outsourced team is simply an extension of your in-house team and not the enemy.

Senior management must stay involved and meet at appropriate intervals to discuss the relationship and any issues or successes. Additionally, meetings should be happening at the operational level to ensure delivery success and quality levels are as per agreed levels.

Let’s chat about your business and how a solid outsourced strategy can add value.

Outsourcing – such a dirty word

So this could be a bit controversial but I think it needs to be discussed. In NZ we have a shortage of quality IT resource. FACT! One of the key issues preventing global expansion of NZ companies is access to talented resource at affordable rates.

As a business owner what are you to do? You are being pulled multiple ways. You have your employees on one hand telling you, “offshore people are useless, that more people are needed in the team right here”. Or that, “the work we are doing is too specialised to do remotely, they need to be sitting right next to us”. Or even a – “we can’t outsource this work because we are already too busy. Oh, and the guy you tried to hire last time was useless, he/she didn’t have enough experience”.

Then on the other hand you have your board or your shareholders or even your wife saying you need to grow the business. You should develop more products but you need to reduce your budget. Why is your HR cost so high? We need that thing done next week, not a month from now! Sounds familiar?

Offshore development, resource-optimizing, co-sourcing, outsourcing – those dirty words. But are they the answer? Outsourcing your resource gaps is by far the most viable option that exists for you to extend you team, plug those holes and develop your business. The best thing about it is that, usually, it is a much more cost effective way of business operation. And in today’s world, technology makes outsourcing easily accessible, as if you had your team right in the next room. What did your staff say again? If they are unable to work with someone in another room, perhaps the issue is not with the other room but with them! Food for thought.

With outsourcing you can find the resource skills readily, and those resources are usually a third to half cheaper than local guys (whom you can’t find anyway). So why are you not outsourcing parts of your company? I will tell you why.

Outsource to India  You are scared.

  All the stories you have heard about outsourcing problems can be traced to two key items –

 ▶ Cultural miscommunications; and

 ▶ Scope inconsistencies.

But what if there was a way to eliminate those two issues? Imagine if you could just deal with a local NZ-based company like you do for everything else, and yet gain access to offshore talent and pricing benefits, well, then your risk is no more than hiring any other local company.

If you could do this, wouldn’t that enable you to address both your day to day operational needs as well as satisfying the board? And just maybe, the wife as well? Luckily now there is a solution that fits this bill. Tandem NZ provides you a local office to manage your external offshored ring fenced team – thereby outsourcing without the headaches.

Take your business to the next level.

To find out more about Tandem NZ and what possibilities they have for your business get in touch via our website

www.tandemnz.co.nz or call Chris on 021 823 857.