Key Steps to Minimize the Risk of Outsourcing
1. Discussion of Critical Issues
This first step should be taken at the initial stage itself. Start by discussing all relevant issues with the outsourcing firm. Structure the modalities of the agreement in such a way that the success of the project is the joint responsibility of both your company and the third-party service provider.
2. Sharing Responsibilities
The burden of managing the risks and the responsibility for the accurate execution of the process has to be shared by the concerned parties. This will ensure that neither side is in a position to shed accountability.
3. Ensuring Business Goals are Achieved
The outsourcing agreement should be such that it yields specific business results to you as a client. Ensure that it does not merely become a channel for you to acquire inexpensive labour. The service provider should also be informed about the goals of the business model that your firm is trying to achieve so that they can also take steps to contribute towards achieving those targets.
4. Establish Quality Standards and Performance Indicators
Document what quality means to your company. Document what quantity means. Define the parameters that represent success and the ones that represent failure. There should be timelines, Key Performance Indicators (KPIs) and benchmarks for achieving targets. If these indicators are breached, then penalties should be imposed and an enquiry should be conducted into the probable cause of the failure to reach the agreed targets.
5. Conduct a Trial of the Services
There should be a trial period where the outsourcing company could be put to the test to check if they can handle the work. This could be for one month, three months, or any other period that you both agree upon. If the process fails during that time, then you always have the option of entrusting the project to another firm. If you are satisfied with the services, then you could finalize the agreement, and the service provider can start the process in full earnest.
6. Ensure Flexibility and Adaptability
Business situations keep changing constantly. These changes will impact both your firm as well as your service provider. That is why the outsourcing model and the process methods must be kept flexible. These models and methods should not fail with the slightest of changes. The process methods and the outsourcing terms should be amenable to changes as and when the needs of your firm progress.
7. Ensure Confidentiality
Today, confidentiality is everything. Therefore, you should sign a non-disclosure agreement with the service provider. This will ensure that your company’s information is kept confidential. There will be certain processes where you might have to give access to the service provider to intranet sites and other important company information. It would be in your best interest to sign agreements with the service provider that protect the secrecy of this data. You can also conduct site visits at the office of the outsourced company to ensure that the data is being kept safe.
8. Ensuring the Right Recruitment
Many businesses insist on overseeing project recruitment by the service provider, so that only personnel who suit the company’s needs and have the right skills are onboarded. You can do this while outsourcing, especially if the work requires a specialized set of skills or access to extensive knowledge.
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