Process of Outsourcing

Outsourcing typically follows the following process,

Planning->

Negotiation->

Implementation->

Continuous Management

The first, and most important of these is Planning. This is the first step to outsourcing and involves setting the objectives and scope of an outsourcing relationship. A feasibility assessment is usually carried out by management weighing the costs and benefits of out-sourcing against in-house functions.

It is important to consider the scope of outsourcing to best meet your objectives,

1. Total Outsourcing = Contracting out 80% or more of the function
2. Selective Outsourcing = Outsourcing a select few functions

Organisations should never outsource a function that is an integral part of its core competency. It is important to realise however that few processes are considered core competencies. This means that most support functions for example Finance, IT, HR could potentially be outsourced.

Here are some key questions to guide a feasibility assessment

1. What are your core competencies?
2. What are your critical functions?
3. What are your support functions?
4. Are there any major barriers to change?
5. Can you significantly improve matters internally?
6. Would you benefit from an external provider?
7. What are your outsourcing objectives?
8. Who have you identified as being the best provider to satisfy your objectives?