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Monday, February 7, 2011

Eight Ways to Ensure Outsourcing Success

Here are eight suggestions to help make certain that your next outsourcing project will be successful.

Baseline magazine
By David Strom
2010-12-21
* Enterprise Business Relationships, including ORMImage via WikipediaOutsourcing isn’t new, but, by now, many IT shops have accumulated enough experience to use this service more effectively. According to Houston-based consultancy TPI, even though the overall outsourcing market is down 13 percent from last year, growth remains strong for U.S.-based contracts.
Certainly, the cost-saving motivation is still significant: The cost for programmers and support services overseas can be less than half of what their domestic equivalents can be. Nevertheless, to achieve those savings, you have to know how to work with the outsourcing vendor.
We spoke with several managers who have used outsourcers to build and augment their systems, and we came away with eight suggestions to help ensure that your next outsourcing contact—and contract—will be successful.
1 Make sure there is a strong cultural fit between your two organizations. This involves both the country of origin of the outsourcer and your own corporate culture. …
2 Top-to-top commitment. Senior-level management at both organizations should meet regularly and understand what success means in each other’s terms. …
Just because your top execs meet, don’t expect them to be mind readers. “Don’t expect that your outsourcer has intimate business knowledge about your own operations,” says Scott McDonald, the CTO of FCI USA, in Etters, Pa. Spell it out in terms they can understand.
3 One plan, one goal. Make sure that your outsourcer has the same measurements for success that you do. … Be open with the outsourcer if the arrangement isn’t working out, and figure out what is needed to fix things. …
4 Putting the right work with the right partners. “… Part of this effort involves rightsizing your outsourcing needs, which means making adjustments when it’s time to add or subtract resources as your business grows or contracts. …
Part of rightsizing is understanding what your actual needs are—whether you are outsourcing your infrastructure or your technical skills. …
5 Allow your outsourcer to fail often and quickly. Part of this process involves putting in place checkpoints that are frequent enough to evaluate progress, and ensuring that the outsourcing team is on the right track. …
6 Find the win-win. “We have to make the entire pie bigger, but not at the expense of my outsourcing partner,” says Kim Kehling, the director of global business services for Procter & Gamble (P&G), in Cincinnati. “You don’t get a win-win without thinking of your outsourcer as a partner.”
7 Is the A-team in place? Do you have your best people managing the outsourcer, and do they have the outsourcer’s best team working on your project?…
8 Don’t choose an offshore outsourcer that is too far or too many time zones away.
Managing outsourcing involves a delicate balance among various factors, including personnel, costs, geography and culture. By using some of these suggestions, you should be able to avoid the pitfalls and enjoy the benefits of outsourcing.
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