Best Outsourcing Practices
Outsourcing is the business practice of employing a third-party service provider to perform some of an organization’s internal functions. This is done to reduce costs, take advantage of external expertise, support the in-house staff, or finish a project faster and more efficiently. The service providers to which the tasks are outsourced usually specialize in the delegated tasks.
Selection of the outsourcing should also be in an efficient way. If the firm cannot perform its tasks well, this will result resentment, loss of resources, and relationship deterioration with the service provider. To do outsourcing correctly, there should be a clear set of defined responsibilities, obligations and rights on each side. These important things should always be kept in mind when outsourcing:
- Build trust.
- Get the communications right.
- Establish clear objectives.
- Follow customer-driven specifications.
- Establish a performance measurement system.
We will explain them one by one as follows:
In any business relationship, trust always plays a major role. Mutual trust can be built by focusing these three things:
- Consideration clause to set up expectations
- Consistency of service
The consideration clause has two sides where each side of the business partnership provides what the other party requires. There should be an appropriate amount of consideration for each other. After the initial service is provided, it is important to maintain the quality of the exchange and consideration to enable the continuity of the relationship. Transparency is being open, honest, and straightforward about various company operations such as performance, revenue, processes, sourcing, pricing, and business values.
Get the Communications Right
Communication is a key factor in the continuity of any business relationship. The outsourcing service provider and client need not only focus on business matters but also policies, procedures programs, or project successes. A mutually agreed communication plan needs to be developed and strictly between the two parties.
Establish Clear Objectives
Before any activity is performed, both parties must plan a hierarchy:
- Goals and Missions should be established and documented clearly.
- Goals should be cascaded down in the form of short communications.
- Appropriate resources should be gathered.
- Set up a monitoring system.
- Provide a reward or appreciation system when goals and objectives are achieved.
Follow Customer-driven Specifications
As the customer is key for a profitable business, so they should be kept in focus when deciding on policies and procedures. If an agency provides a service without following proper procedure, this can be considered a neglectful act that could harm the partnership and the client’s business.
Establish a Performance Measurement System
Performance measurement tracks and generates a report of the results of outsourcing. Measurement systems could be in the form of a cost-benefit analysis or other similar systems. The type of report and format should be thoroughly discussed between the two parties.