Businesses, more particularly tech-based ones, must use an outsourcing strategy as a standard practice in order to achieve efficient growth. By allocating the talent, the company becomes more productive, competitive in different markets, and budget efficient.
What is Outsourcing?
If this is your first time around here, you may be confused with all the terms. Basically, outsourcing is a practice where a company hires a third-party company to perform services that traditionally were performed in-house.
There are three types of outsourcing, but the most common today are offshore and nearshore. While offshore refers to hiring talent in a far-away country in different time zones, nearshore involves doing the same practice but in a closer country with a similar time zone and culture.
7 steps to outsourcing successfully
You may be considering taking an outsourcing strategy but you don’t know where to start. Well, this is pretty understandable due to the fact that this is your first time doing it. At Howdy, we know that there’s a first time for everything, so we’re going to help you with 7 steps to succeed at outsourcing.
1- Have clear needs
Outsourcing is not like going to the supermarket where you can find out what you need while you walk among goods. You have to decide on the motivation behind your decision to outsource. Having clarity will help you implement every step more efficiently.
Understand the difference between different outsourcing models like nearshoring and offshoring, and if you prefer a partner that is more proactive, consultative, value-added relationship or a vendor.
2- Set goals
Okay, now you know what you need, but it’s time to determine what you want to achieve with the chosen strategy. To set your goals you have to ask yourself the following questions:
- Do you need to reduce operational costs?
- Are you looking to raise the bar within your teams?
- Do you need to expand your operations to other countries or regions?
- Are you having problems with recruiting or retention?
Like any goal, it should be specific, time-bound, and measurable. This not only helps you to achieve your goals through outsourcing but it allows you and your co-sourcing partner to work toward the same business outcome.
3- Establish metrics
You need to be able to compare the before and after results of your business outcomes after outsourcing. Try to not only identify your goals but also determine how your organization is performing today so you can measure the effectiveness of your co-sourcing partner.
4- Evaluate the cost of outsourcing
The benefits of outsourcing do not come for free, as a lot of time and money goes into making this decision. For instance, you have to plan and design the contracts, as well as recruit, select, and hire people with the necessary skills to form your nearshoring team. Educating the hired people about the company’s policies and training them also carries a cost. Therefore, it is important to evaluate the costs of outsourcing beforehand.
5- Find your outsourcer match
Once you have decided to outsource, you need to find the right partner. Since most nearshore arrangements are long-term contracts, striking a business deal with the correct party is crucial. To maintain a long, happy, and sustainable relationship with a supplier, it is key to choose an outsourcer that can match the values of your organization. That ideal partner for your company will help you navigate the cultural shift smoothly.
Don’t choose just because you have to do it, remember that when you started your business, you gave values and principles that mark the North toward success. Growing at any cost isn’t the starter choice, as it is to follow sustainable expansion by respecting your culture and beliefs.
6- Set realistic expectations
Effective communication of your expectations both internally and externally is essential for successful outsourcing. Everyone must be on the same page regarding the work and the outcomes. When you clearly let the third parties know what you expect from the outsourcing, they might even help you improve your operations, as they are service-providing experts.
The decision to outsource is huge and has a major impact on the entire company, its people, and its operations. The employees may become insecure about their positions. Therefore, to avoid the spread of unnecessary rumors that may tarnish the company’s reputation, it is best to openly communicate with the actual teams and keep them informed about the company’s decision.
7- Measure performance
Outsourcing is not a short-term project. On average, most outsourcing contracts are applicable for three to five years, but if the association remains healthy for all parties involved, it can be extended. But before extending the term of outsourcing contracts, you must evaluate if you are getting the expected results. You must regularly measure the performance of your nearshore operations, find gaps, and establish ways to fill them. Continuous training and education of employees are important, as well as upgrading your current technologies, and processes and always remaining open to innovations.