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Essentials of IT outsourcing lifecycle

Call Center Outsourcing services cannot be akin to speed dating. Many organizations in the past have made this mistake and landed in a financial, legal and contractual minefield where they found themselves difficult to escape.

My endeavor here is to provide some tips around IT outsourcing to help buyers make a better deal with their providers. There are usually four steps to an outsourcing deal. They are mentioned below:-

1. ExploreIn this phase one conducts a lot of self-analysis of current situation. Activities under this phase are like understanding basic reasons for outsourcing, readiness for outsourcing, identifying candidate services, conducting market research, identifying risks and issues, outsourcing model and could be possible locations of service delivery.

Sometimes the in-house capability or bandwidth may not exist to conduct such due diligence. Taking help of experts can help organizations save losses from very expensive mistakes which might happen latter.

Few questions which one needs to ask and analyze here could be:-
•    Why are you outsourcing to 24 7 call centers?
•    Is the candidate services which you propose to outsource is core to your business?
•    What level of maturity you are today?
•    What are the cost of build Vs buy?
•    What complexity outsourcing will bring to your environment and is it acceptable?
•    What are the risks associated?

2. Evaluate
In this phase one selects a supplier who can provide the services. Usually buyers are tempted or lured to go for cost & capability based selection process. My suggestion would be to go beyond cost and capability to identify providers.
The good approach would be to float an RFI (Request for Information) with candidate services to be outsourced and ask for relevant information related to financial strength, technical capabilities, cultural fitness, vision for future, past experiences, quality norms followed by the supplier, security considerations, geographical spread and references of similar work done. Those outsourcing to a different geography, Hofstede dimensions are good approach to understand cultural compatibility. A pertinent question to ask at the end of RFI is about the best approach for delivering the services and how it can help the buyer.

RFI should be followed by RFP/Tendering process to shortlisted parties. The adjudication scoring can help in selection of a supplier. The best approach here is to see who is the most balanced in all the dimensions rather than using a single score for selection of a provider. This is followed by presentations to further filtering few chosen ones. At the end visiting the sites and taking few references might help in closing the deal with one or more of them.

3. Engage
In this phase, one needs to engage with the outsource call center to complete negotiations. There are many negotiations techniques which are used but out of scope of this article. This may be one of the rewarding experiences. The few things which one needs to ensure in the contract are:-
• It will help if consumer of service prepares a contract on how it would like to receive the service.
• Few of the areas should be focused differently are: Termination, Benchmarking, Realignment and Innovation which is generally ignored but could be very important.
• Flexibility is important as rigidness will be detrimental to relationship
• Focus on Governance of the outsourcing and ensuring a separate competency for partner management is very essential for success of the outsourcing relationship and relationship is managed at the highest level.
• Metrics, reports, SLAs should be prepared in advance to bake them as a part of the deal.
• Continuous improvement and how the value can be passed back to the customer in the entire process should be made visible.

4. Enable
The best day in outsourcing lifecycle is the day contract signing was followed by a big party. The fun begins when we take the next step of day #0 operations. During this period both parties will transition services and setup governance. Transition scope can expand to workplace, HR, asset, contracts, security, vendors, premises, licenses etc. Transition should be treated as a programme and reviewed separately. One should be extra careful about novation of contracts where multiple parties are involved. Inventory of assets with date of purchase is also very important to address any pitfall at latter stage. During this phase a lot of communication is necessary with stakeholders as people perceive it differently.

If one has gone for a multi-vendor arrangement, collaboration will be the key during the period. Establishing common platforms for communication, going beyond emails to video conferencing, chat and corporate social media / knowledge management platforms will be good idea to reduce your governance risk of managing complexity. Service provider personnel should be treated with care and establishing rewards for good work, providing them at par facilities for workplace and display of empathy goes a long way for success at a later date.

In conclusion, building right competency for managing the outsourcing as key to success as more outsourcing deals fail because of failure to govern. Organizations needs to focus on service partnership, programme management, relationship management, demand management, innovation management, contract management, service management, financial management, enterprise architecture & strategy to ensure success of outsourcing decision.