Outsourcing: A Recipe for Success

Introduction

There is a body of research that suggests many outsourcing deals are not delivering the benefits expected by client organisations.

Common themes centre on a mixture of unexpected costs and issues surrounding the relationship. Yet despite these well publicised challenges there remains a significant client investment in outsourcing. In fact, the move towards outsourcing more core or strategic elements of the business coupled with the growing importance of greater collaboration with outsourcers is viewed as a way to achieve greater flexibility and agility.

These challenges and developments suggest that outsourcing continues to be viewed overall as significant in the realisation of business goals and strategies although there are many who are currently in existing outsourcing arrangements that are failing to deliver the benefits expected.

It is our belief that outsourcing can be an effective strategy however there are a number of aspects that have to be understood and actively managed both from the outset and throughout the life of the contract to realise the expected benefit for the clients’ business.

The right blend of ingredients

Having the right ingredients alone is not enough to form the basis of a successful recipe

Any memorable gastronomic experience has behind it an exact blend of quality ingredients and other elements including skills, experience, preparation, timing, tools and monitoring to ensure the delivery of a successful outcome for the customer. At Aurora Partners we believe the same can be said of outsourcing.

The objective of this article is not to describe an end to end process for outsourcing; after all there are plenty of articles about that. It is looking to explore, from a client perspective, those aspects of the “outsourcing recipe” that we know from experience are often overlooked or undervalued and yet we believe are critical in terms of delivering the required value throughout the term of the contract.

Looking at these aspects in more detail will help those involved in the procurement and management of outsourcing to better understand their existing outsource challenges and provide some insight into how to improve the successful prospects of future outsourcing ventures.

Having said this is not an end to end guide to outsourcing it is important however to provide some context. The outsourcing process can be broken down into 3 key stages; Business Case Development, Tendering & Selection and Managing the Contract.

Creating the right conditions outsource 

At the outset it is important to ensure the right “conditions” are created so it’s worth recapping on a few basic outsourcing principles

Understand what your organisation expects to achieve through outsourcing and what services it is planning to outsource:

 

  • Cost saving is one driver for outsourcing but many organisations also outsource to obtain access to skills, drive innovation and to manage complexity/scalability more effectively
  • Outsourcing is typically more attractive and less complex for routine/repeatable activities or commoditised services
  • Outsourcing those aspects of the business that are considered core, critical or strategic carries with it a high impact associated with any failure. This type of outsource requires a higher risk profile to be understood and managed and requires a more mature, collaborative based approach.

 

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