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Sunday, March 18, 2007

Outsourcing Expectations

I have been travelling a lot in the last ten days and there had been times when I just could not even manage to get internet connections. Most part of the time, I just could not get the time for connecting while where I could manage to squeeze some time, the connections were simply non-existent. Where on earth you wonder – well, I was for most part of the time in Perth, Western Australia!!. Now in my travel , a key executive of a major corporation sitting next to me asked me to answer the question - What are the primary qualities that you should look for in an outsourcing partner, and is there a mechanism to measure and rank them? The last thing that I wanted to do in a long flight was to talk business and anyway it was an interesting conversation. The gist of my response:
First and foremost it would depend on the nature of service that is planned to be /getting outsourced. Every type of service shall have its own set of measures of effectiveness when it comes to outsourcing. Besides every outsourcing deal is contextual in nature and has to be therefore measured in relation to its objectives. While cost, scale & speed, quality would matter for every deal at all times – the mix and sensitivity could vary depending on the deal. Besides traditional models of outsourcing may not be the most relevant for business competitiveness related deals – say a transformation initiative. In regular nearly commoditized nature of services like IT maintenance (even here there can be a range of differences in the nature of the deal), most business feel comfortable about taking near standard deals – or deals structured with minimal variations. In general , for special deals the recommended action would be to test the waters through piloting before reaching the stable zone of outsourcing and scaling up further. The level of executive support and involvement of both sides and relationship management would become a key driver in ensuring continual success of outsourcing initiatives. Also if it relates to outsourcing from a high cost location, offshoring has got to be factored in for better costs and scaling up - substantial benefits and changes would be seldom felt without that. The continual revision /change in metrics in outsourcing is a given for enduring success. The effects of multisourcing also needs to be factored in the overall assessment.

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