What’s Your Role in the Outsourcing Relationship?

You’ve outsourced specific functions so you can focus on your core business. Think your involvement is over? Think again.

Over the last year, we’ve posted a number of blogs and published some articles on the benefits of outsourcing. We’ve discussed the reasons why companies choose to outsource specific functions and shown how BPO (business process outsourcing) providers can actually improve operations and save money. What we glossed over was the necessary relationship that has to exist between the company that’s outsourcing and its provider. Making a success out of this relationship is a shared responsibility, one that cannot be overstated.

So why do companies decide to turn to outside resources? Each company may have its own specific reasons for doing so; however, here are a few that are common to most decisions:

  • Greater efficiencies/reduced costs – Every department within an enterprise is now evaluated by how much it contributes to the bottom line. Even though practically every department plays an important part in the company’s success, there are often low value-added processes or tasks that can easily be outsourced. This could mean reduced staff or utilizing existing staff for greater effectiveness.
  • Focus on core competency – Companies need to take a long hard look at what makes them special; at the reasons that people continue to do business with them. They need to consider what factors contribute to that success and keep those elements in-house. Then, companies have to identify those areas on which they expend more in time and money than they see in returns. Those are the areas to consider outsourcing.
  • Lack of expertise –Changing technology, new forms of communication, ongoing maintenance; all of these are expensive. And most companies don’t generate the kind of revenues necessary to keep specialists in these areas as permanent staff. Companies that steer existing staff into these areas often find that this move saves them little money when upgrades fail or are delayed, communication content is lacking, or systems actually crash. Going to providers that specialize in specific areas will save time and money.

Among the areas that many companies outsource are: HR, transportation, advertising, IT, training, and financial process automation.

It’s all about relationships

Business people know that every contact, every deal, every negotiation may involve dollars and cents, but deep down, it’s often about relationships. If you have something to sell, the best way to acquire and retain customers is to establish a relationship with them. To get the best pricing and terms from suppliers, you need to have good relationships with them as well.

But when it comes to BPO’s, it’s a little more complex than a traditional purchaser/vendor relationship, because these providers are actually more like strategic partners dedicated, not just to sell you services, but to actually help you grow your business. That means there should be a significant level of collaboration based on effective contract management and trust. The client needs to manage the relationship in a way that heightens performance and productivity. Unfortunately, some companies feel that once they’ve signed an agreement, their involvement ends. That’s a prescription for disaster.

Here are just some of the client-side responsibilities that are required for a successful working relationship:

  • Clarity is the first step – Before the contract is even signed, every stage of the process must be planned, defined, and agreed to by both client and provider.
  • Establish a hierarchy – Outsourcing is not a “one and done” situation; problems, questions, and issues may arise as work goes on. There needs to be a chain of command on the client side with defined channels and responsibilities, especially if a crisis arises.
  • Create an in-house team –This is especially true during the implementation period. Make sure they have an understanding of the job the service provider is undertaking. Provide in-house training that will teach the team how to work with an outsourcing provider. This may sound easy; however, managers often want to actually manage the day-to-day work rather than holding providers accountable.
  • Convince the staff that this is a positive thing – The very word “outsourcing” can sometimes send a chill through employees worried about the security of their own jobs. This may result in a lack of collaboration between your client team and the provider. Explain how this frees up employees to focus on ways to actually help the company grow instead of focusing on low value-added tasks.
  • Stipulate regular checks on performance – Whether it involves the quality of the work performed, an adherence to deadlines, or oversight of costs, clients need to conduct regular checks and demand accountability reports in cases of non-compliance.

None of the above points mitigate the responsibility of the BPO to provide the services required, and to hold themselves accountable every step of the way. The best-in-class BPO’s understand that the client’s success is their success as well. That’s why it’s essential that clients keep the lines of communication open, show a certain amount of flexibility when necessary and have mutual transparency in all their dealings. This will pay off, big time, in the long run.

About the Author: David Nitzsche is Vice President, Supply Management, for AmeriQuest Business Services. A supply management veteran with more than 25 years of experience, he is well versed in diverse sourcing and procurement operations.

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