Outsourcing has revolutionized how business is done in almost all sectors. IT outsourcing, in particular, continues to grow by leaps and bounds, an indication that more and more companies are realizing its benefits.
The are many advantages to outsourcing, including cost reduction and allowing you to focus on core business activities. But for these advantages to be fully realized, you must carefully choose and manage your outsourcing vendor.
The goal, of course, is for the remote team – the vendor handling your outsourcing – to function better than an in-house one. There are six essential steps to keep in mind before, during, and after the outsourcing contract is signed.
Understand Exactly What You Are Outsourcing
To receive the benefits of outsourcing, you need a true understanding of the full costs that go into your product and how these costs can be most effectively managed. This will enable you to develop meaningful performance metrics that will be essential for establishing a shared understanding with your outsourcing company about performance expectations.
The Crucial Decision: Insourcing Versus Outsourcing
Once you fully understand your production costs, you can objectively evaluate which parts of the production process are candidates for outsourcing. A consideration to keep in mind when making this decision is whether a process is core to your competitive strategy or non-core. Non-core activities are good candidates for outsourcing, while it is generally recommended to keep in-house those areas in which you have developed specialized skills.
Selecting the Right Outsourcing Vendor
While cost is an important factor in selecting your outsourcing vendor, it is not the only consideration. Other key questions include:
- Does the outsourcing vendor have experience with the work you want it to do?
- Has its staff worked in an environment similar to yours?
- Can it provide economies of scale?
Contract Development and Negotiations
In too many companies, outsourcing contracts are left to purchasing departments and senior executives, and only later passed on to the managers and staff who will be working with the outsourcing vendor on a regular basis.
Managers and staff should be involved early – not after the contract is signed. These employees will be valuable in measuring performance and ensuring nothing is overlooked that is critical from an operational perspective.
How to Manage the Remote Team
Once the outsourcing vendor is chosen and the contract signed, it is time to begin building a collaborative partnership. Do this by communicating with the vendor about your company goals and the appropriate strategy to be followed in achieving these goals. Be sure you have gained the cooperation from your internal staff.
When outsourcing, the job of managing your remote vendor never ends. It is an ongoing process that includes continual monitoring and tracking the metrics. And in achieving maximum results, ongoing communication between you and your remote team is extremely important.
Evaluating the Results of Your Outsourcing
With the information you gather, you will be able to evaluate on a regular basis how well things are going with your outsourcing vendor.
Your initial choice of an outsourcing vendor is critically important, as a subsequent decision to change vendors, or even bring a function back in-house, is a costly one and not to be taken lightly. The continuous evaluation of results will allow you to maximize the return on investment from your outsourcing partnership.
Sequent Solutions Has the Experience You Need
Sequent Solutions, with over 20 years’ experience in IT outsourcing, can assist you in growing your IT team in a fast and cost effective manner. We would be glad to discuss your particular needs and goals. Contact us today.