Beginner’s Guide To Outsourcing

August 26, 2012

Outsourcing


Hire or outsource directions

Image by Stuart Miles: FreeDigitalPhotos.net

It has come to that point and you can’t escape it: you have to outsource.  Whether you were part of the decision-making process or you were just told about it, you will need to adjust to a new reality.  Even if they are just down the street, working with an outside company will change how you do business.  Embracing this will make the experience more constructive.  Resistance won’t prevent change because you will still have to clean up the mess resulting from a failed outsourcing project.  You may as well accept the decision and do what you can to make the process as smooth as possible.

Where and how do you start?  The following points will help you with the fundamentals of starting a healthy outsourcing partnership.  These are the basics of outsourcing, which will apply to any industry.

1. Understand the reasons why you are outsourcing

Understanding the reasons why you are outsourcing is the first and most critical step because it will guide what you do for the rest of the process.  Are you outsourcing to save money?  Ship out “easy” or “low value” work so your internal teams can focus on innovation?  Temporarily or permanently increase capacity in an area where there is a shortage of talent?  Access skills that are not part of your company’s core competency?  Take advantage of round-the-clock development? Be honest with yourself and with your internal teams as to why you are outsourcing.  Not all outsourcing is done to save money, but it still has to make good business sense.  Make sure you make the effort to frankly discuss the reasons with the teams that will be expected to support outsourcing and address their concerns.  Without that alignment up front, you will be dealing with resistance for the rest of the project.

2. Understand your own process and where outsourcing will fit

Take a good, hard look at your own process and determine what part(s) will touch outsourcing.  Even if you are outsourcing work your company has never done before, that work will come back into your company at some point.  At the very least, you will need to answer these questions:

  • How will you send the work to your outsourcing partner?
  • How will you verify that the work is completed to your satisfaction?
  • How will you receive the completed work?
  • Who will support your outsourcing partner (answer questions, provide needed information, etc.)?

If the outsourced work needs to be integrated with work your internal teams are doing, then that process also needs to be figured out.  Work with your teams to create a diagram to visualize how these processes work.  Be prepared to be uncomfortable during this step.  Preparing for outsourcing often reveals a lot of hidden costs and complications in your own processes.

3. Choose the best partner(s)

Now that you understand why you are outsourcing and where/how your outsourcing partner(s) will work with your company, you will be able to find and assess who will be the best partner(s) for you.  Once you have reviewed the initial sales pitches, create a short list of potential partners and do your due diligence.  Go visit them and tour their facilities. Ask them to show you the skills, technology, or whatever they are selling in action.  See how and where their people actually work.  If the company is in another country, learn about the culture and make sure you can work with it.  Send them a small test project.  If you only talk to the executives and sales people, you are only seeing the sales promises.  Be transparent about your needs and expectations.  A good partner will be able to clearly identify their needs and make recommendations to set up a successful process.  Remember: if it sounds too good to be true… you are being sold something that doesn’t exist.

4. Document and communicate

Your outsourcing partner is not psychic.  You need to clearly set and document expectations.  If you want them to follow a particular process, it needs to be documented and they need to be trained at it.  If you have particular quality or technical standards, they need to be documented and explained to your partner.  If your industry has particular standards, use them and verify that your partner has experience with them.  Make sure your contracts are clear.  Do not assume they know what you mean when you wave your hands and say “Do it better!”  You need to be specific and show examples.

Once the project has begun, make sure there is frequent informal and formal communications.  Informally, your partner and your internal support people need to communicate daily, either through written (email, instant message, collaboration software, etc.) or verbal (phone, Skype, etc.) channels.  Formally, there needs to be at least one regular business check-in, usually done as a weekly conference call.  The formal check-in should have an agenda and any action items need to be tracked.

5. Work through the learning curve

Even if you are experts at outsourcing, there will still be a learning curve the first time you work with any outsourcing partner.  You will have to learn how to communicate and how each others’ processes work.  There will be bumps in the road and some work will be late, more expensive and/or not meet quality expectations.  If both you and your outsourcing partner work through those issues and address them as they happen, it is very likely that the next project will go smoother.  In this case, you are better off working through the problems than giving up and starting over with a new partner for the next project.  However, if your partner does not meet you half way in addressing their part of the problems, even after escalation to executive levels, then learn from the experience and find a better partner.

Each of these points could easily be a blog article on their own.  If you found this article helpful or you would like to add your own best practices, please share in the comments.  I would love to hear about how outsourcing worked or didn’t work for you.

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About Liza Wood

Throughout my career, I have consistently joined companies on the verge of explosive growth and change. From these experiences, I have developed a human, collaborative, and pragmatic leadership style. I would like to share that point of view, along with my experiences, on this blog. Join me on Facebook!

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5 Comments on “Beginner’s Guide To Outsourcing”

  1. Ling Chao Says:

    Yes. If you don’t have correct way to outsourcing, then you will met lots of problems:
    1. Your cost will be even higher before you outsourcing.
    2. Your team will be extremely busy as they have to do their own job and the meantime, they will have to spend their time on write the handout document answer the question from your outsourcing partner .
    3. Your schedule will massedup because your most team in not sit near by you and you will feel lost control, you will be worried because you don’t know what is going on there.
    4. In many cases, your team have to spend their time doing additional work after your outsourcing partner deliver their work, because you have be send feedback for many times but still, this is not you want at all.

    Reply

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