Outsourcing projects originated in the mid-1989s when Kodak hired IBM to manage four of its data centers, and in 1994 signed a 10-year, $4.1 billion contract with EDS, followed by AMTRAK, leading up to the present day. Today, we’ll get to know some tips to achieve results in an outsourcing project.
Outsourcing projects must be executed taking into consideration a basic premise at the beginning of planning and subsequently during its operation: “Long-term relationship, like a marriage, where both will benefit from this client-supplier relationship and, like a marriage, will face frictions, suffer afflictions, among others.”
The key to success is: “Keep in mind each other’s desires and goals and try to help each other solve problems until death (end of the contract) do them part.”
Outsourcing is very suitable for: reducing costs, generating capital, allowing the client to focus on its core business, having the advantage of using external expertise in its operations, and helping the company to expand globally. With proper planning and management, outsourcing can bring savings and competitive advantages, weak planning will cause a disaster. Throughout my experience in the field and contribution from work partners, I decided to list some tips that I consider important here and invite you, the reader, to post other tips in the comments of this blog:
Establish trust and cooperation between the parties to obtain gains from both sides.
Communication and Relationship
Spirit of partnership
Two fundamental words that must be understood and followed by the client and supplier: cooperation and trust. Both should be working towards achieving a common goal so that both sides benefit from this relationship.
Focal Point
Appoint representatives to act as a link between the client and supplier and together define the responsibilities of their liaison representatives and their operating model.
Authority
These individuals must have the authority to act continuously with their employers, and must be the channel of communication between the parties, especially for complaints. This professional (or more than one) must: Be well informed about the technology involved; Know how to relate; Have firmness in monitoring and monitoring, demanding adequate performance from the supplier; Be loyal to the client’s interests; Understand that the supplier must have their rights respected.
Frequent meetings should occur between the client and supplier with the aim of reinforcing work together and discussing topics of interest to everyone. If possible, under the guidance of the focal points so that they know the problems that are occurring and have them under control. It is important that these meetings be encouraged so that teams on both sides know their activities and challenges, encouraging them to cooperative relationships with a strong sense of joint participation.
Misunderstandings
Have a contract clearly describing the scope of the work to be done and the expected performance standards, as well as covering all exceptions that may occur. Although we know that the world is not perfect, unforeseen events in the contract may occur or be interpreted differently.
Conflict Resolution
There are three different ways to resolve conflicts before legal action (which I recommend avoiding): Conflict resolution committee – led by the client and supplier representatives and technical specialists dealing with the problem in question should also participate in this group. If the committee does not resolve the conflict, then the problem should be taken to the higher hierarchical level (VP or CEO) to be resolved. If there is no consensus, arbitration can be used, for example, in the US there is the American Arbitration Association, which is certainly much cheaper than a lawyer. Escalation of the conflict to a higher executive level; Arbitration or mediation.
People
Our greatest challenge in this business model is managing the emotional aspects of employees to preserve the morale and loyalty of the group. Dismissal, transfers, resentment, and insecurity are some aspects that need to be treated with care and their impacts minimized or eliminated, making the organization stronger.
Downsizing Methods
Cost reduction is one of the objectives of Downsizing, and this reduction is primarily in the reduction of the number of employees. There are several ways to do this, one of them is reengineering, which methodically examines the operational processes and the types of professionals who perform each function of this process. Another way is literally, let’s say, cutting 20% of expenses from each department. Generally, this is not recommended because it ends up cutting expenses in the wrong places.
Explain the process at the earliest opportunity
The most appropriate time to announce the Downsizing plan is a difficult decision, but the plan must be explained before rumors prevail. The worst thing that can happen is your employees finding out about it from the press, partners, or market colleagues before you communicate it. It’s disconcerting.
The initial planning phase with key people in your company should be done as quickly as possible and in the shortest amount of time. This will minimize the appearance of rumors.
During the project announcement, it is important to clarify and emphasize the business reasons that cause this change and present a fair support plan for the employees who will be laid off. This will not eliminate the negative feelings towards the process, but it will reduce them to a minimum.
The human resources team should actively participate in the outsourcing plan, in managing relationships with employees, especially those that involve intense emotional feelings, counseling, and guidance. However, the execution of the plan is a line responsibility, meaning that it is the line manager’s role to make announcements to the affected groups and ultimately explain to each individual how this plan affects them.
Employee loyalty
Decisions about who should remain in the company and those who will be outsourced to the vendor should be based on skills related to customer needs, but an important factor to be considered even if it is subjective is employee loyalty. It is judged by intuition through signals such as: cooperative behavior, feelings of bitterness, general acceptance behavior, and decision regarding the presented plan.
The company should encourage selected employees to stay, ensuring future plans, the possibility of salary increases based on the inclusion of new responsibilities, bonuses, or other financial incentives. This security is very important due to the negative atmosphere and uncertainties generated in this process. Loyal employees need predictability in their work and a vision of the future.
For employees who will be retained, managers should continually explain the organization’s objectives and why they need to be achieved and, most importantly, how each employee fits into the plans to achieve these objectives. This behavior of the manager is crucial to reinforce team morale and also to minimize the negative feelings caused by the colleagues who have left.
I hope these suggestions help you in your next projects!
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