Outsourcing Times: Outsourcing Best Practices

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.

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March 22, 2005 in Management | Permalink

Comments

This is in fact a well written article about outsourcing best practices. Outsourcing does save money, however, it has to be planned well, and managed well. Some companies hurry in, and choose the cheapest offer they get in terms of price per hour. However, while choosing the right offshore outsourcing firm, it is important to evaluate different aspects of offshore software outsourcing. http://outsourcing.indyzen.com encourages good communication, and well planned implementation strategy, and good documentation for successful outsourcing venture. When outsourcing services are planned well, and the right offshoring partner is choosen, the companies have very high chance of succeeding with their offshore outsourcing venture.

Posted by: Indyzen | Apr 6, 2005 7:53:30 PM

Everything is good but how do we contact the outsourcing hospitals?

Posted by: Eastern Diagnostics | Apr 25, 2005 3:00:55 AM

Essentials of outsourcing are

Prior Agreement on skil set of professionals to be deployed on the project. Also outsourcing project to be defined in terms of CPM (critical path method)charts to easilily evaluate the progress of the project.

Minimum use of internal recources during outsourcing project

Avoiding internal conflict and Dedicated internal recource whose performance will be judged on the basis of outsourced project

Division of outsourcing project and project fees into clearly defined and measurable subparts so that in case project as a whole fails to take-off its subparts can be implemented

Posted by: Ritesh Jain | Jun 26, 2005 5:01:03 AM

Offshore Outsourcing: Compromised Service Quality
:by Donna Fluss
When moving contact cneter activities abroad, there is no reason to sacrifice service quality for financial gain. Offshore outsourcing should reduce the cost per agent from approximately USD$30 - 60 per hour in the US to USD$13 - $18 in countries like India and the Philippines, for example. These financial gains can and should be achieved while maintaining or improving service quality.

While offshore outsourcing is a relatively new concept for contact centers, best practices already exist and should be acted upon to build a strong and lasting partnership that benefits your enterprise, your customers, and the outsourcer.

Best Practices for Managing the Relationship
As challenging as it is to manage an outsourcer relationship when the vendor is geographically close to your business, it is a great deal more difficult when the vendor is thousands of miles away. Distance is a factor that must be considered when deciding to offshore. Here are guidelines for creating and maintaining a successful relationship with an offshore outsourcer:

1. Manage the relationship as you would any outsourced activity, regardless of the geographical distance.
2. Locate a manager on-site, particularly early in the relationship while the “kinks” are being worked out.
3. Visit the site frequently, at least once per month. (The outsourcer will tell you this is not necessary and, after time, it may not be.)
4. Assign a US-based manager to oversee the relationship.
5. Speak to your outsourcer daily – avoid the “out of sight, out of mind” syndrome that often plagues outsourced activities.
6. Build formal and informal escalation policies – encourage the outsourcer to escalate inquiries with reward incentives. Set up a formal daily review session, particularly early in the relationship, and encourage the development of informal channels.
7. Randomly monitor customer inquiries and evaluate call and email quality.
8. Conduct a baseline survey to determine customer satisfaction levels before outsourcing your contact center activities.
9. Conduct customer satisfaction surveys as frequently as your budget allows, but not less than quarterly after outsourcing your contact center, to ensure that customer perception of service quality is not slipping.

Donna Fluss is the principal of DMG Consulting LLC, delivering customer-focused business strategy, operations and technology for Global 2000 and emerging companies. Fluss, a recognized leader and contact center visionary, is a highly sought-after writer and speaker. She is the author of the industry-leading annual Quality Management/Liability Recording Product and Market Report and The Real-Time Contact Center, to be published in June 2005. Contact Fluss at donna.fluss@dmgconsult.com.

Posted by: Business Process outsourcing India, BPO India, offshore Outsourcing India, Call Center India | Aug 25, 2005 1:18:56 AM

a very well written article. concise and to the point.
In fact http://www.aumenta.cc takes care of all these points and provides high quality outsourcing services.

Posted by: Call Center India | Dec 14, 2005 11:17:34 PM

My name is Saif Rahman and I am working as a Domain Expert - BPO with Dr Reddy's Foundation for Human and Social Development. I am really impressed with the initiatives taken by the LASON group for taking an initiative to expose rural India to the emerging BPO industry.
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P.M.L and its members have been serving the needs of small and medium-sized businesses in the human resource field since 1985.

By outsourcing human resources for your current employees, business owners can reduce employee overhead and administrative paperwork. Our service removes the non-productive tasks from your business so that you can concentrate on growing your business. It's like having your own personal staff of human resource experts to handle all of your employee hassles.

