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Global Outsourcing Key Considerations – Part 1

Global Business Culture has been heavily involved in a number of large-scale global outsourcing projects over the past decade. We deliver consultancy and training packages to clients at every stage of the global outsourcing process.

What have we learnt over the years? Here are a few thoughts on getting outsourcing right:

Strategic Fit & Business Case

For an outsourcing programme to work, it needs to be a clear priority within the overall strategy of a business and there must be a clear reason as to why it is happening. A clear strategy allows people at all levels in the organisation to make daily decisions about how to balance time spent on competing priorities. A key leadership role is to articulate the strategy so that it that builds the clarity people need to be able to make trade-offs. The business case needs to get to the heart of what it will mean for clients, for employees and for the expected outcome on the cost and quality of service. All this maybe common sense but it is often not that commonly found in outsourcing programmes. Often the approach is clear at the outset of a programme but then gets lost or diluted along the way as the organisation works through the challenges of implementation.

Although the most important factors will depend upon your situation regarding clients, employees and markets, here are some of the common reasons why outsourcing could be an effective part of your strategy:

The need to be clear about why you want to outsource and how it fits in with your overall strategy is a good test to see if it is the right thing to do. It is critical to do this at the outset but also to ensure that there are regular check-ins to see if the programme needs to change.

Location Selection in Global Outsourcing

Deciding on the geographic destination for any outsourcing project could be both the most critical and most difficult decision in the whole project. If your decision to outsource in the first place has been almost solely based on cost reduction considerations, then your location destination decision is likely to be also almost entirely influenced by pricing issues – but this could result in you making a series of costly and almost irreparable mistakes. The damage you do through wrongly identifying the most appropriate location might far outweigh any benefits accruing from the transition.

Therefore, it is imperative that you balance other considerations against a simple price-to-price comparison. The following issues should be weighed against any simple cost comparisons:

This list is not exhaustive but gives a flavour of the type of considerations you need to factor into any outsourcing location decision. Look way beyond comparative pricing calculations – it just isn’t that simple.

Keith Warburton

Keith Warburton, Global Business Culture CEO

Keeping Customers in the Loop When Global Outsourcing

Clients are often in two minds with regards to their own customers when embarking on a global outsourcing programme. Should they keep their clients in the loop, or should they remain secretive about their plans? Will clients react badly to being informed about the changes to come and even more worryingly will they expect any potential cost savings to be passed through to them?

There can only be one response in this situation – clients must be informed and ideally should become involved in the process. Any transition of work will very likely impact on them in one way or another and you have a duty of care to keep your clients fully informed throughout your journey.

Clients need to be in the loop for several very good reasons:

Ensuring continuity in levels of client service are critical during any outsourcing process and having your clients feel comfortable about the changes is essential. Your messaging needs to be well-thought through and consistent and everybody within the organisation needs to be fully aware of what is being communicated to clients at all times.

Core and Non-core Competencies – What to Outsource?

If you are thinking about outsourcing as a key part of your business strategy, then you need to give careful consideration to exactly what work to outsource. Going through the process of outsourcing is a great opportunity to create a big picture map of your processes and which ones are most valuable to your clients. Creating awareness and alignment around this and getting all stakeholders to buy-in to it will serve you well throughout the programme. It will help inform decisions, such as what to move and what not to move and when to use third parties versus your own captive centres. If you design a programme well, the first experience will be positive, and this might increase the appetite to do more. At this point knowing what is on or off limits becomes critical. As you build that big picture of your processes here are some of the factors to consider:

Building that big picture map of your processes along with clear criteria for making and assessment of what to move and what not to is an important step in a programme. We would love to work with you to see how we can help.

Why are metrics so important to successful implementation of Outsourcing/Offshoring Process?

When embarking on a transformational outsourcing programme companies will need to focus very carefully on the use of Metrics and the linkage of these with the appropriate Reward systems to deliver a successful programme. Establishing these metrics is probably the most important workstream of the whole programme as they will underpin a successful transformation to an outsourced and/or offshored process environment both for the home teams and the new partner.

It is critical to get these metrics mutually understood before starting the transformation…otherwise you could get a mismatch between yourselves and your outsourcing partners in the measurement of the process performance. There are some things to watch out for:

We will be following up this initial blog on global outsourcing with some more ideas over the coming weeks but if you would like to pick our brains at any point please get in touch.

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