5 SMART TIPS FOR CHOOSING A VIABLE OUTSOURCING PARTNER
Messrs ST Yakinson is an equipment manufacturer operating from Japan. Their clients are mainly in Europe. Over the years, as operations expanded due to increased business, activities such as payroll, inventory tracking, personnel management and material sourcing began to take its toll on the company.
There was a high turnover of factory staff, entry and mid-level staff. The company recruited more staff to handle payroll and personnel management and a significant number of client care representatives to handle client complaints which increased by over 45% within two years.
So, Messrs ST Yakinson outsourced. They outsourced about 80% of all back-office activities including material sourcing, client services, equipment purchase and maintenance, and personnel management.
All was well in the first outsourcing year. By the second year, it became obvious that Messrs ST Yakinson was the only client of the outsourcing firm, as other clients had cancelled not renewed with them.
Because of this decline, the outsourcing firm let go about 65% of their staff, keeping on barely enough hands to fulfil their contractual obligations to Messrs ST Yakinson. That affects the quality of service being provided as previously specialized services were now merged to reduce cost.
By year three, Messrs ST Yakinson were back to the beginning — more client complaints, high staff turnover with an additional data breach of confidential proprietary information.
Where did Messrs ST Yakinson go wrong? Let’s take a quick look at the process they should have taken when selecting an outsourcing partner.
1. Record of satisfied clients: would you trust your money to a financial institution that says yours is the first account they will be handling? How do you ensure that your funds are safe? History of satisfied clients with a critical look at the management team and financial assets gives one a sense of ease that such institution is OK to do business with. The same principle applies to outsourcing. While back-office operations can be a distraction for organizations whose expertise lie elsewhere, if not properly managed those operations can be the death of such an organisation. So, in choosing a viable outsourcing partner, ask for references from past clients to ascertain how long they have operated and how well they have served others.
2. Identify an area of specialization: Outsourcing firms have specializations. There are facility management companies, there are call centres and business process outsourcing companies like Outsource Global in Nigeria; there are also technical outsourcing partners. Understand aspects of the business which are non-core and shop around for an outsourcing partner in a renowned outsourcing destination like Africa.
3. Use of technology: how technologically ready is your proposed outsourcing partner? The hardware and software components of the outsourcing firm should be the latest available, with the capacity to integrate with resident systems of the contracting business. A clear communication line must be established; uninterrupted connectivity and power availability must be assessed. In essence, the operations of the outsourcing company must not interfere with their ability to provide the services your business requires.
4. Workforce Strength: If you are considering outsourcing because your business has to manage much non-core staff, you definitely should be looking out for an outsourcing firm that will is not cutting corners by piling workloads on limited hands. A viable outsourcing company is one that fully understands a clients process has made available the necessary manpower to carry out said processes. A way to know this is to review your partner’s hiring policies and processes to understand the technical and soft skills that they look out for when hiring.
5. Understand the costs: a rule of thumb is that businesses must never outsource their core processes. Any mishap with an outsourcing vendor will practically ruin the client’s business so businesses must be able to identify their core and non-core tasks. Also look at the cost of outsourcing: which region has the best rates with commensurate quality service? Africa is the new frontier in outsourcing and Nigeria is leading the charge to the best outsourcing destination in the region.
