In many industries, businesses facing stiff competition are driven to outsource certain processes so that they can retain only the in-house team that builds their core competencies. Yet outsourcing doesn’t always work out the way you’d expect; sometimes you need to take greater control and be more involved in order to ensure that the outsourcing process doesn’t succumb to these common errors.
Loss of control or quality
Often, you’ll hear about business horror stories involving outsourcing practices which resulted in a loss of control over third-party operations, or a sharp decline in the quality of service provided – one tends to accompany the other. These issues can happen whenever a company shifts certain processes away from its employees who are invested in the culture and committed to quality; however, some practices will help you implement outsourcing that hews more closely to the output you’d expect from an in-house team. Outsourcing doesn’t have to mean offshoring; working with onshore partners will facilitate quality monitoring. A small business in Idaho, for instance, can entrust IT support to a local company like MicroTech and build a long-lasting business relationship with them. Defining clear performance metrics and service levels, and the ability to work closely together, will increase the likelihood of third-party involvement contributing to success rather than diluting it.
Lack of strategic integration
Perhaps the two most frequently cited reasons to outsource business processes are the potential cost savings and the ability to tap greater professional expertise in a specific area. There’s no doubt that if you properly evaluate potential vendors, you can enjoy both benefits – but what purpose does this serve? Without reinvesting cost savings into more important aspects, such as R&D or process innovation, a business may lose consumers or clients who don’t benefit from an improved experience. Is it your goal to eventually bring back these processes in-house once you’ve identified and trained the right talent? If not, then creating long-term plans and facilitating training to address gaps in the knowledge and skills of third-party staff will be a necessary investment (and additional cost). The decision to outsource can’t be just a short-term fix; it must always play into the overall strategic approach.
Muddled communications hierarchy
Outsourcing also offers the potential to reduce process complexity for many businesses. In aspects such as payroll or legal compliance, hiring an experienced CPA or legal specialists will remove the burden of digesting unfamiliar terms and possibly fumbling around in critical areas. Yet saving your in-house team from one form of complexity can create confusion in other areas; many newcomers to the outsourcing world risk muddling their communications chain. Dealing with internal employees all the time can result in an informal approach which works fine in-house, but can render you blind to the gaps in communication with offsite partners. These contractors in turn may rotate staff at their discretion; these employees may not be entirely familiar with their client’s vision or specifications. When discussing the expectations with your outsourcing partner, go beyond performance metrics and specify schedules and preferences of communication; how frequently and through what channels will it be possible to deliver feedback (or feed-forward); and the amount or level of detail in the information needed regarding long-term plans, reports, and other initiatives.
The decision to outsource may prove smart for any business, but various circumstances can swing the outcome either way. Be aware of the potential drawbacks and you can take these steps to ensure successful outsourcing.
