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How to Aim Higher On Cost and Performance? [Experts Opinion]

Megha V
19th Jun 2019
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With the ever-growing requirements from around the globe, the outsourcing companies have a great opportunity to raise the bar of their services, which doesn’t seem to be happening in all the cases as most of them have been taking things for granted. They need to find a new method or strategy, metrics, etc.to boost the quality of outsourcing.


The process of outsourcing first made a mark for its cost-effective measures like labor well-versed in computer-assisted training. Moreover, companies also utilized outsourcing services and a cushion or had to back up their limitations.


And, now they stick with the outsourcing providers to go forward in producing ground-breaking techniques to boost both cost and performance by utilizing all the latest in the digital technologies to improve the client’s experience.


There are some companies who have been working on the methods to elongate the utility of the outsourcing services by using them as their fortress to boost cost as well as performance. For instance, an American healthcare company worked in tandem with its seller to utilize highly effective automation services like analytics tool to trace out the main reasons behind the frequently occurring issues.


To carry out this process, they diminished their service ticket volumes and enhanced their outputs. It proved to be the right call as they noticed a significant boost in their cost and performance benefits in comparison to conventional outsourcing.


Why outsourcing is fluctuating?


There are various reasons that are hampering the outsourcing process from achieving its goals.


It has been observed that at times, the outsourcing method doesn’t go well with business goals. Moreover, after the escalation of e-commerce, advancements in the digital tools for better customer experience, the inception of machine learning, the commercial sector is finding new methods to boost its flexibility, while also making attempts to reduce their expenditures to cultivate more investments, which is invariably affecting the utility of outsourcing.


Follow the principles of sourcing management


Performance Management:

  • Operations and innovation metrics (annually)
  • Transparency
  • Outcome-based commercial constructs


Sourcing management organization:

  • Empowered leader
  • Clear ownership for defined outcomes
  • Dedicated team
  • Expertise in vendor partnership management


Decision process:

  • Clear decision rights
  • Well-defined roles and responsibilities


Engagement model:

  • Alignment on forum agenda and participants
  • Dedicated forums for operations and innovation
  • Simplified, clear vendor interfaces


How to maximize the outsourcing value to get higher on cost and performance


1. Be prepared in advance


To stay ahead, focus on developing future technology and services for the business and make the sourcing program accordingly, instead of giving stress on the cost improvements. To get a better understanding of what needs to be done, exchange opinions with current and potential vendors on topics like technology trends, new strategies, setting priorities, and prepare for the future requirements and challenges.


2. Follow the conventional vendor partnership strategy


With the increase in the vendors, an increase in the complexity of the vendor network also arises. The topmost outsourcing companies are reinventing their partner strategy to achieve equilibrium of range, potentials, and form a healthy competition between vendors.


This whole plan is composed of an end-to-end analysis of the vendor base, expenditure, feasibility of services, topographic reach, sourcing targets, and scope of supplier management potential range. 

The core idea is to make vendor partners continue the investments, which will invariably benefit the outsourcers as it will allow them to utilize their capabilities to the fullest and in return get the best value from vendors.


3. Work in tandem and drop the dogmatic approach


Optimizing the sourcing demands teamwork and directness between the vendors and the clients. It has been observed that if the companies turn out to be dogmatic, they tend to keep secrecy at becomes reluctant in sharing the insights, which holds back the vendors from experimenting. For instance, a BPO vendor who is finding it difficult to get the right resources that should have experience, skills, and qualifications.


However, when the company and vendor worked in tandem and focused on upgrading the skills of in-house staff, they got the required results.


4. Give impetus on setting benchmarks


The higher officials of a company might be getting hefty packages, but they still might not get satisfied with the quality of service and the status of the partnership. More than often, the degrading metrics is the reason behind this dissatisfaction. It could be due to many reasons; numerous clauses in the contract, which erodes the risk-reward process; or it could be narrow incentives upon reaching the base targets. Companies can deal with these metrics issues by developing a risk-reward framework that incents vendors, which invariably gives birth to new ideas.


5. Reward: The ultimate factor


Companies should avoid unfair processes involved in billing rates while picking a vendor as they might end up shrinking the vendor’s margins, which will invariably make a vendor dejected. Moreover, some vendors cut down their account-related expenses to increase the profit ratio that ultimately hampers the service quality and kills innovation.


While having a deal with a vendor, the outsourcers must offer adequate and apt data so that the vendor can easily price its services. So, it’s better to work together with the provider on boosting the output in average handling time rather than deducting the billing rate. According to a finance group expert, the managed services companies are more comfortable negotiating the location of the service provided rather than the billing rate. In all scenarios, companies focus on accomplishing a better total cost of ownership without hampering the profit margins of their vendors.


6. Too much investment in sourcing management is good


It has been seen that the companies invest a lot while choosing the vendor selection, but in comparison, they don’t invest much in sourcing management. In order to achieve high performance and profits consistently, the engagement needs to form robust management power, with a clear plan to follow and consistent vendor communications as issues in engagement mainly take place at the executive level.


Successful outsourcing utilize a small yet highly efficient management team that takes responsibility for the outputs. They will understand the importance of coordination and focuses on giving time in the forming of a relationship, through governance forums, rewards, etc.for the outsourced workers.


Conclusion


As companies pursue better performance, consistent cost improvement, and novelty is a must. Moreover, they are only going to gain by taking inputs from the experts and skills of service providers. Remember, innovation, and its fruitful results rely on how you execute the tasks with the right team. Moreover, outsourced vendors will surely be going to play a pivotal role for the companies that give impetus in blossoming partnership. To get assistance, you can also opt for a mobile app development agency who offers top quality outsource mobile app solutions to its clients worldwide.


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