EDITOR’S NOTE: This first appeared in our blog, OutieLookingIn.com on Monday, Dec. 7, 2009. I have “migrated” it over as part of our online redesign.
The report found that companies with successful offshoring practices:
- have a senior-level champion for offshoring efforts
- se a service provider selection model
- conduct on-site visits to providers
- use a master service agreement
- have internal stakeholder buy-in for offshoring
- establish a global corporate offshoring resource center
What should NOT be surprising is point number one: senior-level champion. No matter the undertaking in any organization, if the boss doesn’t support the effort whole-heartedly, no one else will. Think about the last successful launch at your own company that wasn’t first moved to the top of your organizations priority list and included a kick-off ceremony by the leader? Chances are you don’t have one.
Next, let’s examine the use of a service provider selection model. Why an organization would have processes and checklists with clearly defined roles and responsibilities in place to order office supplies, purchase real estate, build out new facilities, etc., and NOT do the same when choosing a service provider is beyond me. But, it goes on every day in companies large and small. If you don’t have a need for a full time, dedicated strategic sourcing or vendor selection team, then utilize a third-party advisor to do so. Even better, have them develop a leave-behind process for you to use in the future. (Full Disclosure NOTE: KPGS is a third-party advisor. Guilty as charged.)
Along with this, conducting an on-site visit should be a no-brainer. And yet, many companies choose to skip this step after a 100 slide presentation on capabilities, extensive and exhaustive meetings and dinners with the provider business development team and a round of video teleconferencing with onsite management. It shouldn’t come as a surprise then when the provider places the work in a location other than where the teleconference originated. Or, they build out a new site to accommodate the work because their existing sites were too cramped. True, taking a senior executive or a small team out of pocket for at least a week for a site visit in Asia, Africa or South America is tough, but nonetheless, necessary. Once again, if you don’t have the resources to do this internally, hire a third party advisor to do this as well - along with the aforementioned tasks. (FD Note: KPGS provides this service. Also guilty.)
Master Service Agreements (MSAs) and the accompanying Statements of Work (SOW) are an absolute must, but please don’t turn them over to the attorneys alone to negotiate. What good does a Sr. level champion and a strong due-diligence model along with clear performance expectations do if you turn the negotiations over to folks who aren’t actively involved with the day to day operations and goals?
And this leads to having internal stakeholder buy-in. Assuming these folks aren’t,
(a) involved in the site visit,
(b) goal definition and timelines, and
(c) involved in the up-front planning on WHY you are offshoring,
then the best way to achieve their buy-in is to at least solicit their involvement for making the process work. Creating internal account and performance management teams is a technique to retain subject matter expertise, historical perspective and document your outsourced and offshored processes as you reduce internal headcount. Your providers can do a bang-up job all day every day, but if the internal resources assigned to liaison aren’t on-board it will come unraveled over time.
Finally, the point of establishing a global corporate offshoring resource center is probably one your organization may or may not find a need for. Although I can’t tell who was surveyed to collect these best practices, my experience says this would have to be a company in the $1+B range. Your organization may find the best resource center is nothing more than the internal stakeholders conducting quarterly business reviews, documented best practice sharing and “joint-ride” visits to the provider locations. If you want to get really creative (and who doesn’t?), solicit the stakeholders for what they want. Create internal “wiki’s”, social networking sites and employee blogs to discuss and mind-share offshoring.
In summary, the best practices listed represent a quick checklist of more detailed and documented processes many organizations develop over time. The fact that the number of companies offshoring has doubled since 2002 doesn’t mean your organization has been left out or doesn’t have room to improve. In fact, it means there are just that many more lessons learned for you to capitalize upon and use to your advantage.