OUTSOURCING OPERATIONS:
THE UNANTICIPATED
INTRICACIES/DETAILS
Scope of outsourcers :

Data processing & telecommunications

Client networks

Computer maintenance

Call centers

Customer service departments.

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Routine data processing functions are
the core of a service oriented corporate
strategy.
Issues of the development of new
systems: user participation, need for
continuous monitoring
Dynamic interfaces between
outsourcers and clients
Some strategic questions :

Will outsourcer’s requirements delay
user’s ability to introduce frequent &
major changes in products/methods?

How willing & able is the outsourcer to
make changes in standard operating
practices & how quickly & at what cost?
The Financial Trap of Outsourcing :


Cost cutting / cost savings / Profitability
Profit sharing on loss revenue
Some Hidden Costs of Outsourcing
Operation:


Contract flexibility needed for operations
It may not be a lifetime contract, but divorce is
tough
Seek Partners, Not Just Vendors
The main criteria for partnership :
 An outsourcer who doesn’t simply
‘package’ its service or accept what clients
say they want.
 A contractor who will continue to explore
the cost saving possibilities inherent in
technological advances.
Client Failures to Educate Outsourcers

Client must be willing to put together a
cross functional team and willing to learn
a great deal about what outsourcers might
do and how to do it.
Outsourcer – Client Coordination


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Knowledge of the coordination issues.
The downtime issues.
Specifying response time and
performance objective.
Client / Outsourcer Interdependence is
Usually Understated.


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Documentation of procedures for internal
coordination.
Failures to interlock or coordinate properly, can
create enormous costs.
Astute/smart clients select a contractor who
already is working with sophisticated users in
their industry.
ASSIGNMENT : p.112 – p.119 Best Travel Service
and Alton Magazine
Learning how to make continuous
improvements




Ensure that ongoing operations
coordination is effective.
Maintain high quality and effectiveness.
More attention given to customer
retention / renewals.
New incentives to contractor for making
/ suggesting changes that improved
service quality.
Critical Dimensions of Outsourcing
Operation :




Very experienced outsourcers will developed
routines that will not be totally compatible with
existing client systems.
Most operations have more complex
dimensions than are usually appreciated.
Be careful that the team that courts your
business is not overselling (& over committing).
The client also needs to keep in mind the
possibility that some competitive advantages
will be lost.