Essential Considerations To Avoid An Outsourcing Crisis

Tuesday, January 3, 2017

Essential Considerations To Avoid An Outsourcing Crisis


Over the years, outsourcing certain tasks has saved a lot of great businesses from failure, and provided visionary entrepreneurs with their livelihood. However, it’s also proven to be a total disaster for some firms, and caused countless financial and organisational crises. Like anything in business, good outsourcing requires a careful approach backed up by detailed knowledge. Here are a few key factors that need to be considered when you’re outsourcing anything…

Strategy Alignment and Deal

You and your higher-ups need to understand how the outsourcing deal fits in with the overarching business strategy. Go through your correspondence with each of the companies you’ve been reaching out to, and think about the available deals in terms of purpose, scale, context and limitations. By understanding how the deal fits in with your vision for the business’s future, you’ll be able to mitigate the worst of the emotional impact that can come with some outsourcing deals. In many cases, your staff are naturally going to worry about the future of their jobs, and how the deal will affect the people they care about in the business.

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Are you Going to be Able to Reap the Benefits?

Shifting any given task to another company, whether in the form of IT outsourcing, marketing or anything else, will always lay the immediate cost, effectiveness and efficiency synergies out to be collected. I’d say under half of the deals actually allow the business in question to collect these, mainly due to a lack of preparation. The most important things to consider here are the clearly stated responsibilities of the suppliers and the client, clarity on conditions and timing for synergies to be collected, and the service beyond key performance indicators. It’s also very important to have a plan in place for escalation if and when the results are coming in slow or aren’t coming at all. When you’re constantly getting bombarded with marketing materials for B2B services, it can be easy to get taken in by it all, smile, nod, and put your money down. However, if you fail to consider how easy it will be to reap the benefits, you’ll just be setting yourself up to fail.

The Risks and How you can Mitigate Them

It’s 2017 now, and that means that the risk in an outsourcing deal isn’t isolated to one little area of the company. Now, risk in any business deal will reach all your stakeholders, including financiers, staff, clients and regulators. Whether good or bad, you’re going to exit from the contract eventually, and it’s important to know how you’ll handle it, whatever the details. Staff knowledge transfer or retention is always a big factor to consider. Onshore and offshore risks, along with the financial stability of suppliers and rights to intellectual property all need to be considered as well. Exit clauses for a change of ownership, too, are essential to consider. You need to take the time to consider all of these risks, and what you’ll do to mitigate them in the future.

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