Much research and studies have been conducted to determine critical success factors in an outsourcing venture. However, the fact remains that an outsourcing model for one company may not work as well or at all for another company.

Much research and studies have been conducted to determine critical success factors in an outsourcing venture. However, the fact remains that an outsourcing model for one company may not work as well or at all for another company.

In most recent years, outsourcing— especially offshore outsourcing— has become a mainstream business strategy that has been adopted across the corporate universe. Much research and studies have been conducted to determine critical success factors in an outsourcing venture. However, the fact remains that an outsourcing model for one company may not work as well or at all for another company. So, with all the aspects to consider when embarking on an offshore outsourcing venture, what are the elements that really drive outsourcing success?

Read related article: Philippine Outsourcing: What is a BPO Virtual Captive?

Success Factor #1. Set Your Goals and Understand the Risks

The first— and considered most important— practice that draws unanimous consensus among outsourcing advisors and analysts is the setting of goals and objectives on the client’s side. Every outsourcing venture must begin with a clear understanding of the reasons behind the company’s decision to outsource to an offshore location. It is important to consider the drivers and priorities involved in the outsourcing venture, with plenty of input and participation from stakeholders.

An internal risk and readiness assessment is also necessary to determine accurately the company’s IT capabilities, assets and deficiencies, as well as current operating guidelines and procedures. This will help greatly in determining specific goals and expectations for the outsourcing decision.

Related Article: “Non-Voice” BPO Training Pushed

Success Factor #2. Determine Which Functions To Outsource

Outsourcing should not be viewed as a solution for fixing the company’s failing or broken functions. Deciding to outsource these broken functions and processes will only take them miles— even halfway around the world— out of your control. Instead, the best way would be to fix these broken functions first before outsourcing them or to outsource only those functions that will guarantee business improvement, return-on-investment, and customer loyalty.

Where in the past, most companies outsource mostly customer-facing activities; recent trends actually now promote the outsourcing of knowledge-based processes, prompting the growth of the emerging KPO industry. Whatever process or function you decide to outsource— be it customer-facing or knowledge-based activities— the use of operational metrics and other quality-based measurements as performance indicators remains the best practice consensus for the creation of a management framework for these outsourced processes. Thus, it is important to consider only the functions that you can easily monitor and control through an external partner.

By approaching the outsourcing venture through these factors, companies will be able to come to the negotiation table with clear goals and expectations for both parties involved in the outsourcing relationship— the client and the provider— setting the stage for the vendor evaluation and selection process that will follow.

Sources:

Linda R. Dominguez. The Manager’s Step-By-Step Guide to Outsourcing. McGraw-Hill Companies. 2006.

IT Business Edge. Six Key Success Factors for Outsourcing. Allied Digital Services. 2010.

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2 Responses to “Success Factors for Outsourcing: Know When and What to Outsource (Part 1)”

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