March 22, 2005
Outsourcing Best Practices
When your company is forming long-term offshore outsourcing relationships with another company, the foundation of the success of this venture should be laid during the negotiation period itself. The centerpiece of this negotiation period is the Service Level Agreement.
The aim of outsourcing is to gain value for the host organization. There are several contrasting views however regarding how to maximize value and minimize risk by outsourcing. The following best practices can serve as a guide when structuring your SLA, and then implementing and maintaining a relationship with the chosen provider.
Five Golden Rules For Offshore Outsourcing
1. Develop enduring relationships between key management personnel.
The
usefulness of the relationship between the key management personnel of
both teams depends on good understanding and strong working ties
between them. Studies on outsourcing success stories have demonstrated
that working chemistry in management and peer friendships among
employees have proved to be important determinants in forming long-term
relationships that yield real value.
2. Present a Quantifiable Objective.
A
useful performance criterion includes quantifiable objectives and
clarifies expectations of the quality of service. If you can get ahold
of SLAs for comparable projects, they will serve as reasonable starting
points—but remember, these are negotiable. In any event, ensure that
exact objectives and expectations are included in the SLA and are
understood by both organizations prior to implementation.
3. Pre-determine the Incentives and Penalties Schemes.
The
provider should be driven to meet the established customer expectations
or even exceed it by adopting the performance based pricing criteria.
If performance of the service provider exceeds expectations, then
incentives should be given; conversely, appropriate penalties should be
imposed if objectives are consistently missed.
4. Review Periodically to Maintain Successful Relationships.
Organize
formal review meetings often. During the meetings, both sides can
discuss the performance of both teams and determine the future
objectives or goals of the company accordingly. They can also discuss
product reviews and deliverables during these meetings. Keep in mind
that performance objectives may need to be continually revised
according to changing market conditions and the opportunity costs of
both firms.
5. Communicate Well & Often to Bridge Cultural Differences.
The
parties involved in an outsourcing relationship belong to distinct
cultures, these differences have to be accepted and bridged. The
cultural understanding between the two organizations can be enhanced by
organizing social events, educating about company background,
participating in each others’ quality programs, etc. Communication
really is the key to a healthy relationship. It may be helpful to send
a loyal employee to the BPO site for a few months to facilitate
understanding in the implementation phase.
--
Did you enjoy this post?
Comments
Post a comment
« Tata Consultancy Discusses Future of Offshoring | Main | Small Businesses Increase Offshoring »
Recent Comments