Managing the outsource potential

  • A2 will work with you to identify the activities ripe for outsourcing and create a path to business benefit delivery.
  • A2 will work with you to select the best strategic options, for example a single partner or multiple suppliers.
  • A2 will work with you to clarify the potential supply chain on which your business will depend.
  • A2 will work with you to create a Requirements for Tender that meets your business needs, based on a fully independent and objective assessment.

Identifying and Assessing Activities and Processes for Outsourcing

The key to success in all outsourcing is to identify the right process to outsource. Services or activities need to be assessed to determine whether they can be more effectively delivered on an outsourced basis, to achieve service improvement, cost reduction or core business focus. For both customers and providers proper due diligence is essential to confirm the feasibility of outsourcing and assess potential pitfalls. For example, complex transaction types that require special handling outside the process used for routine work may increase costs or error levels if they are not identified and understood when the outsourced process is set up.

Choosing the right strategic options

A single partnership for all outsourcing may or may not be the best strategy in your environment. Multiple suppliers can provide some security of supply and add a degree of competition that can be used to drive service improvement and/or cost reduction. Where the objectives of the outsource include major business transformation or strategic developments aimed at reshaping the business, or where the volume of work involved is not sufficient to justify splitting between more than one supplier, a single strategic partnership may be best. In this case effective measures are needed to mitigate the risk of dependence on a single supplier.

Understanding your dependencies

It may seem obvious but not all organisations fully understand all the relationships that they rely on for delivery and this is equally important to both the customers and providers of outsourced services. From a customer’s point of view your relationship is with your direct supplier, but what is the extent of their reliance on a key supplier, such as a web hosting service or software supplier? As a service provider what is your exposure to third parties that your customer has contracted with directly – if they fail to deliver, how does it impact your costs or achievement of performance targets?

Creating the tender specification (independent ITT definition)

A key factor in successful outsourcing is a detailed and clear specification of the service requirements. Where services are provided by in-house staff some aspects of the service are often taken for granted and practices may have evolved over time, rather than being clearly defined. Where an external supplier is to be involved it is vital that the requirements are clearly defined and understood. Tendering to outsource an activity also provides an opportunity to re-assess what is needed and define the tender specification accordingly. True independent assessment will give both parties a clear contractual basis for delivery and mutual benefits for the future of the outsource arrangement.

Our experience and specialist expertise can help you avoid the pitfalls and make the best use of outsourcing where it will make a difference.