Outsourcing Best Practices

Outsourcing is a powerful business strategy, if used appropriately and executed properly. Yet, some firms continue to under-perform in their outsourcing endeavors.

Fortunately, this is a management strategy that has been around for many years and a solid list of best practices is available. Here is my list of eight important best practices:

Commitment - the management team must have clear goals that are tied to overall business strategy, understand that discipline is required, and be willing to make difficult decisions. Management must dedicate high performing managers to lead and manage the outsourcing effort.

Awareness - the management team must not underestimate the time and effort required to outsource successfully. They must be very

Consider risks across four areas: strategic risk, operational risk, technology/security risk and financial risk. Assess your readiness before proceeding. Have a viable exit strategy.

Appropriate Due Diligence - invest in the effort to choose the right partner. Four critical areas to consider include:

Company profile - business stability, service offerings, business model, flexibility

People - quality of resources (especially management), performance management methods, recruiting/hiring, scalability, retention

Processes - quality approach and certifications, IP and physical security, governance processes

Technology - applications, infrastructure, software, network security/reliability

6. Focus on value, not simply cost. Do not overemphasize labor costs; look at the complete picture. Understand the suppliers' reputation for work quality and client satisfaction, quality of the management team, how your resources will be recruited and managed, opportunities for process and productivity improvements, and so forth. Many outsourcing managers have been disappointed, or worse, by overlooking the importance of the overall