Outsourcing Success

www.NLP-Success-Coach.com

OUTSOURCING SUCCESS

PRESENTED BY DEAN EGANMASTER PRACTITIONER

Definition of Outsourcing

Outsourcing or sub-servicing involves the

process of contracting out of one or more

business functions, to a third-party company

or person (Freelancer).

Reasons for Outsourcing

Organizations large and small; are constantly

seeking innovative ways to accomplish more

of their goals for less money.

Most Common Reasons

Cost savings Cost restructuring Improve quality Access to specialized knowledge and/or skills Access to experts/talent Capacity management Enhance capacity for innovation Reduce time to market Venture Capital

Most Common Reasons

Outsourcing is commonly used to fill-in Human Resource gaps.

Outsourcing frees up time for managers to focus on core business functions.

Outsourcing offers cost savings opportunities for businesses to stay competitive.

Outsourcing provides flexible options for hiring seasonal workers.

Reduce common overhead costs that are not required when outsourcing such as, office space, supplies, and benefits.

Common Outsourced Areas

Although many areas and functions are outsourced by

companies; here are some of the most frequently

outsourced areas: Information Technology Network and Telecommunications Human Resources Insurance Administration Accounting Marketing Security

Outsourcing Success

Clearly define the scope and schedule for your project

Evaluate a service provider in the same way you would for an in-house employee

Look for specific experience, knowledge, and skill set

Do not choose a provider solely based on price Review the provider’s portfolio and samples

Outsourcing Success

Maintain constant communication throughout the project

Tie payments to clearly defined project milestones Ensure the provider offers a warranty or support

clause for issues after the project (when applicable) Get everything in writing

Three Major Factors

1. The project has visible executive-level support

2. Excellent communication to all persons affected

by the project

3. Proper management of the service provider(s)

What Matters Most

A recent survey of managers that have

successfully developed a positive working

relationship with service provides were asked:

“What matters most when selecting a provider”?

What Matters Most (cont.)

Reliability Trust Technical skills Security guarantees Provider reputation Round-the-clock support

What Matters Most (cont.)

Ability to customize solutions and services Industry knowledge Service-level agreements Innovation and cutting-edge technology Strategic advice

Common Expectation Gaps

Business leaders from across all industries,

have acknowledged, that they are the ones

responsible for making the outsourcing

relationship work.


It will take more management time than expected

There will usually be unexpected add-on costs after the contract begins

Don’t expect the cost-savings to happen immediately

Systems and people do not change quickly


There may be a lack of promised knowledge transfer

There may be a lack of innovation Conflicts may occur over unclear details Allow extra time for deadline deficits

Advantages and Drawbacks

Outsourcing provides numerous benefits to

organizations that choose this option, from

improved productivity, to reducing costs.

However, any outsourcing relationship poses

some level of risk.

Common Risks

• Misunderstanding critical requirements • Quality assurance• Differing of internal processes• Loss of control

Common Benefits

Increased cost-advantages Management can focus on core business functions Outsourcing can help accommodate peak loads Improved customer satisfaction Gain access to specialized services Gain access to expert knowledge Increased revenue Create a competitive edge

Phases for Continued Improvement

Once you have hired the provider there will be a few

processes that should be considered:

Skill assessment should be performed Gap training should be identified and scheduled Goal setting should be agreed upon Performance assessment standards should be

established

Outsourcing Statistics

Information Technology 28%

Human Resources 15%

Sales and Marketing 14%

Financial Services 11%

Other Administrative

Processes 32%

32%28%

15%14%

11%


The Consulting Firm, Meta Group, estimates that outsourcing will grow by more than 20% annually, increasing it from a $7 billion market in 2008 to a $10 billion market in 2010.


According to DLT Consulting, 3 million jobs will

move from “in-house” to “out-of-house” in the

financial services industry alone.

The emigration of service jobs across all

industries could potential growth to as high as

4 million.