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We conduct stress management related workshops for the corporates and the call centre industry.

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Posted by: Vikram | Jan 28, 2006 4:54:43 AM

I feel the best practice is a positive approach towards customer satisfaction.

As a general rule, low price is not the solution, but highend solutions that work for outsourcer matters a lot.

There are various other ways a solution providing company can reduce the cost of services, with a systematic approach.

regards

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http://www.kpoweb.com
The new outsourcing destination in India. :)

Posted by: Best Practice in Outsourcing | Mar 19, 2006 12:30:22 PM

As usual these comments are enlightening and informative.

By outsourcing your current employees, business owners can reduce employee overhead and administrative paperwork. Outsourcing Human resources administrative tasks from your business allows business owners to concentrate on growing your business. In addition Professional Employer Organization services (PEO) can include workers;’ compensation insurance coverage and access to competitively priced health insurance and employee benefit plans. For a complete review of PEO options available from companies in the USA visit http://www.staffmarket.com.

Posted by: Employee Leasing and PEO solutions | May 24, 2006 12:12:31 PM

This article touches on the core elements of what my organization can do for any company looking for additional revenue streams. We work with many companies large and small and provide them several solutions that tap their existing customer base or find new avenues to go down.

Check it out:

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Posted by: Dale Towery | May 25, 2006 3:39:11 PM

PML's service helps business owners deal with the increased employee paperwork and hassle that accompany a growing business.

P.M.L and its members have been serving the needs of small and medium-sized businesses in the human resource field since 1985.

For more information about PML or Outsourcing HR please visit http://www.planmarc.com or call 800-567-0235.

Posted by: PML Worldwide | May 30, 2006 8:53:30 AM

Myself S.Subramanyam Reddy,I have possessing M.A, M.L; PGDIB,PGD IR&PM. Now iam working as lawyer in the Chittoor court.now Iam interested to join in the legal out sourcing to face new challenges in the legal profession,and fulfil the objectives of the organisation.

Posted by: Subramanyam Reddy.S | Jun 12, 2006 11:02:20 PM

Best practices begin before one outsources. on http://outsourcingmonitor.eu we have many articles about how to choose a vendor, how to deal with multiple vendors, employees etc.

Seeing that almost 46% of projects fail or are way over budget (this may pose a risk to your company, job or success record), my best suggesstion to you is that before you - as a consultant, recommend to your client a software or vendor solution, or you, the corporate decision maker, go choosing an outsourcing vendor or deciding on which enterprise software to purchase, you must absolutely fool-proof and double check.
OMEU (OutsourcingMonitor.EU) offers free 2h access to online industry leading evaluation tools that will assist you to avoid failure and minimize the risk of choosing wrong solution. This is the biggest headache most decision makers face, so make use of the free access (may not be offered for ever) : http://techevaluationtools.outsourcingmonitor.eu/

One more tip: If you are an outsourcing vendor, you know that your prospects suspect your sales team is presenting things in a way that does not always have much to do with actual reality. OK, ok, maybe your team or you yourself are very honest, however you are still a suspect.
How to solve this? By providing prospect with an RFI and RFP that supports every detail they may need but might have forgotten to ask now. Show your professionalism , integrity and interest in serving THEIR needs before yours, in looking for a good fit rather than a fast contract. This will boost your credibility and integrity and i'm sure will better grow your business. These RFIs and RFPs are avilable here: http://outsourcingmonitor.eu/technology-research-tools.html
and if you claim any of them for yourself get back to me with proof of purchase and you'll receive a FREE lifelong directory listing on OMEU for your business!

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Greetings,

My name is Quan Zhang, a student at New York University. I am conducting a research project as part of the requirements for a Masters of Science degree. The topic of my project is the offshore outsourcing vendor selection process. The subject of this research is individuals that had experiences with offshore outsourcing engagements. “Experience with offshore outsourcing” was defined as but not limited to assisting clients in outsourcing arrangements, approving outsourcing decisions, evaluating service providers (vendors), managing ongoing outsourcing relationships, and approving final vendor selection decisions.

Your participation and feedback is extremely important to the success of the research. I sincerely appreciate and value your help and feedback. I'd also greatly appreciate if you could forward the link to the survey to others who might be qualified to respond.

Please click on the link below to access the survey which should take less than 10 minutes to complete. Your privacy is strictly protected and confidentiality guaranteed. Data colleted in relation to this research is coded and therefore eliminate the use of any individual names.

http://www.questionpro.com/akira/TakeSurvey?id=439814
Thanks for your help!

Best regards,

Quan Zhang

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