For more than 10 years now, companies have been looking to improve their performance, position themselves in an advantageous way in the competitive market while reducing their expenses. For this, they can rely on outsourcing. What factors were considered by those who made the transition?
Benefits of outsourcing
Outsourcing has become a real tool for companies that want to focus on their core business. This practice offers many advantages:
- The customer can rely on a specialist service provider to perform specific tasks, while having access to the means and information being leveraged to ensure the smooth running of the service and saving on operating costs,
- The client no longer needs to invest substantial capital to carry out complex tasks since the provider has all the resources and technologies necessary to take over these operations,
- The client can remain confident of achieving good results on low value-added tasks. This allows the firm to focus on its core business,
- The company can focus on its development. It can also, if possible, invest enough capital to split its organization.
Factors to be taken into consideration
Today, companies must be competitive and grow while increasing their turnover and modelling a more efficient, experienced and productive back-office. Many have opted for outsourcing to achieve this. While doing so, they have taken into account the following factors. They include the most logical ones to those which are too often neglected.
Cost evaluation: A complex but essential step, cost evaluation must be accurate in the context of an outsourcing project. This is especially relevant when services that are about to be outsourced have been, until now, managed within the company, in-house.
The quality of the service: Another essential point to consider is the quality provided by the future service provider. It must be high, even when the services concerned are not of high added value, do not involve the core business of the company and can be difficult to take charge of internally because of the lack of specific in-house skills.
Mastering your business before giving part of it to a supplier: For successful outsourcing, the customer must be able to master every part of his business, including the least “interesting” aspects before passing those on to a supplier. This will allow the company, once outsourcing is in place, to monitor and supervise the work being done.
Look for a partner rather than a provider: The provider must be experienced in the company’s market, so he will be able to execute the requests of his client. Most importantly, he will also be able to advise the client, keep him informed of the latest innovations, while offering him a secure framework.
The transition phase: This is an essential and sensitive part of the outsourcing process. During this phase, the client is not engaged and still has a way out in case of incompatibility with the service provider.
KPI-performance indicators: For the customer and his service provider to evolve at the same time, it is necessary to put in place performance indicators, but also a system of penalties. Here, feedback from the company’s customers must also be taken into account.
Pilot phases and safety nets in case of disputes: In order for the collaboration between the company and its provider to take place in a transparent way, it is important that both parties have information, concrete data, to exchange. This will require weekly technical committees, monthly pilot committees and annual strategic committees.
The outsourcing contract
Outsourcing is a kind of constant balancing game between the customer and the provider, within a legally secure framework for both parties. To achieve this, it is essential to draft a contract in due form, which will take up, point by point and with the greatest possible precision, the expectations and achievements of each party involved. This document should include the following points in detail:
- Description of the service provider’s speciality,
- The methods used by the provider to exclusively supervise the mission entrusted to him by the client and
- The flat rate paid to the provider.
Project management: the contract will clearly define the obligations of the client, express his needs and constraints during the operation based on the internal problems faced and on his organisation.
The obligations of the provider to transmit information: With the aim of enhancing transparency, the contract must clearly set out the obligation of the provider to relay information, pieces of advice and warnings, both before and during his mission.
Legal constraints in case of termination of the client: The client should be able to terminate his partnership with his provider for a financial payment, if ever the initial contract provides for a legal action on the part of the provider for such a move.
The limitation of liability clause and the concept of obligation: This clause prevents the provider from being totally free of liability in the event of a dispute with the client.
The reversibility clause: It allows the customer to take over or have the outsourced service taken over by another provider of his choice, and this will be conducted according to the obligations and conditions of the contract.
Outsourcing can be defined as a constant exercise to create, maintain and preserve a consistent balance, for the client’s company, which must manage to keep a certain know-how, while allowing the provider to deploy its know-how.
By demonstrating courage, innovation, determination and objectivity, the various players in the outsourcing sector have woven a competitive and uncompromising market. This is an undeniable advantage for companies that need to outsource some of their services, as they are certain to benefit from a quality service. By effectively preparing for this change, a strong and sustainable partnership can be built.