The consulting firm is also anticipating that in

the next five years ¾ of major financial

institutions and investment banks will allocate

tasks to low labor cost centers.

The Global financial institutions are predicted

to invest $356 billion in outsourcing projects.


Forrester Research estimates that 3.3 million

jobs and $136 billion in wages could be

outsourced by 2015 in the U.S. alone.

Freelance Marketplaces

What to Expect


Freelancing is widely seen as the model for work in

the 21st century. Freelance marketplaces make it

extremely easy for buyers and sellers of services to

come together to form a mutually beneficial and

profitable agreement. Most marketplaces are

operated by a third-party company.


The operators of these marketplaces offer the

transaction platform and sets general rules for doing

business. Usually, marketplaces will offer additional

functions to their users such as, payment functions,

rating functions for service providers and may even

offer mediation functions.


There are several online freelance marketplaces in

which to choose from, however, some of the most

popular sites are:

Guru.com Elance.com oDesk.com GetAFreelancer.com

Common Elements/Functions

Buyer will deposit funds into an escrow account

The Provider is paid upon completion of project

Buyer will required set up a profile

The Provider will be required to set up a profile

Projects will be labeled or categorized

Function terms will contain the sites lingo

Data-base matching

Transparency

Qualification process

Profile and portfolio requirements

Fee structure

User functions

Verification of credentials and/or references

Internal discussion board or threading

Time tracker

Payment functions

Basic Rules of Engagement

Buyers should explore various marketplaces Compare the different functions and processes Look at some of the existing provider profiles; from

each marketplace you visit Evaluate typical provider behaviors and pricing at each

marketplace Determine the best fit for your individual needs, project

requirements, and preferences.

Common Service Categories

Web Design/Graphic Design

Search Engine Optimization

Marketing/Sales Advertising/PR Telemarketing Business Plan

Creation

Legal Services Programming Software Development Database Development Information Technology Financing & Accounting

The Buyer & Provider Exchange Process

BuyerBuyer ProviderProvider

Project DetailsProject DetailsPost project detailsPost project details Place a bid Place a bid

Evaluate & SelectEvaluate & Select Accept termsAccept terms

Deposit funds to escrowDeposit funds to escrow Submit completed projectSubmit completed project

Receive completed projectReceive completed project Receive escrow payment Receive escrow payment

Feedback Feedback Provide feedbackProvide feedback Respond to feedbackRespond to feedback

A freelancer/supplier of services/alternative

worker is a person that is self-employed and is

not committed to any one employer.

The Freelancer/Supplier of Services

Freelancers can select the most desirable or

profitable projects to work on Freelancers can create a favorable schedule for

them selves Can accept short-term or long-term contracts They are not committed to any one employer

(unless they choose to be exclusive) Freelancers can establish a “Virtual Agency” to

focus on a few selected clients and their specific needs

Benefits

Drawbacks

Uncertainty of work and thus income Lack of company benefits such as health insurance

and paid holidays Great need for income security through diversity of

buyers Requires self-discipline and self-motivation Unexpected events that prevent completing projects

on time Handling complex legal issues Out-of-pocket expenses

Competition is Fierce

In popular marketplaces, project bids can attract up to 100 or more bids

Bids will be from a wide variety of services providers The Freelancers ranking can effect the price Online marketplaces are truly global places Large pricing range variations are the direct result of

globalization Freelance practices can vary significantly

Making it Work

Once you have selected a provider there is still

a lot of upfront time and preparation needed to

ensure the provider and the project are equally

successful.

“Communicate Expectations”

Developing a Great Relationship with Your Provider

It is important to develop a good relationship

with your provider.

Ensure the written contract is solid and that it

covers all your bases Discuss your value system Encourage team members to communicate

with each other

Getting the Service Levels You Expect

Set realistic expectations Review expectation after each completed

project Set up an easy-to-use performance

measurement tool Ensure expectations are aligned with

company goals and objective

Getting the Service Levels You Expect

Outsourcing should never be used as resolution to a problem

The outsourcing contract should contain some flexibility

Relationship management is critical

Successfully Managing the Relationship

Have a plan in place that will ensure proper

management of the outsourcing relationship.

