How to set up and maintain a successful outsourcing relationship

We have seen the global financial markets in unprecedented turmoil recently, with markets plunging and several financial institutions going under. The crisis is making many people uneasy, but for others it is also an opportunity.

Many commentators believe that this trend will result in a near-term boom in outsourcing. Indeed, one could argue that properly structured outsourcing arrangements, especially around specific functions such as customer service or back office, could provide an effective antidote to the credit crunch, offering a low-risk route for firms to kick-start business operations.

In order to succeed, businesses need to employ increased vigilance in the way that outsourcing is engendered within their processes. While historically seen primarily as a cost-saving exercise, and inevitably treated as such in the initial negotiation stage, outsourcing is now considered a key source of strategic guidance and innovation and, more importantly, a source of vital input into decision-making.

Inevitably, the process for implementing an outsourcing process has become increasingly time-crunched – the time to market for implementing is becoming shorter, with pressure to get contracts signed more quickly. These pressures to deliver to market faster means that some outsourcing contracts can go wrong as mistakes are made, but by investing time and effort at the early stages of the contract, such mistakes can be avoided.

The best method to successfully move forward with an outsourcing project, no matter what your company’s core business, is to develop a taskforce drawn from across the organisation, with a vested interest in making the project work. This team should bring together business functions adjoined to the outsourced project that can provide direction and ensure that the outputs are in line with their departments’ needs.

Communication, in its many forms, is another critical component of a successful outsourcing project. It’s no use putting together a taskforce designed to manage the implementation of a project if it meets irregularly or fails to communicate any problems or issues there may be. Encourage the team to meet and feed back as often as possible to ensure completely open lines of communication.

Employees and the knowledge they hold are the most valuable assets in most companies, so it is vital to look after them. This holds particularly true when undertaking an outsourcing engagement, as creating and maintaining employee engagement is one of the most important, yet most often overlooked, requirements for success.

During and immediately after the implementation of an outsourcing arrangement, employees remaining in the client company can often feel demotivated and unappreciated. To maintain staff morale it is important to ensure employees feel valued, so firms should not underestimate the importance of ‘over-communicating’ before, during and after the outsourcing effort. It should not be assumed that employees will immediately embrace the change. Companies should look to attain strong executive and staff buy-in early on in the project life-cycle – engaging fully with the internal communications function to ensure that all staff are fully aware of what is happening at the earliest possible stage.

The outsourcing projects that succeed are those where the potential outcome has been worked through with solutions developed for every possible scenario. It is inevitable that something will occur that will throw a spanner in the works, whether it’s a financial problem with the company, a takeover bid, budget cuts or, as we’re seeing now, the impact of wider macroeconomic forces on the business as a whole.