Outsourcing is a phenomenon, through which persons outsource their tasks to get it completed in a better way. Persons include individuals, partnerships as well as companies.
Outsourcing is either done due to the bulk of the work or due to getting the desired tasks finished in an efficient way. The agencies to which the tasks are outsourced have specialization in the performance of those specific tasks.
Tasks are outsourced to focus on specialized areas and to have and to give support activities or those activities which others can perform in a much better and efficient way than the organization itself.
Work or activities of the organization can also be outsourced when cost efficiency can be achieved by outsourcing rather than performing by self. The service providers relating to outsourced activity can achieve maximum efficiency because of their experience in repeatedly performing tasks and they know the best and cost-efficient way to perform said tasks.
But it should be taken care of that, to which tasks are being outsourced is able to perform well. Selection of the firm to perform tasks should also be in an efficient way. If the firm could not perform tasks well, this will create resentment, loss of resources and relationship deterioration with the services providing firm.
To get outsourcing to go correctly, there should be a clear set of defined responsibilities, obligations and rights defined on each side and there should be defined procedures for everything.
The following important things should always be kept in mind while going for outsourcing;
- Building the Trust
- Getting the communications right
- Establishing clear objectives
- Customer-driven specifications
- Performance measurement system
We will explain them one by one as follows;
Building the Trust
In any business relationship, trust always plays a major role. If the relationship is forging towards trust building between the parties, they will enjoy their business.
Conversely, deterioration of the mutual trust will lead towards the business deterioration between the parties.
Mutual relationships can be built up by focusing the following three things;
- Consideration provision up to the expectation
- Consistency in better service provision
- Transparency between the relationships
Actually, consideration provision has two dimensions, meaning one party give one thing and other in consideration imparts the desired thing of the other party. So, on both sides of the business, there should be an appropriate amount of consideration for each other.
After an initial period of better service provision, next thing will be to maintain both qualities as well as the quantity of the consideration being provided. Hence, continuity of the relationship requires continuity of the considerations to be provided.
Transparency is the key to building mutual business relationships. Without transparency, mutual relationships cannot go for long. Transparency should be both in tasks performed and also in monetary terms.
Getting the Communications Right
Communication is the main factor in the continuance of any business relationship. With communication, a business can go further and with the communications, it can deteriorate.
Most often communication is not duly focused in a business environment but the management of the successful business give it a due focus. In good business practices, special policies and procedures are developed for communication and even communication audits are performed with planned programmes and lack of appropriate procedures are reported just like financial figures in financial audits.
However, to communicate with external organizations like in outsourcing activities, communication patterns should be developed with formal procedures and no departure from procedures should be allowed to the persons, responsible for communication.
Establish Clear Objectives
Before every activity to be performed in business, it should be planned in such a way that it should present business orientation in a like hierarchy as is given here;
- Goals and Missions from specific communication should be established and written clearly
- Goals should be cascaded down in short-term communication objectives and strategies
- Appropriate resources required for better communication should be gathered
- There should be a monitoring system for communication
- Better communication should be rewarded with appreciation or some sort of monetary rewards
Customer Driven Specifications
As the customer is key for any sort of profitable business, so they should be kept in focus, while deciding on any sort of policies and procedures. Procedures and policies with the firm to which specific functions are outsourced should be decided by taking care of the customer.
If for example an agency has to provide a service based on our organization and there are no formal procedures, then a neglectful act by that firm can harm our organization’s goodwill.
Performance Measurement System
Performance measurement established a number of results generated by the outsourcing of the operations. It can be done through cost-benefit analysis or other such analysis. A mechanism should be developed for performance measurement and assessment of the desired results and if any deviation is seen from the planned, it should be thoroughly discussed.
As mentioned above; building trust, getting communications right, establishing clear objectives by customer-driven specifications and measuring performance will lead towards best outsourcing practices and will help achieve outsourcing objectives.