How to Make Offshore Outsourcing Work for You

By Chris Twigg

There has been much hype lately about the growth of offshore outsourcing and an increasing number of success stories. But the number of failed projects is also on the rise. Here are ten tips to help you get the most from your offshore outsourcing endeavors:

1. Find the right vendor: Many vendors have sprouted up in developing countries, but the difference between good and weak vendors is immense. Even vendors that have a good reputation often fail to deliver. The key to vendor selection is to deal directly with the people who will be managing your business on a day-to-day basis. Their experience and ability rather than their technology, client list, or offices should convince you.

2. Experience counts: Do the people managing the business know how to make your project a success? It may seem like an obvious question but the level of middle management is critically important. Remember, it is the quality of the operational management which makes the difference. An account manager sitting at a desk in London has little influence over project delivery in Bangalore.

3. Don’t make assumptions: Anyone who has worked in any developing country will tell you this is the most important thing to remember. What seems logical in New York City may seem illogical in another country. Remember that you’re potentially dealing with a country culturally very different from your own.

4. Use multiple vendors: If your project is of sufficient size, use more than one vendor. The management of offshore operations generally requires more intensive management. The use of two or more vendors is an effective way of driving continued improvement among your vendors. It also acts as a safety net in case one under-performs. Ensure that the vendors are aware of the involvement of the other vendors. This will motivate them, as they will know there is the opportunity for additional work or to lose the work, depending on their performance.

5. Count the costs: It is true that offshore outsourcing brings substantial cost reductions but some vendors propose complex pricing structures to hide costs. This is typical of business in many countries, so be sure to always insist on a transparent pricing structure. Some vendors may try to hide costs such as telephony and account management. Be aware of all of the costs before you start.

6. Backup plan: Don’t start a project without having options to finish it. Over the next few years, you will see vendors with weak business models go out of business as their funding dries up. You must have an alternate strategy if you are suddenly no longer able to do business with a vendor.

7. Continually evaluate: Set key performance indicators (KPIs) and continually review them. Without tight management, problems can occur quickly. It will always be far easier to manage a project if the KPIs are understood from the very beginning.

8. Own the strategy: The highest performing outsourcing companies in North America and Europe are able to define and deliver your call center strategy. Vendors in other offshore locations may not have this ability. You need to control the strategy and then clearly define the execution plan for your vendor.

9. Skeptics succeed: Work from the assumption that your outsourcing will achieve limited success and that everything could go wrong. Be aware that it’s often the answers you don’t get which are the most important ones – and that the answers you do get should be taken within the context of the culture in which the call center resides. Probe deeply in order to ensure you’re not working with the wrong partner.

10. Two-way benefit: Your account has to be worthwhile for the vendor. If your account is unprofitable for the vendor, you will receive a sub-standard level of service. Of course, you need to ensure you receive your money’s worth but there is a limit. Executed effectively, offshore outsourcing can be a win-win for the client and the vendor. Costs in many countries are such that everyone can benefit and the quality can remain high and even improve.

[From Connection MagazineJune 2003]

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