Outsourcing projects are designed to outsource certain services to an external service provider over a longer period of time. A large part of the projects misses the user's goals, and often the outsourced areas are later brought back into the company. Such unpleasant surprises can be avoided if the following critical points are excluded:
Unclear Target Definition:
Particularly in economically difficult times, users want to save money with outsourcing projects. However, this one-dimensional orientation is generally too short. In order to support the customer's corporate strategy over several years, the selected service provider must be able to take account of important aspects such as innovation, standardization of services or delivery to different countries. The objectives of the specialist areas must also be taken into account when considering the term of the contract. However, the experience shows that even their own department often cannot describe how it fulfills the objectives of the specialist areas.
The users should neither outsource too much nor too little, but the "golden cut" search. It is particularly critical to transfer information about customers, products or processes to a third-party vendor. Also, services that require a lot of constant coordination between the respective departments or require company-specific know-how, such as the design of the remaining business processes, are only conditionally suitable for outsourcing. However, it is not advisable to take too much restraint during outsourcing: it limits the service provider's ability to exploit scale effects and thus achieve savings.
Choice of The Wrong Partner:
For outsourcing projects, only experienced service providers can be considered. Other important selection criteria are the capability and competence of the supplier as well as his willingness to fulfill the client's objectives. In this context, the outsourcing company should be informed at an early stage as to which employees the service provider wants to take off for the outsourcing project and how these are qualified. Do they approach company culture and the visibility of users and service providers match? The responsible manager of the outsourcing company should ask himself if he can come to a solution together with the delivery manager of the service provider if a service is not provided as agreed.
Insufficient Rules on The Contract:
Users always make the mistake of not thinking at the end of signing an outsourcing deal. However, the company should clearly define details such as the transfer of assets as well as the transfer of knowledge and employees, before the contract is concluded with its provider. If the user terminates the contract, for example, because he wants to change to another service provider or wants to integrate the outsourced tasks back into his company, he is usually in a very weak negotiating position. The service provider is hardly interested in the changeable customer re-transfer of employees, assets, and knowledge.
The user should, therefore, contract the service provider into the transitional arrangement and impose explicit re-transmission obligations on him. He should allow enough time for the project so that the service provider can continue to support him during the transitional period. Regardless of what and how much the user outsources, a decisive prerequisite for success is that it draws defined boundaries in technology and processes. Otherwise, an outsourcing project can even cause additional costs because services are doubled.
Lack of Contract Flexibility:
Techniques and business requirements change within the term of the agreement. For this reason, an outsourcing contract should be designed so flexible that prices, unit prices, and quantities can be changed at any time, without incurring extraordinary costs for the customer. Anything that is not explicitly regulated must be reworked at a later stage.
Insufficient Control of The Service Provider and Risk Management:
It is by no means self-evident that outsourcing partners work together without any problems after the conclusion of the contract. The user should therefore already determine when the bidder controls the provider and how his work is controlled. Particularly at the start of the project, it is essential to draw up a transition plan including all performance definitions and milestones. In this way, the user company remains open to identify and correct problems in the cooperation at an early stage. A consistent service reporting is advisable for both parties: The user receives a clear proof of performance, which he also needs for an internal allocation of the outsourced services. The service provider, on the other hand, can objectively prove his services.
An outsourcing project is usually very complex and cannot be reversed at short notice. Therefore, a complete risk assessment is necessary. This includes, among other things, listing and prioritizing the risks of outsourcing, identifying the costs incurred in the case of a problem and developing measures to limit the risks. In the course of business process and outsourcing, the companies spend a large part of their management and control on its operation. So, it is very crucial to take the above points into consideration while choosing the best outsourcing partner company.