According to a three-year study of 90 offshore initiatives, more than half of offshore business initiatives fail to meet the goals of reducing costs and contract performance. This Foote Partners study concluded that mismanagement of supplier relationships was to blame. In particular, several companies have abdicated too much management responsibility to their offshore supplier once the contract is signed.
It’s tempting to do it. After all, offshore suppliers can be on the other side of the world, and it costs a lot of money to monitor them closely. They are at Level 5 on the Capability Management Model (which ranks quality practices) and most companies are probably Level 2 at best. But if you cannot build and maintain better relationships, it will cost you a lot, maybe even your job if you have made daring savings projections to your CEO.
Here are 13 steps to successfully manage your offshore outsourcing provider:
- Select an experienced vendor and understand the true business model of the vendor. Everyone involved must understand the company’s core values for both parties and respect them.
- Go through an extensive due diligence process and consider all possible eventualities of the offshore agreement. Nail all the conditions before signing an outsourcing contract, and be absolutely certain that you understand the different legal norms and cultural norms.
- Determine the stability of a supplier’s workforce and find out how they measure their attrition rate. Make sure your provider has career paths and retention incentives in place.
- Make sure from the beginning of your membership and that of the supplier to a detailed strategic outsourcing plan abroad, not only senior management but also middle management. Establish clear goals and consensus before signing an outsourcing contract.
- Have a good inventory management system As the EMERGE application can help you easily manage your inventory for your offshore business.
- Set up a small “anchor team” of domestic employees in charge of project control and quality assurance. Select a few people from the vendor company to serve as home liaisons and help with project management to avoid project control issues and business awareness issues. Agree on project management tools and processes to use and make sure the offshore team understands all the processes. Adopt a structured process of change management and problem tracking, but be flexible about the needs of the offshore team.
- Develop a communication plan for key external and internal stakeholders, providing mechanisms for feedback, two-way communication and especially active monitoring with the offshore outsourcing manager (s) and the IT steering committee .
- Embrace the offshore team, involve them in your business, share vision and plans, and help them anticipate and respond to changes.
- Pay special attention to “soft” factors. Throughout the project, ensure regular face-to-face communication with suppliers, the offshore team and managers of outsourced facilities. Budget and plan to visit the offshore installation, communicate business expectations in person and maintain constant personal contact. Consider visits, examinations and tests abroad to ensure that feedback is understood and incorporated accurately, in a timely manner, and to motivate the offshore team.
- Carefully describe the process of ordering changes made to the work done and respect it so that you do not lose sight of change requests in several e-mail exchanges with a supplier.
- Devote hard efforts to managing user expectations. Give users simple information about achievements and do not hide the bad news. Introduce the stakeholders to the offshore team and do not hesitate to share their concerns. Agree on contingency plans in advance with the offshore manager. Demonstrate transparency and proactive planning.
- Establish and measure financial, productivity / performance, resource and relationship / process goals that go beyond service level agreements. Aim as high as possible to not be disappointed by a lower result.
- Anticipate unplanned costs during the early stages of the outsourcing relationship, as knowledge is transferred from staff members to outsourcing team members (eg, significant travel expenses and extensive cultural or linguistic training). ). Deploy additional network bandwidth and security technologies as needed for large data transfer. Keep abreast of country-specific regulations and requirements for data communications and encryption.
- Think about short and long-term scenarios and scenarios to anticipate emerging costs and make sure that the outsourcing provider delivers the expected services. Treat the outsourcing relationship as a performance contract based on tasks as well as a partnership.
In conclusion, try to avoid expensive surprises. Consider quickly completing a full application development cycle or phase of the outsourced IT operation or business process, and involve all Technical, Quality Assurance, Compliance Team, and Group Leads. users. It is not necessarily a pilot, but an exercise to go through all the steps leading to the implementation of a big project. Use experience as an early test of teamwork, knowledge transfer, communications, project management and other critical success factors.