How to make outsourcing work

As more and more companies adopt the outsourcing route, it is more important than ever to understand the considerations for outsourcing decisions and the drivers that can make it a continuous success for everyone.

Companies facing increased competition in this new economy are increasingly outsourcing to help improve their services, besides cutting costs. Many enterprises struggle with the decision of whether to outsource their operations using a captive service approach or to selectively outsource to one or more third party outsourcing service providers (OSPs). In this article, we will focus on how companies can use Outsourcing Service Providers (OSPs) to help them focus on their core competencies and reap the benefits of process improvements.

We see outsourced operations as microcosm of overall operations of the company. These outsourced processes need to work harmoniously with the existing operations and be tightly connected to help the company move forward. The continued growth in company's service portfolio of outsourced operations will rely on the ability to think beyond cost and labor arbitrage.

OSPs have to synchronize the outsourced operations of the company with their existing operations to ensure that deliverables are not just governed according practices emerging from the Service Level Agreement, but are driving synchronized operations. Such practice ensures maximum productivity and helps companies maintain competitive edge in the market.

Synchronized outsourcing is about managing customer relationships with the operations management required to maintain the competitive edge of the company. OSPs need to understand the client business, its competition, and the important role played by current operations in the entire service/product life cycle. For example, an OSP providing sales services to the company via telemarketing has to see it as a first step in closing sales for the company rather than daily sales numbers and targets defined in the service level agreement. Telemarketing for any company has every aspect of a marketing activity, which has a budget allocated to ensure a constant inflow of customer contact to customer order fulfillment with closing deals. This requires managing. It is more than getting sales leads. This is a complete cycle from sourcing the sales leads to creating a custom-built product/services package for customer, delivering at right time and then servicing the customer and retaining it. This involves constant interaction between the outsourced services provider and the company, updating the critical aspects of sales and customer information making sure that each customer is given due attention with its needs and fulfilling it.

Synchronizing operations at a global scale will require re-thinking of strategies away from traditional thinking. This is more of day-to-day collaboration on each event and working towards combined business goals.

Let's take a case in Healthcare outsourcing: Claims adjudication takes 80% time and effort of the insurance carrier, TPA and the patient in any healthcare insurance claim. The process in healthcare industry is traditionally complex and highly critical. A large part of it can be outsourced to an OSP and the benefits of cost reduction, staffing shortages and ensuring standard workflow can be achieved through synchronized outsourcing. The OSP and the healthcare company function as one entity for the customer. The whole process of claims adjudication is synchronized to ensure that operationally the benefits of low cost and excellent process delivery are followed. This also ensures customer retention and delight.

This high-level strategy will help allay any fears around loss of control, and spiraling costs, which the healthcare company may have. Both entities have to jointly identify the business goals and monitor the gaps if any and ensure quick closure. They should have a dedicated point of contact that has the mandate and the power to make outsourcing work.

The prime requirement of synchronized outsourcing is a long-term commitment from both the buyer and seller. While it gives the OSP a stable relationship and repetitive business, it gives the insurance carrier the benefit of surviving in a competitive market by focusing on introducing more products.

The success of outsourcing relies on the on mutual satisfaction between buyers, sellers with long term perspective of the relationship leading to achieve:

• Business Process Improvement
• Cycle Time Reduction
• Benchmarking Service Quality
• Cost Containment
• Maximum Efficiencies
• Increased speed to market
• Enhanced customer service

Opening doors for globalization has made the buyer and seller enter into a symbiotic relationship where each flourishes due to other.

Synchronized outsourcing streamlines workflow and gives a market advantage. Using Market Intelligence helps devise the right products for customers ahead of competition. Trusting each other's delivery capability and ability to keep business goals as targets will make a flexible process to deliver and compete.

The author, Alka Sirari works for iSeva Systems Ltd., a leading BPO company and can be reached at alka.sirari@gmail.com