Accounting, legal services, manufacturing, human resources, software development – these areas, among others, have long been the most common business functions outsourced. That’s primarily because these areas generally require specialized skills and or equipment, and they can often be done more cheaply by another company. When organizations decide to keep everything in-house, they have higher research and development costs, marketing, and other expenses – all passed on to customers. On the other hand, by using an outside provider, the cost structure shifts, and economies of scale provides a competitive advantage. Making this move has helped many companies reap big-time benefits, such as reducing overhead, increasing efficiency, speeding time to market, enjoying more flexible staffing, and ultimately generating higher profits.
So, does that mean that if you’ve already hired specialists to handle business functions like accounting, HR, or IT management, your business is wholly optimized? As we enter a new decade, the answer is – not anymore.
There’s new thinking that’s pushing companies to outsource advanced business areas too – strategy development, innovation initiatives, application optimization, solving complex business problems, and more. Cloud computing and other technologies are fueling this expansion to include bigger-picture areas of the business. But, moving into unchartered territory also means addressing new challenges, like learning how to open up internal limits without giving up control over the strategic direction of the company. Let’s explore some of the barriers and address how companies can forge ahead to take advantage of this new and exciting way of doing business.
Start with bigger thinking and a supportive framework
Step one for hiring experts to provide support beyond traditional business areas requires setting up more structured processes. Enterprises should make planning a priority, and look ways service providers can help them truly transform and optimize processes or functions. Taking this approach is in stark contrast to simply ‘lifting and shifting’ the responsibility of one business area to third-party and hoping that group is capable of completing tasks more efficiently or at a lower cost point than in-house. More strategic operations and planning may require spending more time in the RFP process to find the ideal service provider, allowing for more time during the ‘transition’ phase in working with an outside party or increasing the scope of services. To find the right partner, it may also be critical to offer service providers more agile contracts as well, taking a step away from conventional fixed-pricing agreements. Contracts that are aligned with goals for business outcomes or growth, incentivize providers to share in the risks of the project and the successes. A more supportive framework for working with external partners also includes implementing strong governance programs and addressing regulatory and compliance issues upfront.
Get smart about managing cybersecurity risks
Another area that needs attention when working with external partners is addressing security risks. This approach includes outlining shared data risk and security protocols. Taking these steps is particularly essential if partners or suppliers have access to the company’s most sensitive personal or regulated data, or if the partners process the data on behalf of the company. These datasets represent the company’s ‘crown jewels’ and should be protected. By collaborating and mapping out cybersecurity protocols and tying expected outcomes into contracts before and engagement starts, both parties take ownership of responsibilities and outcomes. To work effectively, customers need to also proactively monitor cyber risks with periodic evaluations and regular audits of partnership agreements, to make sure benchmarks are being met.
A future with no limits
In the next decade, the only limit to strategic outsourcing is the imagination. Priorities have shifted from primarily cost-cutting goals to bigger-picture corporate goals where companies look to form alliances with service providers so they can better innovate and become more competitive. This evolutionary shift opens up this practice to tackle customer-centric projects and complex challenges related to data migration, application optimization, security, or regulatory compliance. Whatever path you take, making these moves can help your business see its priorities more clearly, shifting focus from peripheral activities to growth, innovation, and providing better service to customers.