How to Outsource Correctly and Succeed?

Hi, there. This is Julie Clements with Managed Outsource Solutions. I’m the Chief Solutions Manager here. Wanted to talk to you about outsourcing and if you’re considering it, how to do it effectively and succeed.

In today’s competitive world, many companies are increasingly adopting outsourced solutions for various business processes with a view to maximize productivity and revenue while minimizing overhead costs. However, outsourcing partners must be chosen with great care. For instance, you may want to outsource your payroll but you may become consumed by doubts. You worry whether costs will increase, whether it will be time-consuming to hand over the job, and whether you can trust another company to handle your sensitive and confidential business data. When forging partnerships, there should be a level of trust with the service provider and you need to find business partners that can share your vision, and work towards achieving your goals. If you want outsourcing to be a smart decision, you must do it correctly, outsource for the right reasons, to the right provider, and at the right time.

So, here are some things to consider when outsourcing so that you do it correctly and succeed.

First of all, you need to understand your competitors. When you are taking a global stance, you’re competing with the entire world. So understand your competitors and be conscious of what they are doing. If for example, if you want to create a footwear brand, learn the outsourcing trends other companies have successfully used to do well. Sometimes the competitors may want to buy you out, so have a clear idea about the value of your company.

If off-shoring, consider the regulations of the country you are outsourcing to. Each country will have its own sets of rules and regulations. So if you are outsourcing to a different country, then study their laws, exporting and labor costs, taxes, wages, etc., that could affect your business. Learn which demographics offer the best places to build your business and which countries have maximum customer retention.

Focus on things that can grow your business revenue. The power of outsourcing becomes noticeable only if it contributes to the growth of the businesses. Outsourcing should help you to scale at a rate you want instead of trying to keep up with clients or orders you need to complete.

Also know who to hire. There are so many vendors available and choosing a vendor can be a big challenge. You need to know who to hire. Your outsourcing partner should know what they are undertaking to do and to be able to meet all challenging requirements. With such a service provider you needn’t start from the beginning, telling them what to do.

Always, outsource the right activities. Outsourcing shouldn’t make you give up control over aspects that define your business or that which make you unique. This will ensure that you retain your company’s competitive advantage. Increased demand doesn’t always mean that outsourcing is the solution. If you already have an outsourcing company handling some work for you, find out whether they can handle some more work. Some area of your business may have extra staff or time to take on a new project; then, it is better to entrust the task to them rather than outsource to a new provider. Try not to outsource those areas of your business that will directly impact your customers. Outsourcing customer service or sales may prove beneficial for large businesses, but it could prove risky for small businesses or companies in transitory stages. Outsourcing may be a good solution if demand in a certain area of your business is outgrowing your resources or staff. In this case, outsourcing can reduce stress and help you meet customer demand.

Another thing is to consider all outsourcing expenses. Remember that actual and projected savings may not match. In an outsourcing partnership, costs are involved that may not come to mind at first. For example, when searching for the right service provider, you are likely to lose time and also incur fees from networking websites or other sources. Legal fees may be involved in some instances when negotiating and drawing up a contract with an outsourcing vendor.

Take into account reviews and feedback. Read all available reviews or feedback from former clients of the outsourcing contractor. A vendor with a substantial amount of positive feedback may be more expensive than a member with a negative or no feedback, but it is worth choosing that vendor. You can also ask other business people or your acquaintances regarding outsourcing agencies they may be familiar with.

Don’t always go for the lowest bidders. You’ve heard that phrase — you get what you pay for. Cost savings is an attractive prospect, no doubt. But remember that the lowest bidders may not have the required expertise or experience for the job. The pay a worker receives reflects his/her education, work quality, and experience.

So, don’t rush into a partnership. Make sure that you take your time signing the contract and handing over the responsibilities to your chosen vendor. Give the contractor some control and assign the rest based on their performance. This will enable you to make sure that everything is going well before entrusting them with larger responsibilities.

Also make sure to set clear goals and ensure that you have really good open communication. Be clear about your goals and expectations and communicate this clearly to your team. Monitor quality of services consistently and pass your feedback to the team directly. Communication could be a problem when you don’t have frequent face-to-face contact with the team you employ. While telecommunication is a good option, a better way is to communicate via a memo or email. Important information should always be in written form including guidelines, feedback, procedure manuals, and expectations.

Make sure that you ensure that there is transparency. It is necessary to put transparency practices in place. Arrange meetings at least once a week, or once a month, especially early or in the beginning where everybody is getting used to everybody and everything. And these meetings can be in-person or via videoconferencing and will help avoid setbacks, delays, and misunderstandings. After a meeting, send a memo highlighting the main points that you discussed.

Manage your existing staff with great care. Outsourcing could upset your existing staff and make them feel insecure. It is best to be frank with all partners and staff and communicate any decisions as soon as they are made. This will help avoid fear and rumors in your business areas that are unaffected by outsourcing. Some of your staff may have to work for your new partner, and it is vital to communicate with those people, so they understand what to expect and also ensure their loyalty is maintained. Identify key employees in areas that will be outsourced and recruit them to other areas of your organization. In case in-house personnel are being replaced by outsourced staff, treat those employees with so much respect and let them know that they are valued. You can consider transferring displaced employees to other areas, other departments. If this cannot be done consider providing opportunities for training that will prove a great advantage to them in their job search.

One thing is to also prepare a solid outsourcing contract. Your contract should establish expectations and serve as a record to refer to at all times. It should outline details about payment, expectations, roles, creative and other rights, and also describe an exit strategy. Have a lawyer to review any contract you sign. The contract should allow you to terminate your agreement if the vendor doesn’t meet your established quality expectations during a very specific time period. If this is not possible, you can set a date when the contract is due to be renewed so that you can consider whether to go ahead with the outsourcing partnership.

Now here are some really good outsourcing success stories that you can look up.

One is Google, WhatsApp is a good one. I want to say that WhatsApp was acquired by Facebook in 2013 for $19.3 billion, and they have credited their success to outsourced developers. Unilever is another good one. You can always visit on my website for you at www.managedoutsource.com. If you want to take a look at some more of that, please go to our website.

Outsourcing, no doubt, can have a positive impact on your business. Whether you are outsourcing data entry or some other business process, or part of your client work or product development, it can really benefit you because outsourcing can be time-efficient, cost-effective, and allow access to expert and specialized service providers and resources, and allow you to balance in-house staff and overhead expenses. So definitely take a look at it. Let us know if I can help you with any other further questions and thanks for taking the time.