Rather than adopt a piecemeal approach, companies now choose to take a long-term view of what they wanted out of their outsourcing activities. The shift to strategic outsourcing, which emphasizes continuous improvement, innovation, and global collaboration, seems inevitable. Companies see it as a more sustainable solution to growing a business than other outsourcing models.
What is Strategic Outsourcing and How Does It Work?
To be strategic, companies have to be selective in the kinds of processes they choose to outsource, retain and eliminate for optimal results. Evaluate every workflow or process in the value chain using a decision matrix.
Select the business processes that only competent providers can handle and choose the ones you think will help you build a strategic partnership with another company. These are the processes you may outsource for future gains.
Tips in Developing Your Strategic Outsourcing Plan
- identify the services in the value chain that are good candidates for outsourcing
- make sure your outsourcing strategy aligns with your organizational goals and objectives
- customize key performance indicators (KPIs) to measure the value and effectiveness of your outsourcing strategy
- manage, monitor and measure service response, quality and cost using KPIs and SLAs
- identify opportunities for continuously improving the service
Why Choose a Tactical or Strategic Approach to Outsourcing?
Strategic outsourcing can help streamline your operations in many ways.
#1 With your service provider as your partner, you’re assured of continuous management of outsourced processes.
Your interests will always be protected when you have a productive partnership with your vendor. Your vendor is responsible for on-site supervision of your staff. Meanwhile, it’s your responsibility to manage the risks and implement quality control procedures.
A good vendor works with you in identifying flaws in workflows and fixing issues as they come up, and you work with your vendor in identifying opportunities to add further value to your business.
#2 A strategic approach to outsourcing delivers added value to your business via innovation.
Service providers always have an interest in innovating their services and moving up the value chain. Work with your provider in thinking up more creative ways of doing the job with fewer errors and better results.
Be generous in your support for new ideas and constructive feedback from your provider. Encourage your provider to be proactive in applying improvements to workflows, and seek their advice on implementing changes to processes and systems.
#3 Strategic outsourcing shifts the focus from cost-reduction to improving work quality and service delivery.
An overwhelming emphasis on minimizing costs can be a hindrance to process improvement. It’s true that streamlining your operations may help reduce costs, but it also means you may have to invest in newer technologies and better quality of labor.
Higher level work in specialized niches, such as in data science, legal processing, research and development, and finance, seems to be in greater demand now that automation for low-level routine tasks is a viable option.
#4 Strategic outsourcing emphasizes a sustainable and collaborative partnership with your service provider.
In a strategic outsourcing relationship, your service provider is also your business partner. You collaborate on a global scale to continuously improve your process and find solutions to your company’s problems. An effective alliance with your provider generally leads to effective integration and innovation.
Essentially, customer organizations and their vendors must work together and find common points of discussion. They should find out at what points in the processes their service provider can add and deliver sustainable value. They should also make sure that the resources, incentives, and objectives in their sustainable outsourcing strategy are aligned with what’s really going to make a difference to their organization.