Include key business objectives: Growth assumptions Current and projected financials Operational details Roles and responsibilities Change management


Strategy Strategy

Summary reporting, submitted bi-weekly

Change management, reviewed quarterly

Relationship Relationship OperationsOperations FinancialsFinancials ComplianceCompliance

»Check health of relationship at least quarterly, or after each completed project

»Ensure sourcing communication medium is in real-time

»Ensure performance dashboards are updated and monitored in real-time

»Ensure issues reporting, is completed in real-time

»Provider invoices are submitted and reviewed in a timely manner

»Ensure payment method is in real-time

»Ensure provider compliance

»Ensure policy compliance auditing is completed and reported in real-time

»Security or privacy issues reported in real-time

Outsourcing Plan; Review Quarterly


The outsourcing plan should mirror the

outsourcing contract

Not a legal document but more of a

measurement tool

Evaluating Proposals and Providers

Thoroughly evaluate all details of each proposal

Determine “how?” the provider intends on

accomplishing each proposed item

Action items should include a plan or process that will accomplish it

Evaluating Proposals and Providers

General areas of focus:

ExperienceCapacity for ComplexityLeadership Skill Level Importance Level

Offshoring

The outsourced business function is processed

in a foreign country.

Creates the opportunity for significant reduction in labor costs

Enables businesses to enter into new

marketplacesCreates the opportunity for gaining access to

specialized talent, knowledge and/or skills

Nearshoring

Defined as outsourcing of one or more

business functions to a provider located in a

bordering country.

Example: A United States based business hires a service

provider, that is located in Canada.

Culture Matters

Offshoring of business functions will require

cross-cultural competent management.

Leadership and management competencies for working globally will vary

Cross-cultural awareness includes; employee

mind-set, communication processes, and

understanding of cultural differences

Culture Matters

Basic cultural dimensions to consider are:

Individualism verses collectivismHigh content and low content cultures Monochromic & polychronic time orientationCross-cultural leadership

Cultural Differences

Each culture has a specific pattern of behaviors, beliefs, and/or traditions

that govern their policies and views.

High Value Low Value

Institutional CollectivismSweden, South Korea, Japan, Singapore, Denmark

Greece, Hungary, Germany, Argentina, Italy

In-group CollectivismIran, India, Morocco, China, Egypt

Denmark, Sweden, New Zealand, Netherlands, Finland

Gender EgalitarianismHungary, Poland, Slovenia, Denmark, Sweden

South Korea, Egypt, Morocco, India, China

AssertivenessGermany, Austria, Greece, US, Spain

Sweden, New Zealand, Switzerland, Japan, Kuwait

Future OrientationSingapore, Switzerland, Netherlands, Canada, Denmark

Russia, Argentina, Poland, Italy, Kuwait

Performance OrientationSingapore, Hong Kong, New Zealand, Taiwan, US

Russia, Argentina, Greece, Venezuela, Italy

Human Orientation Philippines, Ireland, Malaysia, Egypt, Indonesia

Germany, Spain, France, Singapore, Brazil

Offshoring Best Practices

When it comes to managing projects and

moving work offshore; there are some best

practices that will help guide you to success.


Do not limit what you can offsoure Training at the offshore location is more

efficient and cost effective Replace attrition and add for growth offshore Get client consent through proof of concept

and testimonials Make sure that offshore and onsite group’s

work as a single delivery team


Manage the offshore team; do not become their customer

Information sharing should be encouraged between offshore and onsite group’s

Celebrate success and be generous with compliments

State the obvious; over-communication is okay when dealing with offshore team members


Do not assume anything Know each person on your team Know the offshore day-to-day processes Build strong relationships with the offshore

managers Show genuine interest in the local culture

Outsourcing Success

Business

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