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Outsourcing in Response to Business Transformations: 3 Tips for Success

Posted by: ADP on 15 June 2016 in Multinational & Globalization

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Often, organisations consider outsourcing in response to business transformations an unpleasant choice, but that doesn’t have to be the case. The idea that other people are needed to handle responsibilities might be the best-or only-way to handle growth.

It’s easy to become over-extended as you expand, and it’s important that the C-suite’s energy is focused on maintaining the organisation’s core functions. The in-house team of experienced leaders, managers and employees can handle core functions, but many other tasks can be effectively handled by outside sources.

Of course, the decision to outsource and the transition should be handled with care, so here are three tips to guide your strategy.

1. Look for an Outsourcer That Will Grow With You

You should consider an outsourcer that will be able to handle your workload not only now, but also several years down the line. When it comes to Human Capital Management, there are many questions to consider. For instance, do you have a unionised workforce, which can mean different benefits packages that must be managed? Then you need someone with the capabilities to handle multiple plans seamlessly. Does every location have the same pay scales, or do they differ? If you’re located across multiple states (or intend to expand into multiple states), can this outsourcer ensure compliance with all state laws?

2. Select an Outsourcer That Shares Your Vision

Vision is critical to your organisation’s success during expansion. Find an outsourcer that adheres to your standards and understands what you are looking for now and what you envision for the future.

If, for instance, you are outsourcing operational tasks, you should make sure your new partner understands and adheres to your organisation’s internal standards and culture. If your outsourcer is in a different country, you may decide you want them to work according to a higher standard than their local laws require. Being clear with your new partner about your expectations goes a long way.

For example, according to an article in Forbes, Apple “relies on outsourcing to fulfil their operations model. They design their products internally, and then their contractors operate a complex supply and manufacturing chain on their behalf.”

3. Anticipate and Manage the Risks of Outsourcing

As with any business decision, there are risks associated with outsourcing that leaders will need to anticipate and manage. Consequences such as disruption in the supply chain, a drop in company morale due to fear of job loss, and lack of understanding of labour regulations in the area to which you outsourced are just a few.

For one organisation, hiring a partner that could meet their IT needs required more due diligence than anticipated. According to a CIO (1) article, “7 Outsourcing Nightmares and How to Avoid Them,” a specialty chemical manufacturer hired a large IT partner with a one-size-fits-all approach. When unique problems cropped up in their mainly autonomous business locations, the IT partner was not prepared to handle them, and the chemical manufacturer spent more money than they expected fixing the problems with independent contractors.

Organisations must do their research and consider analyst recommendations when evaluating outsourcing partners, but they cannot stop there. They must also ensure alignment of their new partner with their corporate culture and anticipate how outsourcing will impact day-to-day functions as well as the employees they already have in place.

The change management may seem daunting at first, but remember the concept of core functions. The outsourcer’s core function is whatever you’ve outsourced to them, and they presumably have the know-how and technology to do the job more efficiently. Making the strategic decision to outsource your non-core functions will allow your organisation to focus on delivering your unique value proposition.

SOURCES:

  1. http://www.cio.com/article/2390272/outsourcing/7-outsourcing-nightmares—-and-how-to-avoid-them.html

Please see the original blog post here:  http://www.adp.com/spark/articles/outsourcing-in-response-to-business-transformations-3-tips-for-success-9-376

By Suzanne Lucas

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TAGS: Business transformation Human Resources Management Outsourcing

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