Outsourcing – Our Perspective
Outsourcing is a USD 180+ billion industry with 75 percent of IT organizations using it in some or other form. Outsourcing is no more a mere buying/procurement decision, it’s a strategic imperative rather. Organizations adopt outsourcing to disaggregate the value chain and free up internal resources to focus on core activities. It should be a strategic decision by the client organization in identifying the activities/candidates for outsourcing. In the changing scenario, outsourcing benefits are no longer limited to price, they include faster service maturity, service quality improvements, scalability, better risk management and of course, innovation. In a survey conducted, it was found, cost cutting/control, enabling core business functions, solving capacity issues and enhance service quality were the key business drivers for outsourcing.
However according to a survey, only 20 percent of off shored/outsourced projects are able to realize its true values.
A closer look into this reflects the following pitfalls:
- Expectations mismatch
- Blurred business case
- Managing the invisibles
- Lack of mutual inclusiveness
- Post contract operational non-alignment
- An agreement/contract for execution – beyond winning
- Underestimating the transition
- Cultural challenges
- Inflexibility beyond contracts/agreements
Customers, traditionally follow run-of-the-mill towards outsourcing governance. While clients and service providers do set contractual metrics to the engagements, measurement of metrics reflects health of the engagement but not necessarily the engagement success. There are major gaps between the desired outcomes and delivered outcomes.
Survey shows, robust Vendor Management is a critical success factor for outsourcing initiatives. Outsourcing buyers and vendors have a tendency to rush through the transaction, which can lead
to downstream problems. Spending adequate time during request for proposal (RFP), vendor selection and transition is another critical success factor for outsourcing deals. When used, third party advisors were recognized as adding significant value across all phases of the outsourcing lifecycle. Over 50 percent of participants found that third-party advisors added value during strategic assessment, business case development, RFP / vendor selection, and negotiation and contracting. Survey also shows 43 percent of respondents reported significant savings attributable to the vendor management function.
uBeA intends to see the success through the eyes of its customers through Concave Outsourcing. Let’s connect to experience the success.
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