Martyn Hart Large

Outsourcing works

08 January 2014

Chairman of the National Outsourcing Association, Martyn Hart, tackles some common fears about outsourcing head on.

For many owners and executives, allowing another organisation to take over the running of an important part of their business can be a scary prospect. Fears over control, costs, performance and security leave many businesses clinging on to every last task. Are their fears justified or are they missing a great opportunity to truly focus on what they do best? Chairman of the National Outsourcing Association (NOA), Martyn Hart, addresses five of the most common barriers to outsourcing.

I will lose control

With so many processes, protocols and personal relationships to dovetail, allowing another organisation access to the inner workings of your business can be daunting. Loss of control can be a worry, especially if you are a first timer. The best way to assuage this worry is to focus on building a good relationship with your supplier, which is by far the most important success factor in outsourcing. Obviously Service-level Agreements (SLAs), Key Performance Indicators (KPIs) and contractual schedules will feature heavily, but if the relationship is unsatisfactory, clients can still be unhappy, even when all the boxes are being ticked and everything is on target. Make sure both the contract and the people remain flexible – if the contract isn’t flexible enough to allow change, and a poor relationship means the contract is followed to the letter and often referred to, things can easily fall apart. But if all the people are flexible, the contract focuses on deliverable outcomes and change is considered normal, then, by relinquishing a little control in favour of expert input, you can get big results.

My costs will escalate

You have to have a business driver, a bona fide reason to do it. It is still true that BPO services allow economies of scale and if your costs in a certain area are too high, therefore damaging your competitiveness, outsourcing will reduce those costs. Or if technology is moving so fast you don’t know what is going on, you need a BPO service to provide you with expertise and access to leading technologies, which will drive savings. Costs shouldn’t be a surprise if they have been properly determined at the contract stage. But you need to watch out when people are selling on commission. If you are dealing with an organisation where the sales guy sells then instantaneously moves onto the next sale, or the client-side relationship manager gets promoted and moves on, then the next generation relationship might not be as effective, and, as previously discussed, poor relationships mean poor outsourcing. Take the time to learn exactly who’ll be managing your contracts, and lock them into the deal. But first things first, talk to your own staff – they’ll be knowledgeable about your business and will offer ideas on how to save money on your internal processes. Consult internally before rushing into outsourcing, as it’s not always the answer.

If you are organised from the outset, there is no reason why a BPO provider can’t analyse better than you could in-house.

 

 

 

 

 

 

I won’t be able to analyse performance

Problems generally come when a company doesn’t actually know what their own measurements are when commencing outsourcing. Only when embarking on outsourcing will they realise that they don’t actually have any internal benchmark. If you are organised from the outset, there is no reason why a BPO provider can’t analyse better than you could in-house. Because BPOs are set up to price from the outset, they will be better equipped to analyse performance. They will have better tools and be able to give you more accurate price breakdowns because they have to price for the job in the first place. Companies are not used to analysing or costing themselves, but they need to get used to it. So when thinking about outsourcing don’t just go for ordinary SLAs. Why not put the parameters you need for benchmarking? Then you can benchmark whenever you like.

My information will not be secure

Of course businesses need to take precautions. If you are in the European Union, then you should try and keep the data in the EU or a country that meets EU standards. A good provider will have the correct governance and risk procedures to manage your data, including accredited staff. But even more important is intellectual property. Rights to intellectual property and making sure that exit and transition between contracts works well is something that should be considered in detail before you sign the contract.

Outsourcing results in job losses

This is a big, emotive, tabloid-friendly topic but outsourcing needn’t always reduce jobs. A company that supports its staff will try and help them, either by coupling outsourcing with some kind of expansion idea and moving people to help that or out-placement. Often part of the deal with the supplier is that those staff move there. Maybe not exactly the same job but at least a job under TUPE with the right conditions. But not all companies do that – some will just see it as collateral damage, part of the never-ending restructuring of the economy that the UK has been through many times before. It will always cause problems for individuals, but if it means growth in other areas, or companies surviving that would otherwise struggle, then it can only be for the greater good.