Readiness checklist for Outsourcing

Outsourcers love to promote the many benefits of outsourcing – the labor savings, the reductions in fixed costs, and the flexibility to scale quickly or redeploy capital for high-growth opportunities. What they fail to point out is that if your organization isn’t ready for outsourcing operationally, organizationally and financially, none of the promised benefits will materialize as quickly or fully as advertised.  Initial Checklist and Readiness Self-Assessment can assist with establishing a fundamental framework for charting your course toward renegotiating, prior to a contract term event. Starting with the basics ensures you have a firm understanding of your renegotiation opportunities and how to move to the optimal solution. An Outsourcing Readiness Assessment results in detailed and specific recommendations for:

• What you can reasonably expect to achieve and save from your outsourcing strategy
• The time frame in which savings and benefits can be anticipated
• The most effective way to redeploy savings
• The technological, financial, operational and organizational steps required to realize savings and reduce or eliminate risks
• The right plan for proceeding, given the limitations of reality

The initial checklist contains the following key areas that will need to be considered, as you move toward developing your strategy. Establishing a firm foundation for charting your term event strategy is paramount to a successful outcome. Starting with these basics will ensure you have a firm understanding of your sourcing opportunity and how to move toward the right solution.

1. Key Objectives: Have the key objectives for your sourcing strategy been determined?
2. Financial Goals: Have the financial goals that are to be achieved by the sourcing strategy been determined?
3. Cost & Benefits: Has a sourcing analysis assessing the costs and benefits been completed?
4. Time frame: Do you have a time frame to execute your sourcing strategy?
5. Risk Assessment: Do you have a well-defined process for identifying the risks and related mitigation with the sourcing project?
6. Dependencies: Do you understand all the dependencies required to achieve your sourcing objectives?
7. Benchmark: Have you conducted a benchmark study to clearly understand your organizational performance and cost of delivery relative to the market?
8. Staffing Analysis: Have you conducted a staffing analysis by job category for the areas identified in the sourcing scenario?
9. Readiness Assessment: Have you formally assessed your organizational, cultural and strategic readiness for your sourcing initiative?
10. Selection: Do you have a methodical time-tested provider (for outsourcing)/location (for shared services) selection process?
11. Alternative Approaches: Have you developed alternative approached of various sourcing scenarios (e.g. full outsourcing, partial outsourcing, phased outsourcing or shared services)?
12. Support Experience: Does your legal, procurement and human resources department have the experience needed, and have they been involved in several sourcing projects?
13. Transition: As part of your sourcing initiative, do you have the process, discipline, experience and resources required for preparing. Planning, and managing the transition?
14. Communications: Does your sourcing plan address communications to your internal organization, providers, contractors  government agencies, third parties and the media?
15. Relationships: do you have a clear operational vision for management and an ongoing relationship with the provider (if outsourcing)?

About Author:

Shailesh Nambair  is consultant and part of Systems Plus Pvt. Ltd. think tank. He actively contributes to information technology and VMO. He can be contacted at: shailesh.n@spluspl.com