Outsourcing Pitfalls

Outsourcing Pitfalls

We strongly believe that organizations should stay focussed on their core business and strategy. We have found that this focus enhances productivity. That said, ineffective outsourcing decision can cost the company. Here are some potential pitfalls as we have seen.

1. Taking a tactical rather than strategic approach: Decisions about whether or not to outsource should be based on a strategic, long-term perspective, not short-term needs

2. Not addressing organizational resistance: Consistent and frequent communication and change management are a necessary part of outsourcing

3. Ignoring current costs and service levels: Knowing costs and service levels assist in delivering a business case for outsourcing to senior management

4. Not clearly defining service delivery models and expectations: A carefully constructed service delivery model defines, how ongoing services will be structured and performed

5. Not becoming familiar with the outsourcing market: Learn about vendor differences and the outsourcing marketplace

6. Poorly defining the business case: Provide senior management with a thorough understanding of the value of outsourcing

7. Inadequately designing the vendor evaluation and selection process: A well-organized vendor selection process must use objective evaluation criteria

8. Failing to develop performance outcomes: Communicate expectations to the vendor and assess the vendor’s performance

9. Not preparing a negotiating strategy: Involve one person in the vendor selection process who will assist in negotiating the contract

10. Underestimating implementation and vendor management: Establish an implementation team and define the roles of employees involved in vendor management

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