The 4 W's of Outsourcing Strategy

Are you planning to outsource?  Don’t let the critics and naysayers discourage you – outsourcing can be a great thing to do; as long as it is part of a well-thought through strategy!

How will you know if you have considered all the right things?  I suggest you need to start with the 4 W’s: Why, What, Who, and Where.

WHY?

If you fudge the answer to the other three W’s there's still a chance that your strategy will work, but if you are not honest with yourself about WHY you are outsourcing you're setting yourself up for failure. So, let’s have a look at the reasons to outsource:

Good reasons to outsource:

• buying expertise that you don’t have in-house
• scaling quickly
• gaining capacity with low investment
• speed to implementation
• entering geographies that you don’t know
  

Wrong reasons to outsource:

• saving money
• shifting a problem

Openness and honesty with yourself, firstly, and also with potential partners is the key to making the relationship a success.  Seeking to do the impossible is the key to killing the partnership.  In other words, if you haven’t managed to reduce costs or solve a problem yourself, a third party will never be able to do it to your satisfaction.  Guaranteed.

WHAT?

You can pretty much outsource anything and if you share your vision and strike a fair commercial relationship with the partner you choose (and treat them like a real partner – an extension of your business) you can have fantastic results.  Any basic rules?

• If it is core to your success, don’t outsource it.  For example, I don’t think outsourcing complaints is a smart move – you need to keep the learning loop close to home.
• You can make offshoring a real success if you appeal to the core competency of the region.  For example, rather than outsource voice work to India, outsource webchat – excellent written English but with no accent issues!
• Is there something that the partner can do better than you?  Do they have deep technical support expertise from another client that you can benefit from as you build your in-house capability?
  

This is just common sense.  If you outsource deep consumer technical support skills to the Republic of Ireland you are likely to have a great operation.  If you outsource escalated executive complaints to the Philippines you are likely to get the outcome you deserve!  
 

WHO?

I’ve said it before, but I‘ll say it again.  Openness and honesty are the key to successful relationships – and to those I would add cultural alignment.

The outsourcer that you partner with needs to really understand your vision, and more importantly, understand how you want to get there.  If you feel like equal partners you are more likely to succeed together.  If you have a master and slave relationship you will probably get what you want in some fashion – but you won’t excel.  Partners should be able to discuss the good times and the bad times without reproach.

How will you know if you’ve found right vendor to partner with?  Here are some tell-tale signs:

• You know that they have some experience doing what you would like them to do.
  
• Their response to your RFP is written as if you had written it yourself.  Not sycophantic, but they demonstrate that they “get it”, they understand you and what you want to achieve.
  
• Their presentation is neither groveling nor arrogant.  They feel like people you could talk business with over a beer.
  
• When you ask around people say great things about them.  If you talk to their clients you get past the façade of the RFP process and understand what it is really like to work with them.

WHERE?

You have two choices on location – you can stipulate it or you can allow the partner to do what they do well. 

It could be that, for strategic reasons, you want to move into a certain geography – for example, move offshore for labor rate benefits or near a certain university or competitor for technical skills.  There is no problem with being prescriptive – but you should have an open discussion with the partner to ensure that you agree on the execution.

The other option is to let the outsourcer recommend a location for what you need.  Outsourcers are experts at identifying great places to put their business that is sustainable, at the right price with the right skills.  Let them do the legwork and the property searches and make recommendations to you. You can then assess the potential locations for your key criteria – for example skills, accent, demographics, ease of transport to your home territory and so on.

Outsourcing can add a richness of complementary skills to your operation that can enhance your performance and help you to achieve your vision.  With an outsourcer’s experience of setting up new operations, you grow rapidly from a standing start with very little capital expenditure.  But you have to put the work in to get it right.  As I said in the beginning, you can get away with not answering the “What, Who and Where” questions honestly, up-front – it is possible that you can work with each of these “on the fly” and get lucky.  But you can’t get away with ignoring the “Why” question because that informs each of the other steps. 

So, why are YOU thinking about outsourcing?