Outsourcing has emerged as a key element in today’s business landscape. However, some outsourcing deals fall flat while many become dysfunctional as one (or both) sides look for an exit, failing to deliver as per the business expectations. At times, businesses outsource the wrong mix of tasks or partner up with a rogue outsourcing company. Many businesses, in a rush to seal deals and keep costs low, skip one or the other due-diligence steps when reviewing the service provider’s capabilities. On the other side, there are amazing outsourcing success stories that tell how businesses were able to bring down costs dramatically and build capacity to grow in a way that would be unlikely if they had depended only on their in-house resources. Without adequate advice, planning, and management, outsourcing projects can, and do fail.
But there’s some good news…
While there is no magic bullet to create your success story and avoid the pain, cost and frustration of a failed deal, we present to you the No.1 outsourcing tip to get it right the first time.
Anyone looking to outsource work overseas for the long term is advised to go on-site to visit their preferred outsourcing vendors.
Nothing else will help you get outsourcing abroad right the very first time as much as visiting your service provider’s office on-site. An often underrated, misunderstood and alleged low-priority activity, on-site visits play a crucial role in the decision-making process for outsourcing.
Do make it a point to travel overseas and visit the delivery centers of shortlisted vendors before you sign on the dotted line. This will be a valuable source of information and insight that cannot be obtained from any other source. By doing so, companies can ensure that their service providers are able to meet the contract requirements in terms of both capacity and capability.
Those who opt out of on-site visits often get hit by quite a few surprises after signing up. From mismatch in team leads proposed on paper to transition plans built on false assumptions; varied unpleasant surprises may be in store for you.
Conducting site visits will let you identify problems or poor assumptions in advance so that you can discuss potential solutions with your outsourcing service providers before it feels too late. Companies that visit their service provider’s office before signing the contract have repeatedly emphasized the importance of doing so before making an informed outsourcing decision.
But why do some companies avoid on-site visits?
The reasons can be different for different companies. However, the most prevalent ones are lack of time and the cost of travel. The travel cost and time away from office during on-site visits may look like a hard-to-manage upfront investment to many small or medium-sized companies. However, it’s not so.
Think about how much revenue that outsourcing project will bring to your business upon successful completion. Is it not worthwhile then to make this cost/time investment for selecting the right partner? Even if you are not outsourcing work overseas but rather planning to set up a dedicated team of say 10, 15 or even 50 members offshore, think about how much you will be saving from a successful outsourcing partnership? Or, the other way around – how much you will end up losing to a rogue company if you decide to bypass this due diligence?
Whether you are outsourcing or setting up a dedicated offshore team, the time and cost investment for an on-site trip as compared to the potential opportunity gains is actually a very small one and, more importantly, a very diligent one.
Who should conduct the visit?
Another reason why many outsourcing clients are less inclined to traveling on-site is that they have found little success with such visits in the past. Now, the reason why this excercise may have failed to deliver in the past was the wrong person making the trip.
Rather than the CIO themselves, key staff members should conduct the site visit. Since they are the ones that will be engaged with the service provider on a daily basis and be responsible for managing the business outsourcing relationship, they are best qualified to visit on-site and evaluate the services proposed by the vendor. Also, being the evaluators, they can easily communicate the intricacies of their business processes to the service providers. The direct interaction between the two teams before final selection will help identify and predict potential problems before they even occur.
When to conduct the visit?
The best time to visit the outsourcing vendor is right before the final selection when you have shortlisted preferred service providers. This is a sweet spot for an on-site visit. The service providers know they have been shortlisted but not yet selected.
Outsourcing service providers, at this point in the process, are most likely to commit their best resources to your team in order to win business. Also, if you are not happy with the allocated team, you can press for switching them with other higher-quality resources. Chances are the service provider will most likely agree on this and that too without arguments. Sweet spot, remember?
How to make the most from the visit?
It is important for your team to not just carefully examine what the service providers do but also how they do it. While the provider might insist on the participation of its key executives and salespeople in this process, you must stress on including the proposed team members, who will actually deliver the solution, to get the real picture.
When on the on-site visit, your team can see and understand how the providers’ teams work for other customers in a similar environment. This should be a practical visit focused on knowing the details of the proposed solutions, project plans, team members and tools. It should be the time to meet and rate the expertise, experience and cultural fit of the proposed team (through interviews) along with their capability to collaborate with your team based on live feedback and the ability to add value.
By the end of your on-site trip, you will have clear frontrunners from the shortlisted providers’ list and realize why outsourcing is good for your company’s success or you will simply know why outsourcing won’t work for you. Sometimes, making an informed decision (rather than one based on assumptions) of not outsourcing to a service provider is as much of a victory as a successful outsourcing deal.
Since the economic principles of outsourcing are deep-rooted and a lot of corporate giants are already outsourcing overseas, it should not be difficult for any established SME to determine if this strategy will be a good fit for them or not.
A fact that many businesses fail to realize is that when your outsourcing strategy goes wrong and you have to go through several trials and errors before getting it right, you will lose significantly more time and money than going on an on-site visit to select the best-suited vendor company.
With the right approach in mind, a carefully planned on-site visit to potential offshore outsourcing vendors can yield a better understanding of the vendor proposals and help you get outsourcing right the first time.
Ironically, less than 1% of the companies actually conduct on-site visits before finalizing their offshore outsourcing vendor. This is the reason why many outsourcing companies end up partnering with rogue outsourcing service providers and then have to deal with unpleasant outsourcing experiences.
Stay tuned for more detailed information on proven outsourcing tips and a better understanding of how you can get outsourcing right the first time.