Careful When You Outsource

8/14/2019 Careful When You Outsource

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Copyright Information

All material and content presented in this e-book is shareware and has been compiledexclusively to benefit the reader.

Disclaimer

The author is not responsible for the money

you will save or not save by reading thismaterial and he simply can’t guarantee anyresults. Results are solely your responsibilityand will be congruent to the actions anddecisions you take.

Limited Liability Though Sandeep Nath has taken utmost careto present material in its entirety andcompleteness, he makes no representationand warranties as to its completeness andaccuracy. All methods suggested will be

subject to warranty and liabilities of theoriginal outsourcer and client and will bebound by their claims. Sandeep Nath will notbe liable to any claims or warranties arisingout of use of the guidelines presented in thisbook. In short, use the material andsuggestions in this book on your own risk and

judgment.

Is offshoring all right for confidentiality?

http://hiredbrains.net/confidentiality-issues-in-outsourcing-accounts/








Why this book?

Offshore outsourcing can be treated as a businessnecessity today. The objective of this ebook is to makesure that you are able to take outsourcing decisionseffectively and draw upon mistakes made in the pastby other companies, to ensure projects and servicesare delivered to you in the best manner.

While choosing an outsourcing partner, have a written

down strategy. Like any venture, when the rewardsand revenues are higher, there are chances of deviations, if certain crucial issues are not managedproperly.

In outsourcing particularly, some contractualconsiderations and best practices must be adhered to. The results of a recent survey by

PricewaterhouseCoopers in Ireland indicate that 68%of respondents are already outsourcing with almost50% planning to outsource additional services. Largeoutsourcing deals have been announced in Ireland inthe last 18 months across the financial, media andtelecom sectors. However, although the benefits of outsourcing can be substantial, the risk of failure is stillhigh due mainly to poorly designed and documentedarrangements between buyers and suppliers. While notintending to underestimate its complexities, thefollowing are some of the key dos and don’ts forcompanies wishing to engage in effective outsourcing.

So let’s get straight to the meat and potatoes…

Why SMEs must outsource accounting services

http://hiredbrains.net/outsourcing-accounting-data-entry-work/








Identify opportunities for outsourcing

Fundamentally, when defining core and non-coreservices for your organization to outsource, youshould gather as much data as possible.

Consider using (and paying for) external help toconduct benchmark studies and identify areas for

opportunity. Also consider using a supplier toconduct a study, as this will give you the bestalignment to market offerings, along with drawingon the supplier's experience with other clients.

Learn from those who have gone before you,including suppliers, their customers, industry

analysts and other third parties. Ensure that youhave clear and visible senior management supportfor outsourcing initiatives before you startcommitting expenses.

Get your act together internally. Ensure that youhave the right cross-functional team formed toassess service options, includingsourcing/procurement, financial and technicalrepresentation. You should have professionalsourcing and procurement expertise manage thecommercial aspects of your deal. All suppliers havetrained sales personnel, so why would you want toput amateurs up against them?

What is the cost-benefit of outsourcing?

http://hiredbrains.net/cost-benefit-of-outsourcing/

http://hiredbrains.net/cost-benefit-of-outsourcing/



Selecting the right service provider

For obvious reasons, this will be your first challengeonce you gear up the mindset inside yourorganisation. Do not use old business models andsuperimpose new technology on them. New ways of work demand new business models that you mustbe prepared to bring in.

Thus the first tip is to pick partners who’s promotershave executed change before. Check them out. Doa reference check on the management. Ensure theyhave the requisite functional experience,management acumen and execution bandwidth.

Familiarize yourself with the services providers' wayof doing business. Importantly, be aware of the

benefits outsourcing with them can bring. Thismight not be standard across the various providersand a discussion focused on this will table usefulpoints for due diligence as well.

Factor in long-term relationship dynamics. Oftengood deals are front-loaded with free services and

by the time you pay for the real service you realiseit’s not really what you dreamt of.

Finally, be sure you get what you commit to pay for.What you are aiming to find is a company that willgenerate a good quality result, even if it costs more.Remember, any error at the outsourcing end ismagnified 10x at your client end.

What should one expect from the outsourcing company?

http://hiredbrains.net/outsourcing-company-requisites/

http://hiredbrains.net/outsourcing-company-requisites/



Developing a conducive working relationship

To get the most from your relationship, be precise andexhaustive on what you need from the services provider,how and when. Be very clear on what is not expected.Convey project specifications and issues between bothparties without misunderstandings creeping in. Thisrequires deliberate effort!

