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Outsourcing - Top Ten Best Practice Checklist

Part 2 of 2

1. Don’t consider outsourcing just because your competitors are stealing a march to India. Outsourcing should be one of several options reviewed and assessed for short and long term cost reduction benefit. Verify its worth to you and then your customers, ensuring minimal disturbance to all concerned.
2. Do allocate time to extra due-diligence to confirm the business drivers behind the strategy to outsource. Will the business be 100% ready and prepared for predicted market conditions, impact upon financials and stock values? Gauge shareholder perception and opinion, particular emphasis needs to be placed on maintaining skill sets & impacting employee motivation.
3. Plan the strategy and ensure you capture every detail:
   a. Program research activities
   b. The implementation
   c. Customer migration impact
   d. Infrastructure changes
   e. Human capital requirements (pre and post outsource)
   f. Timings and seasonal adjustments
   g. The back out plan. Then and only then can you build a true budget; you cannot realise the true costs until you have fully mapped these details and its impact to operational costs and P&L.
4. Do engage in extensive partner research. Select your outsourcing partner in the same way you would choose a house; spend time reviewing the operation, location time zones, importantly the management, as you will be trusting then with your customers and they don’t live your business or its core value – how are you going to ensure this lives on? Review their board of directors, business plans, contingency and exit strategies. Who else do they work with and who are they planning to work with.
5. Only outsource what you need to, don’t let the financials or the partner capability be the driver. If it’s back office operations only, then stick to the plan and keep the processes as simple as possible minimising points of failure.
6. Understand the impact this will have on your brand globally… you wouldn’t take a Rolls Royce to a Mini dealership for a service just because it’s cheaper! Customers will notice the change. You have to get the processes right first time with little margin for error. Failure equals lost customers and revenue and this in turn can lead to a broken business.
7. Before you commit to your selected partner, re-review the strategy and planned goals, ensuring the plan is still valid and its tenure is viable. Does the partner fit with where you need to be in the next 3,5,10 years? Don’t be afraid to press the ‘STOP’ button if it doesn’t feel right and allow time here to rework if necessary.
8. Test, Test, and re-Test all processes and procedures thoroughly before moving them into a ‘trial’ or ‘live’ state. Model every eventuality that might impact operations, services and ultimately the customer. When you’re happy migrate sample services and test groups of customers in phases until the outsource provider has passed your benchmarks to accept the full ‘workload’ or customer base in its entirety.
9. Imbed a mix of ‘trusted’ experienced staff who intimately understand the processes, policies, operational procedures, culture and customers within the outsource provider for a period of no less than 3-6 months. This ensures continuity of handover and a quick response or post-mortem to any escalations as they arise. Carry out ongoing reviews against strategy and customer feedback.
10. Don’t execute any downsizing activities at home until you have complete confidence to release key staff and skills no matter how the numbers stack up. They are your insurance policy and back out plan if something was to go wrong. Remember they collectively hold years of business and customer knowledge that you have paid for, never let it walk out the door without complete confidence of your strategy. If you do this right, you can retain key staff, skills, knowledge and effectively outsource whilst getting the financials right.