Outsourcing Management As a Service

The dependence on service providers for delivery of services is on the rise. More and more IT and BPO leaders are realising that timely execution of strategic programs to meet business needs is an uphill task and requires matured sourcing practices. Over the last decade several organisations embarked on an outsourcing-led transformation; several of these initiatives failed to deliver the expected value as many underestimated the complexity and skills required in executing the outsourcing strategy. The leading cause was they failed to take a long-term view and answer critical questions:

– How do you maximise value and bring forward sustainable enterprise improvements from outsourcing initiatives?

– How do you integrate outsourcing with the usual business of the organisation?

– How do you calibrate the pace of outsourcing-led transformation while balancing your company culture, operating model and business objectives?

– How do you assess the level of complexity and take a structured approach to achieving the outsourcing goals?

– How do you maximise success and balance that with the myth of excellence?

The companies that succeeded had invested in building a business-led strategy, strong governance, investments in mature outsourcing competencies, and dedicated outsourcing management organisation (Program Management Office, PMO). Most importantly, they recognised outsourcing management as a key differentiator and core competence.

What is outsourcing management as a service?

In practice, outsourcing management can be successfully done as a service supported by blend of strategic and operational competencies. Outsourcing competencies are a cluster of related abilities, commitments, knowledge, and the skills that enable an organisation to act effectively in a job or situation. They signify the measure of the ability of an entity (department, organisation, person, and system), especially in relation to the overall outsourcing objectives.

Creating a meaningful, sustainable and high-value outsourcing impact will require enterprises to evolve matured outsourcing competencies. These would need to be extended to clients as well as providers. In the absence of mature outsourcing competencies, outsourcing experience can be frustrating for internal clients as well as vendors. Some of these processes may exist in buyer environments but they may not have been structured as competencies and positioned for continuous improvements.

Building and nurturing external and internal relationships requires that organisations evolve services and processes as subset of competencies to provide a positive outsourcing experience to customers and service providers. Implementing a “competency-based service catalogue” will be critical to providing a structured view to clients and vendors. Clients need to service providers also in addition to internal outsourcing users otherwise vendors won’t be able to deliver the expected value. “Outsourcing management as a service” will build mutual trust, keep vendors and outsourcing users strategically aligned and make it a win-win for both clients and providers.

Skills required for “outsourcing management as a service”

Outsourcing management as a service would require strong blend of skills in areas of program management, service management and relationship management. PMOs must own “outsourcing management as a service” and evolve these skills to implement and mature the competencies, and to derive maximum value from outsourcing initiatives.

Outsourcing as a service is enabled by Outsourcing Services Framework. The framework covers the depth and breadth of several key competencies, specialised outsourcing topics associated with each competency, associated processes and best practices that organisations need to implement as part of a defined service catalogue to generate greater value from outsourcing initiatives. The choice of which competencies to invest into will be unique to every company and will depend on the maturity of their needs and processes. The outsourcing objectives, nature of work, desired maturity of relationships, risk management needs and the size and scale of the outsourcing initiative may influence the level of investment in competency framework.

Implementing competencies will provide a strong foundation for continuous improvements

Managing complex relationships is more art than science. “Outsourcing management as a service” provides guidance to improve service focus for outsourcing management and lays out a strong foundation to enhance value by improving productivity, reliability, responsiveness, and maturity of outsourcing initiatives. The outsourcing service framework of competencies is practical, flexible, and self-sustaining. Competencies and underlying services and processes can be designed to build on continuous improvements using industry practices (e.g.: Six Sigma, TQM, Lean etc)

Thinking in terms of the outsourcing cycle – strategy, design, transition, steady state and optimisation – can be a good foundation to start with “outsourcing management as a service”. The competencies required at each stage of outsourcing cycle need to be envisioned as part of a flexible framework that will be uniquely adapted to each company. Each competency can be designed to have underlying services, processes, benchmarks and metrics associated with them. Reviewing these in an integrated fashion at the program level and evolving dashboards would be critical to mature and identify areas of improvements. Thinking in terms of services and competencies will mature the already existing processes in alignment with outsourcing objectives.

“Outsourcing management as a service” provides a compelling critique of conventional thinking on managing outsourcing. It keeps the focus on quality of outsourcing experience and matures the outsourcing initiative in alignment with business objectives.