Determining What to Outsource: the Basic Do’s and Don’ts

On June 7, 2012, in Outsourcing, by Business Development Group
Experts have different views on the analysis and determination of what and where to outsource, but they do agree on some basic do’s and don’ts when determining what to outsource.

Experts have different views on the analysis and determination of what and where to outsource, but they do agree on some basic do’s and don’ts when determining what to outsource.

Although offshore outsourcing started out of and gained popularity on a foundation of Information Technology, many companies now realize that other business functions can be outsourced as well. Outsourcing manufacturing, mortgage loan processing, back-office banking functions, customer care call centers, benefits management, tax compliance, and other noncore business functions are now gaining popularity as well, fueling the growth of the offshore outsourcing.

Experts have different views on the analysis and determination of what and where to outsource, but they do agree on some basic do’s and dont’s when determining what to outsource.

Related Article: Success Factors for Outsourcing: Knowing When and What to Outsource (Part 1)

The Do’s

• Art Salyer, executive vice-president of operations for Trojan Battery Company recommends assigning a full-time project manager who can focus solely on the project. The project manager’s most important responsibility is to initiate an assessment of your business functions or tasks for possible outsourcing.

• Linda Cohen, managing vice-president of Gartner Inc. suggests the creation of a decision team and working with your decision team to clarify your vision of desired outcomes. The decision team’s main function will be to determine which business functions are candidates for outsourcing and which ones are not— and why.

• Plan to outsource only the performance aspect of the business function, not the responsibility function. In addition, benchmark your current performance on the business functions you’re planning to outsource and use this as a basis for comparison in evaluating vendor candidates. Ideally, your vendor should be able to perform in par, if not better, to your current in-house performance of that particular business function.

• Take your time and think it through. Rushing will only increase the risk of making the wrong decision.

Related Article: Knowledge Process Outsourcing: The Next Frontier

The Don’ts

• Don’t outsource something just because you don’t want to do it. This is according to Jim Lanzalotto, principal at Scanlon Louis, a strategy and marketing outsourcing firm headquartered in Philadelphia. He additionally pointed out that “Sometimes there are things you don’t want to do but they are important to your core business.”

• Don’t outsource a business function just because it’s broken. Outsourcing these broken functions will take them miles— even halfway around the world— out of your control.

• Don’t outsource any decision-making. All the decision-making must be done by you as this can greatly affect core functions of your business.

• Don’t allow yourself to be swayed by consultants’ whose ultimate purpose is to convince you to outsource “everything”. To be more objective, it is best to use an insider or to hire a consultant with no ties to outsourcing service providers.

Related Article: How to Build a Better Business with Outsourcing

 

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