The 3 Outsourcing Methods

If you decided that you want to outsource, you have internal processes that are functioning well, and outsourcing seems the next logical step in terms of reducing overheads and cost.

It is a good solution when is done well. But unfortunately, many service provider relationships break down for a number of reasons.

As soon as outsourcing is your principal decision, one of the first things you need to consider is how you are going to outsource. Outsourcing have different meanings to different people, and making an informed decision as to which way you choose can make the difference between outsourcing success or failure.

There are three different outsourcing methods and how they might suit your objectives.

1. Outsourcing

As generally understood outsourcing is the practice of sending certain job functions outside a company instead of handling them in the same business. More and more companies, large and small, are choosing outsourcing as a way to grow while restraining payroll and overhead costs.

The key factor in outsourcing is that you are not engaged in any part of the outsourced service internally. The buck stops with your partner – your responsibility is in monitoring the outsourcing company’s performance against specific KPIs to ensure that it is meeting your business objectives.

2. Out-Tasking

This is the least dramatic form of outsourcing.

Out-tasking is an outsourcing business model that refers to a supplier performing tactical or project-oriented tasks or processes. Out-tasking includes contracting and licensing engagements, which are less complex than Business Process Outsourcing (BPO) engagements.

This method of outsourcing is ideal if your in-house team does not have the expertise to handle certain service aspects. The key difference between out-tasking and outsourcing is that you retain overall risk and responsibility for the delivery of the service.

Out-tasking does not relieve your responsibility, but it can be a useful tool for relieving in-house workload and utilizing specialized third-party skill-sets.

3. Multi-Sourcing

Also known as “intelligent outsourcing” involves engaging with a number of specialized partners for each element of a service. It is an approach to outsourcing in which IT operations and technology infrastructure are contracted to a number of vendors, usually in combination with some internally provided elements of information technology. The multi-sourcing approach contrasts with fully in-house IT provisioning and sole-source outsourcing models.

In terms of cost savings and risk reduction, multi-sourcing seems the ideal solution. Experience teaches us that procurement costs aside, you are far more likely to end up with a more effective and efficient solution for achieving your business outcomes via multi-sourcing.

However, multi-sourcing has its challenges. It requires multiple contracts and a far greater allocation of internal resources for program and contract management to ensure that your multiple partners deliver to your expected objectives.

If you are trying to take a decision and find which outsourcing methods complements your business needs, so give us a call for a FREE consultation and obtain a service proposal for your business today.

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Via: Best Practice Group/ Search CIO