If It Isn't A Core Competency, Take The Activity Or Business Process And Contract It Out

Posted Fri, 11/20/2009 - 13:12 by cary
Before starting an engagement with BPO/SPO service the client should ask themselves are they able and capable of outsourcing processes to an offshore, near shore, onshore or rural sourcing model. Is outsourcing the correct model or is a shared service model a better fit for the organization moving forward.
What are the risks for sourcing these processes and executive management needs to look at sourcing as a management practice, not a project. Also, as you develop this strategy, they will need to develop a governance model that connects the sourcing strategy to the business strategic plans.

After the signed off by the executive committee. The next step is to identify a list of service providers to ask specific questions:
1)Financial – is the service provider financially stable, do they have any law suits against them currently or in the past, what are their referenced companies and are they financially stable or have any law suits against them,
2) Processes – is the service provider a market leader in their processes, can they innovate these processes during the contract, can they assist in positively effect time to market,
3) Technology – have they invested in their technology to keep pace with the marketplace or are they going to in the near future,
4) Employees – what is the churn rate for their employees, is their adequate labor pool available to draw from during the contract, what is their employee satisfaction rate.

Most companies once they elect to go with a BPO/SPO try to pinch pennies during the contracting. This has its merits of course in the short term. However, it does not allow the relationship to develop over the contract period and hence will not allow significant additional innovation and value to be brought into the engagement. Instead of focusing on penny pinching the client company should consider this as a marriage between two organizations towards a common goal.