The relationship with an outsourced services provider anda typical vendor is a matter of depth. A little like amarriage then, work with your partner and do not impose.Once you outsource, your provider is part of yourcompany; treat it that way. Give them a sense of 'ownership' of their tasks as though they were part of you. Appreciate and encourage performance.

Importantly, since the provider might be in a not-as-developed geography, keep in mind the industrial andtechnological limiting factors affecting them. Be realisticand work with respect, as this is essential to a goodworking relationship. Though it may appear obvious to do,be in awareness of subconscious signals you might sendto the contrary.

There can be many things that can cause problems tocommunication, such as; language barriers, timedifferences, cultural and economic environmentdifferences. It is crucial that both parties can understandeach other on these aspects right at the outset.

How does the work flow in offshoring?

http://hiredbrains.net/workflow-in-offshoring-accounts/







Balancing the different agendas

Naturally as a relationship develops, both partieshave to learn how to nicely nudge and insist. As aclient you also have to learn how to listen to theadvice and insights your outsourced suppliersprovide to accomplish your corporate goals.

You must stay aware of technological and processadvances so you know to ask for these servicesbefore they develop a standard service offeringthat's not exactly what you need. It’s a good idea tomake a quarterly chart of best options forenhancing the outsourced work and operate theviable option.

As a client you must clearly define what you areoutsourcing before signing a contract. Failure to doso raises the cost of undefined services.

Expect and accept change and new ideas andmethodology. Failure to do you would backlash

within your company and cause stress even inexpected situations.

Be sure to provide training support via differentmedia to your outsourced team. This is essential asthey must feel as knowledgeable as your team onpayrolls. Openly discuss all matters relating to theoutsourcing with them.

Should only big size companies outsource?

http://hiredbrains.net/big-size-outsourcing-clients/

http://hiredbrains.net/big-size-outsourcing-clients/



Domestic v/s offshore outsourcing

While outsourcing to offshore locations and theuse of lower cost foreign nationals has featuredprominently in the media over recent months,many UK-based companies have in factoutsourced to domestic service providers.

Why? Although cost is always a factor in theoutsourcing decision, it is not always thedominant one. By outsourcing to domesticproviders, UK companies have compromisedcost reductions but got excellent service, goodcultural fit and best-in-class IT services.

So it is clear that for the best of both worldsyour focus would be on the providers’backgrounds, capabilities. Commitment, IT andfinancial capacity. Selecting the cheapestprovider may prove more costly in the longterm if service performance is poor. A good ‘fit’is what you need.

A professional selection process using detailedselection criteria will make the decision easier.Be prepared to brief potential providers on thebenefits that you expect and the reasons for

your decision to outsource.

What should be the level of persons engaged at the client end?

http://hiredbrains.net/people-involved-in-outsourcing/

http://hiredbrains.net/people-involved-in-outsourcing/



How far to go with negotiations

As the success of the outsourcing arrangement willdepend a great deal on the working relationshipbetween buyer and provider, it is important to strikea commercial deal that fosters trust between theparties.

Although naturally buyers will want the deal to becompetitively priced, it is not worth pushing theprovider to cut costs so far that service levels willinevitably suffer. A win-win agreement, whereby thebuyer receives improved service levels at reducedcosts and the provider makes a reasonable profit,has the best chance of long term success.

Crucially, once the deal has been struck, the legaldrafting of the contract must reflect the commercialintent. For example, how does the contract deal withthe imposition of penalties on the provider for failureto meet agreed service levels? Is the contract flexibleenough to adapt to changes in your business?

In addressing such issues, it is worthwhile seekingthe advice of legal experts who have specificexperience in drafting outsourcing contracts and whocan work with your team to deliver the legalframework for putting the deal into practice.

What types of accounting functions can be outsourced?

http://hiredbrains.net/accounting-functions-to-outsource/

http://hiredbrains.net/accounting-functions-to-outsource/



How to actively manage the relationship

Your responsibility for service delivery doesnot end with a successful handover. In fact,how you manage the ongoing relationship withyour provider will be critical in determining theextent to which the potential benefits of outsourcing are realised.

Where multiple activities have beenoutsourced to different providers, integratedmanagement of these providers is key todelivering optimum performance.

For this reason, you must have a practicalcommunications framework and appropriatelyskilled staff who will manage interactions withthe provider over the lifetime of the contract.

