Effective Outsourcing
Outsourcing all or part of production or service is common
nowadays as businesses concentrate on “core competencies” and leave others who
are more ”expert” at something to provide that part of their product offering
to their customers.
Outsourcing is any task, operation, job or process
that could be performed by employees within an organization, but is instead
contracted to a third party for a significant period of time.
A manufacturer may, for example, ask another factory to
build certain components or parts for that manufacturer’s finished
product. A mobile telephone operator may
ask a "call centre"in another country to handle customer enquiries, requests,
complaints and other matters.
In all cases, what is happening is that the business
outsourcing to another is putting its reputation in the hands of a third party
over whom they have less control than they would have over their own people. A number of myths exist about outsourcing,
mainly:
·
Outsourcing will solve all your
problems;
·
Outsourcing companies will do
it better than you can;
·
Outsourcing will save you money;
·
Any product/service lends
itself equally well to being outsourced.
Amongst the many
advantages of outsourcing are:
·
It allows the company doing the outsourcing to
focus on “core activities”;
·
It may reduce costs;
·
It may result in efficiency savings;
·
It allows for flexibility in staffing;
·
It offers a smaller company the potential to
serve multiple markets or to handle higher business volumes;
·
It provides jobs in areas that need them.
On the downside, outsourcing may
result in:
·
High initial set up costs;
·
A loss of control;
·
Hidden costs if contracts can levy higher
charges for volumes over the agreed amount);
·
A potential threat to security and
confidentiality;
·
Quality control problems;
·
Problems if the contractor goes into
administration or drops your business;
·
A loss of reputation if goods/services are seen
as “substandard”;
Other problems that you might
face are:
·
Language and culture issues;
·
High staff turnover in certain outsourcing
centres;
·
A contractor in another country is subject to
foreign laws which may affect your product or service delivery;
·
The standard of hiring and of staff may not be within your control.
·
Periodic Quality Control reviews
Ask anyone who outsourced to
China when that country first started as a manufacturing centre and you will
have a clear view of the issues that they faced and how they overcame them.
A prime example of the perils of
outsourcing surfaced when laptop computers manufactured by Dell, Apple,
Toshiba and Lenovo started to catch fire.
The problem was traced to the battery pack, the manufacturing of which
had been outsourced to a well-known company.
Another example is that certain UK financial institutions have brought
their call centres back “onshore” after receiving a high level of complaints
that the overseas staff were difficult to understand.
In short, outsourcing is an
additional risk and before proceeding, you should ask:
·
Why am I doing this?
·
Do I need to?
·
Can I guarantee the same quality?
·
What standards are not negotiable?
·
What will it cost?
·
What’s my “contingency plan” if things go wrong?
·
Who’s responsible for compensating customers
where the service/product provider is at fault?
When done well, outsourcing will boost business volumes,
customer satisfaction and profitability.
The trick is to:
·
Make sure you do it for the right reasons;
·
Have a focussed selection process based on your
business’ needs, standards and strengths;
·
Ensure that
you have properly defined and easy-to-use quality measurements;
·
Review your supplier’s performance regularly;
·
Use an experienced consultant if you’re
outsourcing for the first time.
I have spent more than half my life working in different world markets from the most developed to “emerging” economies. With more than 20 years in the world financial services industry running different service, operations and lending businesses, I started my own Performance Management Consultancy and work with individuals, small businesses, charities, quoted companies and academic institutions across the world. An international speaker, trainer, author and fund-raiser, I can be contacted by email . My website provides a full picture of my portfolio of services.
Labels: Customer Care, Productivity, Selling, Strategy, Teamwork
posted by William Martin @ 16:34
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