Outsourcing Success
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Transcript of Outsourcing Success
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www.NLP-Success-Coach.com
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OUTSOURCING SUCCESS
PRESENTED BY DEAN EGANMASTER PRACTITIONER
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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).
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Reasons for Outsourcing
Organizations large and small; are constantly
seeking innovative ways to accomplish more
of their goals for less money.
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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
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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.
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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
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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
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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
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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)
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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”?
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What Matters Most (cont.)
Reliability Trust Technical skills Security guarantees Provider reputation Round-the-clock support
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What Matters Most (cont.)
Ability to customize solutions and services Industry knowledge Service-level agreements Innovation and cutting-edge technology Strategic advice
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Common Expectation Gaps
Business leaders from across all industries,
have acknowledged, that they are the ones
responsible for making the outsourcing
relationship work.
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Common Expectation Gaps
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
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Common Expectation Gaps
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
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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.
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Common Risks
• Misunderstanding critical requirements • Quality assurance• Differing of internal processes• Loss of control
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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
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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
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Outsourcing Statistics
Information Technology 28%
Human Resources 15%
Sales and Marketing 14%
Financial Services 11%
Other Administrative
Processes 32%
32%28%
15%14%
11%
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Outsourcing Statistics
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.
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Outsourcing Statistics
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.
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Outsourcing Statistics
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.
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Outsourcing Statistics
Forrester Research estimates that 3.3 million
jobs and $136 billion in wages could be
outsourced by 2015 in the U.S. alone.
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Freelance Marketplaces
What to Expect
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Freelance Marketplaces
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.
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Freelance Marketplaces
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.
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Freelance Marketplaces
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
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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
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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.
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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
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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
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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
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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
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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
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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
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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”
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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
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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
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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
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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
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Successfully Managing the Relationship
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
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Successfully Managing the Relationship
The outsourcing plan should mirror the
outsourcing contract
Not a legal document but more of a
measurement tool
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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
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Evaluating Proposals and Providers
General areas of focus:
ExperienceCapacity for ComplexityLeadership Skill Level Importance Level
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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
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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.
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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
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Culture Matters
Basic cultural dimensions to consider are:
Individualism verses collectivismHigh content and low content cultures Monochromic & polychronic time orientationCross-cultural leadership
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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
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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.
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Offshoring Best Practices
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
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Offshoring Best Practices
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
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Offshoring Best Practices
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
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