Building Blocks for a Successful, Strategic Outsourcing Relationship

Organizations are constantly seeking new ways to build greater value to offer their customers. And, fierce competition has created an urgent need to provide products and services that exceed customer expectations. Loyalty, relationships and retention are not merely buzzwords – but requirements for survival – in today’s aggressive business climate.

The logical path for many executives has been to focus on core competencies and to outsource infrastructures that support integral operations such as back-office, product distribution and call centers. According to a recent article by consulting firm Ernst and Young entitled “The Power of Partnership,” outsourcing “enables companies to tap into new skills and capabilities that their own organizations are lacking – to create wealth for example, or to build a global infrastructure that supports expansion into new markets, to improve relationships with customers and suppliers, or to streamline operations.”

In fact, outsourcing, from a strategic perspective, may make absolute sense from a cost, competency and planning standpoint. The outsource agreement may lead to downsizing, which significantly impacts the performance of current internal staff. The successful implementation of an outsourcing relationship requires the involvement and commitment of both the client and the vendor. The most successful outsourcing relationships are partnerships that reflect a value proposition for both parties.

Call centers, increasingly being referred to as “customer contact centers,” are being evaluated by internal organizations as a prime area to outsource. The reasons for this include the challenges associated with securing a qualified labor force, the requirements for implementing cutting-edge technologies and the rising expense of both.

To ensure a successful transition, it is important to consider certain steps:

• The first step to take is to create an executive leadership group. High-level executives consider outsourcing proposals and make the ultimate buying decision.

• After these executives move on to other matters, it is critical that a representative from executive management maintains interest and oversight during the transition process.

• The executive group should select an operations/implementation team, to be composed of the “hands-on leadership” from both the client and the vendor’s organizations. This team is charged with jointly developing goals, timelines, performance measurements and budgets.

• The operations/implementation team must determine the new standard operating procedures. They must also determine what subset groups are required to make the transition successful. This may include expertise from areas such as technology, systems, quality control, facilities, training and human resources.

• Systems and technology personnel will examine requirements, review existing technologies and make recommendations for the new environment. Vendors offer a distinct advantage, as they are often buyers of leading-edge solutions. This allows them to offer clients the benefits of products that will support effective customer solutions.

Quality control, or assurance standards, must support the specific goals of the client. The client’s team members can best define those needs, keeping their impact on the entire business plan in mind. The vendor subject-matter specialists can offer multi-layered project experience, ideas and proven methodologies that are effective for other groups. They can also educate the client on the technology aids available to best measure and report results.

Outsourcing often means managing operations off-site, particularly in the call center arena. Vendors have extensive experience in selecting sites that will support not only an adequate number of employees, but those who match specific skill-set profiles. Working with the client’s designated team means having a full understanding of that skill-set requirement, as well as any geographic preferences or requirements.

Human resources is an extremely critical area. Displaced employees might be able to transition to another part of the client company, be hired by the vendor or participate in an exit plan that is legally and ethically correct. Since the outsource team has been through this process many times before, it can offer solid advice and recommendations. The timing of this process – and manner in which it is communicated- definitely impacts the success or failure of the transition.

Training and curriculum development requires a commitment from the client’s current team. Vendors can structure content and documentation in a manner that teaches knowledge efficiently and cost effectively. An increasing emphasis is being placed on certification for all levels of employees. The vendor’s team should have people who specialize in teaching subjects and measuring retention.

Representation, collaboration and cooperation are critical to the success of the new operation. In their 1999 article, “Outsourcing Relationships: Why Are They So Difficult to Manage?” the Everest Group cites that differences in vendor and client cultures often cause “misunderstanding and distrust.” Simply stated, the more the two organizations work together from the outset with a set of clearly defined goals, the greater the chance for success.

The executive team defines goals. The operations/implementation team details the objectives linked to a timeline, plan and deliverables. The subject-matter groups collaborate to accomplish their specific duties based on the specific deliverables.

This newly formed partnership will have a challenging journey. The most successful relationships have elements of risk and gain for both parties. It is often difficult to document all the metrics in advance, but there must be an agreement that both parties will be accountable for making the endeavor a success. This means regularly scheduled meetings with specific agendas. Jointly developed checklists and regularly updated and distributed project-plans often help to keep the process on track. Like any good relationship, disagreement is healthy and honesty is crucial.

Organizations must be vigilant to maintain a strong relationship after the transition is complete. The vendor is responsible for the functional group, while the client must view the vendor’s team as an extension of his own. The attitude must be that both will win or lose together. Clear and concise reports outlining success and improvement must be used. Mutually determined meetings or regularly scheduled calls must be arranged. Flexibility to make changes and adjust to both is important as the business needs will certainly include some evolution. The nurturing of this relationship may lead to new opportunities that the two companies can then explore together.

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