Are You Ready for Transformational Outsourcing?

May 11th, 2009

Extracting better value from an outsourcing relationship also means transforming the organization, not just keeping headcounts.

Outsourcing is not new anymore. In fact, it has become necessary to outsource either part or most of many organizations’ operations, especially in the current business climate. As ExecutiveBrief had predicted at the start of the year, the decision is not about whether to outsource or not; it is about outsourcing as a critical aspect to the survival of an organization.

However, signing up the help of third parties to cut costs and keep head counts is not the best way to approach outsourcing, no matter the economic climate. Instead of cutting costs, extract better business value from consulting engagements in terms of improving internal processes, learning from the experiences that consultants have earned from their exposures to past projects and clients, and optimizing productivity.

Suffice to say that the most mature organizations and the ones that have a better chance to succeed when things turn around (yes, because things will eventually turn around) are those that adopt outsourcing to transform their processes and strategies.

“Plenty of organizations outsource, but they typically do so for marginal or nonstrategic processes that don’t matter to their business success. And many organizations need radical change, but they rarely think of entrusting that objective to a third party,” said Jane C. Linder in her book Outsourcing for Radical Change: A Bold Approach to Enterprise Transformation.

Creating long-term value from an outsourcing relationship means changing the organization, and we are not talking of adding or scrapping headcounts alone, but of improving the entire organization and shaping business strategies because of the following strengths that only third-party involvements could provide:

Access to additional skill sets and business experience. The right outsourcing partners bring talent and skills to the table, but the best ones add industry expertise and improve processes, so make it a point to tap the wisdom that outsourced workers have gained from their extensive experiences in past projects. It could mean an overhaul of internal processes, management of metrics, or improvement of quality. The insights and experiences that they bring just might be the wakeup call that you need to shake your organization out of lethargy.

Better resource management. Because cost-reduction is a huge part of such initiatives, outsourcing allows organizations to free up resources to continuously support critical business operations, acquire new assets, or seek new growth opportunities. Cost management is important to your strategy, whether it involves streamlining resource requirements or focusing business processes, so take such opportunities to reallocate resources on core strengths and build new skill sets and processes to support the initiative.

Creation of new revenue streams because of available cost-effective expertise. This is particularly true for independent business units and small- and medium-scale enterprises. Outsourced talents bring more than the core skill sets required by projects, but also side expertise that could be tapped to create additional service offerings.  Enabling consultants to be more than hired workers that fill up gaps in the workforce could result in new opportunities for business growth.


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Entry Filed under: Why Outsource?