Outsourcing as a practice has gained so much legitimacy in recent years that companies everywhere are now scrambling to leverage the low costs, and often, higher productivity available in offshore locations. In fact, executives are so convinced of the benefits of outsourcing, that they’re trying to transform their firms and outsource large parts of their operations in the space of only a few months. In a business process timeframe, that’s almost overnight. In my opinion, such a rapid transformation cannot allow the client the full benefit of the services received, even if they are performed well. It’s usually only after a year or so that the client company learns how to properly integrate the vendor into its operations, and align the services provided with its own core competencies.
Interestingly enough, Cynthia Batty, Director at TPI Consulting, doesn’t criticize these overnight transformation attempts. In a new article she writes called ‘Surviving and Thriving in an “Overnight” Outsourcing Transformation’, she instead gives helpful advice on how to make that rapid process as pain-free as possible. According to her, some simple governance, and a bit of planning ahead is what’s needed. Here are her first two points:
1) Make sure you have established clear accountability for the outsourcing relationships at all levels of the enterprise
Executives often use the word transparency when referring to sourcing processes. That’s good, since everything is clear and easy to see. But what’s needed even more these days is responsibility, or accountability. As the buyer, you need someone in your business who is responsible for making sure that the services you’re receiving at up to the mark. As Batty says, “The service provider is responsible to deliver the services, but YOU are accountable for ensuring that you receive the services. Identify a clear line of accountability from a service to an executive who is a genuine stakeholder in the outcome, to ensure that the service accountability does not get lost in the [business] transformation.”
2) Establish enterprise roles and responsibilities early in your transformation
At the start of an offshore project, many buyers see their outsourcing team as an isolated box. They forget that the members of this team often also have responsibilities in other departments like finance, HR, etc. So what’s needed is the assigning of clear roles in the outsourcing relationship, before certain key aspects of the project get ignored. Remember, if you’re transforming your business ‘overnight’ there’s a very small timeframe, and an even smaller margin for error. “Corporate functions are significantly affected in outsourcing, particularly Procurement, Risk, Security, Legal and Audit,” says Batty. “Leaving role definition until later can stall important development of the governance approach and can impede the development of an outsourcing center of excellence.”
In my next post, we’ll discuss three other ways to make your rapid business transformation a smooth one.