Outsourcing initiatives typically have a disproportionate focus on the glamour and excitement of the deal, rather than on the grittier realities of implementation and effective change management. But there is an increasing consensus amongst those who have outsourced critical business processes – and particularly amongst those who have used outsourcing to offshore those processes – that this is wrong. At a recent conference in India, where client organisations met to share experiences and discuss best practice, there was universal agreement that insufficient effort was put into implementation and change management – what you might call the actually “doing”.
First of all, why criticise the traditional emphasis on the deal? It certainly isn’t wrong to get the deal right and to focus on the contract – after all, when you buy outsourced services all you have is the contract, so that had better be right. Part of the trouble is that the contract focus tends to be at the “front end” (i.e. the terms and conditions) and on the pricing, rather than on the “back end” (i.e. the detailed descriptions of services and service levels, and transition plans). This means that although the legal construct can be robust, there is often an alarming vagueness about what the services which will be delivered actually are.
But in addition, the following often happens. Firstly, the client suffers from “deal fatigue” – the key players who negotiated the deal go back to their day jobs, and the advisors and project team are let go because the “deal is done”- consequently the bank of knowledge built up about the deal is lost just when it is needed to ensure successful implementation. Secondly, many clients suffer from over reliance on the contract, and from feeling that the contract is mainly about what the supplier will do, when it almost always has as many, if not more, obligations on the client. Just because something is in the contract doesn’t mean it will happen, and just because the supplier agreed to something doesn’t mean they can deliver it without help. But many clients take the view that they have signed the contract, now the supplier can deliver – and they sit back and wait. This is never likely to succeed.
So what are the unglamorous “just do it” things which a client should focus on to make sure the deal they contract for actually gets delivered? Certainly the following:
Define and document the service and service levels you get now and the service you want to receive in future, and include them in the contract – that is the real cornerstone of the deal
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Design (preferably co-design with the supplier) the end-to-end process which will be required, including the retained organisation – who you need on your side, what they will do, how their roles will change (the supplier can’t do this for you)
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Ensure complete and effective knowledge transfer to supplier staff, including ongoing support for as long as it is needed. Its no good relying on the contracted service levels here – the only way the supplier’s people will come up to speed quickly with your processes is if you help them, and that means more than providing documentation and a few weeks work-shadowing.
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Communicate all the time – to onshore staff who may be losing their jobs, to the new offshore supplier staff who are effectively working for you now (despite the fact it’s a service contract and you don’t employ them), and to the supplier management so that you can jointly deal with issues and problems. You can’t over-communicate.
Above all, remember that outsourcing is about people delivering services. It may be packaged in a deal and a contract, but it’s actually about getting people to do the right thing. And think how much harder it is to get people aligned with each other when they are thousands of miles apart, and do everything possible to bridge that gap. That means more face time with each other, more travelling, more staff exchanges, more meetings and conference calls, more ideas on aligning interests and rewards – much of which probably didn’t make the business case when the deal was signed. But that’s what it will take to get it done.
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