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If you are not experienced in outsourcing, consider hiring an
from: experienced outsourcing consulting firm to help you through theprocess. Generally the large accounting firms and outsourcing
vendors provide excellent support for large scale projects, and
there are a number of smaller firms that can help the small and
mid-size companies. If you want to manage the process on your
own, even the most sophisticated project management techniques
can be broken down into four simple project management stages:
o Analysis o Evaluation o Implementation o Review
After you have identified potential outsourcing candidates try
stepping through these steps to see if outsourcing makes sense
for your organization.
Analysis. The goal of this stage is to determine your company's
core business and to identify expensive or low performance
supporting functions.
Make a list of your mission critical products and services and
all supporting functions. Then determine how these sectors must
perform to keep you competitive or to place you ahead of the
completion. Any department or function that is not your core
business, is a large cost center and is not particularly
effective in delivering results is a prime candidate for
outsourcing. In computing your "costs" do not forget to factor
in the time that a problem area may take from your executive and
support teams.
Evaluation. The goal of this stage is to identify and match the
needs of your targeted department with an outsourcing provider.
First break down the key functions of the department into its
major component structural parts and major functions. A simple
analysis can be performed by writing down the department name or
function, the work product produced and the
information/materials needed to produce that work product.
Perform this exercise for the current operations and then for
the "how it should be done" case. This chart will be a simple
written expression of what is needed from the targeted
department or function.
Now it is time to identify local and offshore outsourcing
sources, get them to sign a non-disclosure agreement and send
them your basic analysis. The outsourcing provider will have
many more questions but you will have a simple, basic guide to
make sure the provider is on course. You will likely send out a
Request for Quote or a Request For Proposal which will contain
your "needs" contained in your chart with a request for a
solution. It is also a good idea to ask your potential
outsourcing partners to send you a proposed contract for you to
review at this stage.
You will want to score each provider based on price, service,
quality and terms. Do a simple net present value analysis to see
if the project makes sense. Above all, do not loose your sense
of reality in the sea of numbers. Select the service provider
that best fits your needs.
Implementation. The goal of this step is to transfer knowledge
and data from your internal department to your outsourcing
partner, implement best practices and commence operations.
Implementing a new outsourcing program can be as simple as
logging into a new payroll provider's system and entering data
or as complicated as divesting a major division of your company
and coordinating a multi-man year conversion process. Regardless
of the complexity, you need to work with your outsourcing
provider to create a clear step-by-step project plan with clear
actions, deliverables and due dates and have a weekly review
process that quickly identifies and resolves any problems or
delays. Make sure that your outsourcing partner provides you
with some method to clearly track the progress of your project
and have contingency plans, testing plans and reasonable
penalties if key milestones are not reached. You will also need
to create a transition plan for any planned staff reductions.
Review. The goal of this step is to set up an ongoing system
that maximizes the performance of both your internal staff and
your outsourcing partner to make sure you get the results you
need.
"If it does not get measured it does not get managed." This must
be a mantra for the team if any outsourcing project is going to
be successful. Make sure that you have set up specific service
level agreements (SLAs) in your agreements that have specific,
measurable results. Identify project managers on your staff and
with your outsourcing provider and give them targets. If you tie
a compensation plan to results you will be amazed at the
improvement in quality.
During my years as a business consultant and IT executive, I
developed a simple checklist to evaluate vendors and manage
outsourcing projects. If you are interested in receiving a free
copy feel free to send me an e-mail at the address below with
information about your project and company.
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