Outsourcing is never a quick fix, nor an easy win. I regularly come into contact with executives who are considering outsourcing options for functions which are problematic. Outsourcing a problem will only generate one result – a bigger problem.
Without the requisite transformational effort, outsourcing can create more issues than it solves. The ambition is always to allow teams to focus on activities that are core to their business, driving customer value and competitive advantage. The reality can often be poor business performance, sour relationships with the outsourcer, and years of extra cost and distraction trying to get things right.
Before you undertake a transformation to your business through outsourcing, you should consider three key questions:
1) Are you clear on your strategic priorities, what that means to the expertise you want in your business and how outsourcing any portion of your business fits with that view?
The received wisdom is that you should be retaining those areas of your business that deliver the highest value and where you have operational advantage over your competition. In other words, outsource what you are not good at and that is not adding value.
2) Are the candidate areas of your business at the right scale and in the right state?
The scale should deliver sufficient benefit to outweigh the risk and the better the state of the business the more likely you are to establish an effective outsource.
3) Outsourcing is a significant transformation. Do you have the capability and capacity within your business (transformation management, business change and operational management) to be able to run the outsource programme and ensure the benefits are delivered?
If you can answer these three questions positively, great. Then, ask yourself one more, how do you feel about losing direct control of those candidate areas, for at least the next ten years?
Read more about assessing whether outsourcing is an option for your organisation by downloading our article ‘Outsourcing: Can it work for you?’