More outsourcing means more complexity
According to a recent study by KPMG, the outsourcing of back office functions is due to increase over the next six months, which is of course good news for outsourcers. But the report mentions suppliers are concerned customers will not renew contracts. With outsourcing trends moving away from the single supplier model to an approach where buyers choose the best provider for specific tasks, and contract lengths becoming shorter, clients can achieve more flexibility and efficiency when outsourcing.
This approach also presents a new level of complexity. How do companies best manage the increased numbers of ‘moving parts’ that need to be monitored to ensure what they are all delivering is producing the desired business outcomes? In addition, how do companies move from one structure to the other while managing the risk to their business?
Access to dynamic and up-to-the-minute information across a range of business functions is critical to managing complex contracts and limiting risk, and technology can provide this. By linking business operating data to the key data of an organisation, the outcomes and effect of any changes can be managed, offering suppliers the opportunity to show they are at the sharp end of delivery and giving clients confidence they can manage risk when moving their business from a single big supplier to multiple specialist providers.
When multiple suppliers are then tightly linked to the outcomes and capabilities sought after, resource, cost and timeline can be completely understood by both supplier and client alike and managed accordingly.
Anyone with experience in outsourcing will know that while you can outsource a function, you cannot outsource the responsibility. By giving both sides access to timely information on how the process is running and taking a risk management approach to the contract, it makes it much more likely that small problems will be solved before they become big problems.
☛ George Davies is chief executive at MooD International
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My problem with outsourcing is about changed dynamics of everyday engagement and sense of unified purpose. For outsourcing to work well, all need to be in it with heart and soul and I do not believe this can be achieved. However I would be very interested and happily disappointed to see examples to the contrary.
Mr. Towlson,
We have achieved it, but off-course with the contribution of our clients. When Client has a clear plan and the scope of services is well defined and the contract is renewable long-term contract, then it becomes easy for any BPO to commit appropriate resources, processes and quality control to achieve client’s objectives.
One of our client continued with us for five years, trained and certified resources on the process remotely and calibrated on quality frequently, resulting in a successful outsourcing engagement for both the parties.
regards
Hello Mr. Towlson,
I am very proud to be associated with a company in the outsourced division where we have been “working with heart and soul” for our parent company for the last 6 years. The answer is simple – instead of vendors, why not open captive centers? Employees boty onshore and offshore can and are held accountable to the same standards, policies etc. Over the last 6 years we have proven to be integral and strategic partners in the success of our parent organization and offshore continues to grow without any pink slips being issued to our onshore employees. And yes, I am proud to say that my company is in the Fortune 25 and the number 1 in its field with over 8000 employees in the offshore world.
Regards…
Thank you for your comments. Just for the records I am Mrs but I can see how name Renata can be mixed up with Renato, which is a male equivalent in Spanis language.
It is possible that outsouring works well for some type of contracts i.e.: as described in the above examples. I might have seen non-workable outsourcing solutions and hence my problem. More analysis are needed.
There is a saying, “The further away the supplier the greater the risk”. Having vital suppliers on your doorstep will have advantages (Coca Cola supply chain is a good example). I am not convinced buying overseas is cheaper in the longer term when all costs including time spent on quality checks, lost at sea, and expediting are totted up.