Outsourcing Strategy: Balancing the Key Areas of Value

On August 28, 2012, in Outsourcing, by Business Development Group
For an outsourcing initiative to be successful, it needs to create value for the different groups of stakeholder entities involved. It is critical to maintain balance between stakeholder entities by managing the expectations of each.

For an outsourcing initiative to be successful, it needs to create value for the different groups of stakeholder entities involved. It is critical to maintain balance between stakeholder entities by managing the expectations of each.

Outsourcing has become a global business trend for modern organizations. By outsourcing non-core business functions to specialized service providers, a company can shift focus and resources to core business processes, increasing efficiency and performance in today’s highly competitive global market environment.

For an outsourcing initiative to be successful, it needs to create value for the different groups of stakeholder entities involved. It is critical to maintain balance between stakeholder entities by managing the expectations of each.

Shareholder Value

For a company that decides to implement an outsourcing initiative, it is imperative to maintain a suitable balance among the “competing interests” of all stakeholders. Value-creating organizations follow the best practice of creating long-term shareholder value. By aiming to provide maximized shareholder value, companies simultaneously create greater value for all stakeholders, creating and maintaining balance among the key areas of value.

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Employee Value

An ideal work environment is one where employees feel valued, have less work-related complaints, want to work in, and don’t want to leave. To create a work environment where key employees will want to stay and produce the required results, the company will have to maintain open internal communication about the outsourcing initiative implemented. Benefits to maintaining employee value include: increased focus, reduced absenteeism, heightened morale, improved productivity, and reduced costs of hiring and training new employees.

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Vendor Value

The true value of an outsourcing service vendor is in how they maintain a company as a client. A good outsourcing vendor will want to know the client’s objectives, will want to deliver the client’s desired outcomes, and will want to establish a long-term successful outsourcing relationship. However, as is the case in any other type of relationship, developing and maintaining a good vendor relationship with an outsourcing service provider will take work, time, and mutual trust.

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Customer Value

One of the risks of outsourcing certain business processes is the possibility of reduced service quality that could lead to damaging customer relations. Before the implementation of the outsourcing strategy, the current levels of service satisfaction and loyalty must first be identified, and benchmarked to become the key performance indicators in the outsourcing contract. By building on customer value throughout the outsourcing initiative, a company can ensure customer satisfaction and loyalty, consequently building up the creation of shareholder value.

Related Article: Outsourcing Customer Services – Maintaining Levels of Customer Support

 

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