3 Things to do before outsourcing
It is becoming easier and easier to outsource some, most, or all, of the common business needs. This may be IT, HR, accounting, marketing or almost any other part of a business. Outsourcing is becoming a popular option as there are a lot of positives that can come from outsourcing, but there are also big negatives that can come from it. The key to outsourcing, just as any other business activity, is to do due diligence first. Lets look at some things to do and some not to do when measuring whether to outsource a function.
Have a plan
I have come across a lot of companies that outsource a function in an attempt to cut costs or avoid headaches associated with that function. This is a good reason to outsource, but it still requires some consideration and planning. It is never as simple as “throwing it over the wall” for a vendor to take care of. In all cases, the details need to be nailed done as to what will be outsourced and how the outsourced processes will flow or interact with in house processes. A lot of vendors will work with their customers to help integrate the outsourced service into a company’s processes. This is a great offering to take advantage of, but there can be some cost associated with doing so. When you lay out the details of what to outsource (and the required integration points and processes), it provides a great starting point for both a SOW and related SLAs. These are important deliverables to have when you want to evaluate the performance of a vendor.
Have an Exit Strategy
One of the most painful things I have gone through in business is extracting processes and data from a vendor to bring things back in house. The outsourcing always seems so simple, but if you aren’t putting pieces in place to be able to switch vendors or bring a function back in house you are asking for trouble. You should always be able to answer the question: “What happens when the vendor fails or disappears?” There are some great deals available to help a company outsource their functions, but usually the vendor is going to provide minimal help at best to change to another vendor. This can lead to solutions like the old Roach Motel advertisement (or the line in the Eagle’s, "Hotel California") where you can check in, but not check out. The new vendor will often help make the transition in that case, but if you are bringing things back in house there is no one to help. Make sure the plan does not require help from the vendor, just to be safe.
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There is much more to consider when looking at outsourcing and we will return to this topic in the future to dig a little deeper. For now, you can always send an email to info@rb-sns.com or contact us on the web site to help you with any specific questions or to schedule a consultation call or IT audit.
Rob is a founder and principle of RB Consulting. He is also a longtime student of technology as a developer, designer, and manager of software and software projects. He is active as an entrepreneur and has managed to author a book about his family experiences. In his free time he and his wife, Karla, keep busy raising eight children. When he finds free time he can often be found on the ice playing hockey to relax.
