How to Get More Value out of your Outsourcing Agreement

How to Get More Value out of your Outsourcing Agreement

Since the 1970’s outsourcing was a strategy that was utilized by companies needing to reduce the cost of business. Back then, it was more of a stop-gap measure. A policy that would come in whenever business conditions were not ideal for revenue generation. Focus would then shift to stream- lining in order to maintain profitability.

However, as global business conditions became more unpredictable and unstable, companies looked to outsourcing as a double edged sword. It could be a strategy that would not only stream- line costs but also improve revenue generation.

Silicon Valley, USA. It was in the mid- 1990’s that technology firms in Silicon Valley started outsourcing services to technology companies located in India. Not only were the US companies able to reduce costs but the Indian IT companies were able to improve products, services and quality of deliverables.

Soon, more outsourcing agreements were entered into between US and Indian companies.

By the new millennium, as equities markets collapsed around the world, businesses began outsourcing services as a way to remain profitable. From the year 2000 to 2016, global outsourcing has been on an uptrend. It has grown from a US$45 Billion industry to a US$105 Billion industry.

But not all outsourcing agreements have a happy ending. There are a number of engagements that turned sour.

So what went wrong?

Technical and fundamental issues aside, many of the faults can be found at the human level. If you want your outsourcing agreement to flourish you have to change your approach and view it from a different perspective.

Keep an Open Mind

No one can lay exclusive claim to knowledge. Just because you are the client, it does not mean you know everything. You are the expert at what you do. But so is the outsourcing services provider. Whether you contract a Virtual Assistant or an outsourcing company, you should keep an open mind and allow the service provider to do what they do best.

Adapt a Strategic Partnership

When you have shared interest, you stay on the same course. Get your outsourcing services provider involved in the business. It is a great way to foster trust and remove fears and biases that inhibit productivity.

Take the Time to Build a Relationship

The best way to manage a business engagement is to understand how the “other side” works. This is especially true if your outsourcing services provider is from a remote location like India or the Philippines. There are social, cultural and behavioral nuances that exist. The best way to overcome them is to develop a better understanding of these traditions.

Moderate Your Expectations

Outsourcing has been proven to be an effective business development strategy. But it is not a “magic formula”; neither is it the proverbial “lighting in the bottle”. It takes time for success to manifest in outsourcing. There is the Learning Curve that you must respect. But if you keep your expectations to manageable levels, you will succeed.

Before considering a strategy of outsourcing services, do some research and learn all you can about the concept. Then write down your goals, objectives and expectations. From there you should take the time to qualify your ideal outsourcing provider. Taking a more purposeful approach to outsourcing will translate to long term growth and sustainable success.

Posted in Blog, outsourcing.

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