A well defined governance plan which includesmeasures of success which are aligned to youstrategic goals is also essential.

How is quality maintained in outsourcing?

http://hiredbrains.net/quality-in-outsourcing-accounts/

http://hiredbrains.net/quality-in-outsourcing-accounts/



Don’t under-estimate the demands of the transition

Both buyer and provider need to worktogether closely on both the planning andimplementation of the transition.

A detailed transition plan with clearlydelineated roles and responsibilities iscritical in achieving a smooth handover of services to the outsource provider.

You need to give due consideration at an

early stage to how you will manage andresource this period. Contingency planningfor potential problems is also crucial,particularly in case mission-critical functionswhere this can involve several ‘dress-rehearsals’.

How does one get started with outsourced contracts?

http://hiredbrains.net/outsourcing-financial-services/

http://hiredbrains.net/outsourcing-financial-services/



A dozen more tips worth gold

Create and maintain an environment that fostersopen, honest, transparent communications andmutual trust. Feedback is a gift, and some daysare like Christmas.

Ensure periodic visits to and from the outsourcingservice provider. It’s like a couple blossoms when

the in-laws know each other well.

Be explicit in governance meetings at all levels(eliminate use of colloquialisms). Include twosimple slides and check these regularly -- whatour company wants from the supplier, and whatthe supplier wants from us.

Use your contractual terms as the basis fornegotiations and include them in the RFP with aredline copy as a condition for response. You willfind out very quickly what snags will arise when itcomes time to close the deal. This also allows youto negotiate through issues with leverage -- whichyou will no longer have once a supplier isselected. Identify and manage the risksassociated with the services and ensure that yourcontract supports this.

No organization has the time, energy andresources to mitigate all risks, so you will need toidentify and manage the right set.

What is Hired Brains

http://hiredbrains.net/what-is-hired-brains/




Ensure that you use the structure of a Master ServicesAgreement that provides the terms and conditions for

doing business, without commitment. Use statements of work for each project/service area, allowing yourorganization to efficiently negotiate effort for additionalprojects and services, with rates and terms already inplace. Ensure that your Master Services Agreementincludes rate tables for all skills and countries whereyou could potentially be doing business.

Establish clear criteria for supplier selection and have itlive beyond the selection process to become the basisfor monitoring services and value delivered. Thiscriteria should include elements of a cultural matchbetween your organization and the supplier's, quality of services, ability to scale services up and down, and costsavings..

Spending adequate time and effort in fullyunderstanding the costs, benefits and strategic fit of outsourcing is a crucial first step and will form the basisfor any negotiations with providers should you chooseto proceed.

During your engagement, never ignore issues raised bythe services provider, even if they seem minor. Viewthe outsourcing engagement long-term and neverthreaten termination or be inflexible. Doing so will onlyhurt your business.

Why you can be sure with Hired Brains

http://hiredbrains.net/testimonials/

http://hiredbrains.net/testimonials/



Outsourcing is not just a cost reduction solution, it is astrategic initiative and to be successful it must bealigned to the business goals. It is therefore absolutelyessential to have senior management buy-in from thevery beginning. In addition, there are many otheraudiences who need to be considered. Employees willnaturally be concerned with how it affects theiremployment conditions. Unions will take an activeinterest and industry regulators too may wish to be keptinformed. Recent events indicate that employee disquietcan make any outsourcing project a very public debate.

Having a well planned communications framework forengaging with each of these groups will be of paramountimportance in handling the project judiciously.

Having decided that outsourcing is right for yourbusiness, you will need to invest significant effort inpreparing for discussions with potential providers. It paysto be a pro-active buyer. Knowing the commercial, legaland service management options and being organised to

perform due diligence will result in a better deal in ashorter timeframe. If you do not have internaloutsourcing expertise, consider engaging withindependent experience advisors who understand themarket and can guide you through the process.Outsourcing service providers prefer an educated buyer.

Operationally, be sure to document, in exhaustive detail,

all the aspects of this business relationship, with specialemphasis on the deliverables.

How to Hire Hired Brains

http://hiredbrains.net/outsource-accounts-data-entry/

http://hiredbrains.net/outsource-accounts-data-entry/



This ebook has been

modified for use by

Hired Brains (India).

Links furnished as

footnotes are relevant

to companies seekingto outsource accounts

to Indian professionals.

www.HiredBrains.net



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Careful When You Outsource