It used to be that when companies talked about outsourcing, it was one (or two) particular reasons: reducing costs and enhancing back-office operations. Today, however, the game has changed. We’re facing a very different world than in the 1990s and early 2000s. The labor market is tight, and it’s challenging to find and retain employees with specialized skills. Companies are often left with a skills gap in areas like IT security, networking, accounting, legal, account management, and digital marketing to name a few. Also, critical innovations are emerging that are making it possible to work from anywhere, and at any time. Thanks to cloud computing, mobile technologies, online collaboration apps, and faster and more reliable broadband service, people are also doing their best work from anywhere in the world with an internet connection.
What’s next?
These changing dynamics are reshaping outsourcing as well. Deloitte calls this a shift to ‘disruptive outsourcing.’ Analysts point out this model is different because it’s designed to drive growth and improve agility, compared to simplifying costs and enhancing back-office operations. Experts pin the evolution to significant advancements in disruptive technologies such as cloud computing and robotic process automation (RPA). (Source: Deloitte). Does this mean that reducing costs isn’t a critical factor anymore? Not so fast! Leveraging outside specialists is still a smart way to keep costs down. Application development, for instance, can cost 30% to 60% less using a skilled freelancer, especially if US companies go offshore, working with teams from India or the Philippines, for example.
Should you make a move?
So the question remains, is your company ready for outsourcing 2.0? Here are some key considerations to come up with your best game plan for moving forward.
- What areas can you optimize? Figuring out what areas of the business that are primed for innovation and improvement is an excellent place to start. Are you launching a new website? Do you need a mobile app? Do you need on-going digital marketing support? Does your customer support system have room for improvement? All of these areas are excellent areas for working with an outside partner.
- Can partners help you continually innovate? When it comes to developing a strategy around working with service providers, it’s all about finding partners that can help you gain a competitive advantage. Can the potential partner drive efficiency and agility? Look for partners that have the right skill set and also grasp the ‘disruptive outsourcing’ model because they follow best practices and have the experience needed to make your project a success.
- What about potential challenges? When it comes to establishing new ways of working, they’re always challenges that can hinder the migration effort and on-going processes. Common problems that surface might include data migration issues, security risks, compliance challenges, resistance to change, and fragmented processes. To reduce risks start with deliberate planning to attain alignment between external teams and internal employees regarding strategy and goals. Outlining a consistent management strategy is also critical. Ask yourself:
- ‘Who’s the main point of contact for the relationship?’
- ‘Who’s responsible for reviews?’
- ‘What’s the promised delivery time in providing feedback or making changes?’
- ‘What project management and collaboration applications are we using? Do all parties have appropriate access?’
- ‘How often do we expect updates?’
- ‘What steps does that external team take if they encounter an issue?’
By having these conversations up front, organizations can eliminate miscommunication and incongruent expectations. Not only that, companies can lay the groundwork to build a truly cohesive unit, where all parties are working together from the same playbook and they are 100%-focused on innovating.
Now and later
Will outsourcing continue to shift from traditional work transfer to a heavy focus on transformation and automation? New technology advancements and shifting work dynamics are all indicating yes! Done thoughtfully, this new outsourcing model has the potential to have a big impact on business – empowering teams to work smarter and increase productivity, and to gain a significant competitive advantage.