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Keys to a Successful Outsourcing

Ariel Lascano

While companies often look for cost reduction and variabilization, service levels improvement and access to technology and best practices capabilities not available internally as the main reasons for outsourcing, after a while, the most important benefit companies recognize are the time and effort they can devote to their core business.

For the success of an outsourcing project, it is imperative to define a strategy for the evaluation of objectives and selection of suppliers; followed by contracts negotiations and governance model definitions with outsourcers.

The care and thoroughness of the initial stages, even if it takes longer, increase the likelihood of a successful experience.

It is essential that the company has a clear vision of what they are looking when outsourcing a service, which in general is efficiency or improvement. When efficiency is sought, the emphasis is on controlling and reducing costs while maintaining consistency in the delivery of services.

When looking for improvement and therefore enhance the competitive position of the organization, the importance falls on the speed to achieve the required capabilities.

The final goal will determine the hiring and management of the outsourcing process.

Also, organizations question themselves the scope of service to be outsourced. The traditional view indicates that companies can only delegate activities that are not part of the core business. But even this paradigm is questioned, as many companies are realizing that even key processes in the value chain do not offer competitive advantage, even if well executed, and have begun to trust such processes to specialists, obtaining cost benefits and flexibility.

Faced with this decision, companies should also consider whether the market has providers that can meet the requirements. To ensure this, the supplier must meet three basic requirements: technical ability to operate IT, keep up with the latest technology trends and proven financial capacity. The latter is essential, given that outsourcing is a capital intensive activity that involves a long-term relationship.

The geographical coverage may also be relevant for companies with operations in different countries, and require a supplier that ensures a consistent SLAs and use of best practices in each of them.

During contract negotiations; considering that in most cases a comprehensive outsourcing will required a medium to long contract term, flexible terms should be included to accommodate new customer needs arising from rapid changes in their markets.

Customer should also take into account the transition plan, SLA definition and measurement, incentives and penalties, an exit plan and, of course a suitable change management process.

Special attention should be devoted to managing the relationship with the supplier; implementation skills, change management, risk and corporate communications, are as necessary to a successful project as it is operating a particular technology. Companies moving into an outsourcing process will have to develop these skills internally or sought them in the market.

Finally, throughout the decision process, it is common for IT managers to present fears of loss of influence within the organization. But this fear is unfounded, as they will have opportunities to take a more strategic role in their organization, to the extent that they stop exercising an operative role and focus on how IT adds value to their business.