6
Oct

OUTSOURCING and THE SIN OF PILATE

Escrito el 6 octubre 2012 por Jesus Guerro en General

Outsourcing services and operations means a clear trend in recent years.

The question is, why do we really outsource?

Unfortunately, this decision is often taken on the basis of cost-reduction without analyzing properly how to drive the process to obtain the benefit pursued.  Taking out processes that we have not been able to manage or to handle under control.

Delegating operations on third party companies can bring cost reductions by leveraging the partner´s capacity and synergies with other clients, and know how, so acquiring economies of scale, but Never Automatically.

Sometimes the decision to externalize operations exceeds the range of a specific service to dramatically withdraw entire departments, as we have seen in the IT function where even the CIO is erased from structure, naming a Project manager in place hanging from the CFO. Is it really necessary or even advisable?

The obsession comes from getting nervous about closing up non-solved processes  by just, signing a contract, washing hands and transferring the responsibilities and obviously, the same problems, to the partner who will become even more confused.  It is not difficult to foresee that the situation will end up exploting more complex,frustrating  and obviously, more expensive.

Signing an Outsourcing Contract is not and End but a New Beginning.

We keep on being the Owners of all processes.

Outsourcing means a strong competitive weapon when the decision is based on the question:  

Who is the best carrying out this function? Who is the one who will better join our philosophy and business model?  

Actually, many modern organizations are built up upon strategic partnerships with specialist firms. And It has nothing to do with issues about core or non-core functions or value or non-added value activities as the old concept of subcontracting prayed when it was born.

Today all type of strategic functions are delegated to partners. Namely, Product Development, Marketing and Publicity, Manufacturing, Distribution, Customer Contact or Strategic Aim Advisory.  are we able to think in something more core or valued? No. So that is not the question.

By contrast, the main reason to outsource should be based on working with people who demonstrate excellence in the things I need or I want to do, while my Top Challenge focuses in driving all this set of separated entities as a Unit, as a compact body, as a fast and powerful engine. We need people to do that.

This degree of externalization is so important that often the real and maybe unique Core of the Company remains just on the Brand, the rest is actually, interchangeable.  This is why creating an Identity is so essential today. Although great teams inside make it possible.

Therefore, previously to the decision to outsource we must draw the new scenario, design the new processes, establish the new relationship model, communications workflow and decision making points to boost the engine more efficient.

Who will be in front, who this side?  How will we connect reliable and sustainable links?

Who are the best both sides to remove the red line?

 This is how we will reduce costs, without putting in danger the most sacred thing, customer satisfaction which selects us.

 

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