Companies generally use outsourcing to save money, however, the “big picture” is more complicated than simply reviewing how to reduce expenses. Following are 5 key questions you should be asking before making any decision to outsource.
1) Is outsourcing in line with your business strategy?
Cutting costs have always been often the focus when looking at outsourcing. However forward thinking businesses realise that paying attention to their long-term strategy is more cost effective that simply short-term factors. Things such as flexibility, growth, adaptability and innovation need to also be considered.
2) How much, if any, an impact will outsourcing have?
To determine if it is worthwhile you must conduct a thorough review of your current costs and operations. You process review will include both high-level reviews by top management as well as detailed analysis by managers at all levels. This was you can identify business processes that could be considered to be outsourced to help your bottom line.
Other questions will no doubt drop out of this review, for example, what areas could outsourcing improve quality while reducing costs and provide faster delivery to customers.
3) Is there support from the top?
Outsourcing failures are likely to happen if outsourcing review and selections are not in your company’s top 5 priorities. Ask yourself how does the boss feel about outsourcing?
“Starting at the top” s a winning outsourcing strategy. However, you should not stop there you need to work your way down through all levels highlighting the benefits to each area. This will give you the best chance in outsourcing success.
4) Are You Outsourcing for the right reasons?
Remember that ideally you are contracting outside your company for necessary and non-core aspects.
Always remember that your major benefit for outsourcing is that it gives you and your employees more time to focus on core activities — focusing on decisions and tasks that involve your business passion. Include this question in your outsourcing decisions; Is this a core or non-core business activity? You will be far more likely to make the right outsourcing decisions and for the right reasons.
5) How are you going to monitor your outsourcing success?
Like everything in business, you should be constantly evaluating and measuring results. The same is for your outsource provider, How will you know if your outsourcing supplier is delivering?
A common strategy is to put in place a Service-Level Agreement (SLA) that acts like a “scorecard” to monitor services with measures such as effectiveness, efficiency, conformity, timeliness, user-friendliness, reliability, capacity, availability, speed and quality.
Regardless of the SLA in place, a successful outsourcing partner will exceed SLA levels by always focusing on “continuous improvement” in areas such as quality, productivity, customer satisfaction and cost of delivery.
Do not forget
Choosing the right thing to outsource and the right outsource provider is a difficult job. For it to be successful it should be placed in the hands of highly responsible individuals within your business.