Making the decision to outsource is a challenging prospect for any company. Even more challenging however, is finding the best possible partner for your organization.

As with any relationship, business partnerships take time to develop, especially if you are looking for a long-term partner. In light of this, there are a number of crucial factors you need to consider as you investigate which outsourcing solution will work best for you.

Cost Versus Value

If your company’s top priority is cost, you should clearly communicate this to potential providers in order to ensure a relentless cost focus. If cost is not a main focus, you should evaluate the manner in which the provider is proposing to provide bang for the outsourcing buck. Is the premium pricing bringing greater value to the other needs of the company, such as robust disaster recovery and business continuity, Sarbanes-Oxley compliance, or superior technology? If not, then perhaps the extra cost is not warranted.

Reach Versus Grasp

Today, organizations operate in a business environment that is much like the weather in Malaysia: if you don’t like it, just wait 30 minutes and it will change. As such it is not enough to simply find a partner who can handle your existing needs because those needs could easily change tomorrow.

When investigating prospective partners it is essential to think about the future. What plans are being put in place today to ensure that capabilities will grow, that investments will continue to be made, that the provider will continue to attract the kind of talent that will make it a strong and dependable partner? Do they have the ability to handle an acquisition in a new geography? Is their outsourcing capability likely to grow to encompass recruitment administration or learning and development management?

A partner’s reach must exceed their grasp. This means that their current capabilities must be evaluated along with their potential to grow in the future. Moreover, a partner must keep pace, not just with business and market changes, but also with the outsourcing organizations own changing needs.

Hi-tech Versus Hi-touch

Two factors influence the choice of provider; the situation of the organization and the kind of solution it has decided upon.

E-solutions are an important consideration for any business. Internet problems are the last thing any organization wants to be worrying about especially when it comes to technical glitches such as limited net access and security constraints. Subsequently, care must be taken when assessing the technology capabilities of a potential outsourcing partner.

Where an e-enabled solution is called for, a partner with proven strengths in the area is always preferable.

Onshore Versus Offshore

While companies with single country operations are usually happy with providers strongly entrenched in the same country, it is important to explore capabilities beyond the current geographic spread. As your company grows and develops, so to do your outsourcing needs and understanding a provider’s ability to “best shore” is a critical part of the evaluation process.

It is important to acknowledge that companies that were considered local a few years ago are often considered regional today, possibly even global, so costs may be better controlled through near-shore or even offshore solutions. In the Asia-Pacific region, hubs have sprung up in Singapore, Kuala Lumpur, Manila and Bangkok, providing a range of solutions based on the service offer, language requirements and cost considerations.

Organizations also need to decide whether they are looking for outsourcing “width” or “depth”. When weighing country specialists against regional players you must ask yourself whether it more critical to have geographical spread or deep experience and knowledge of particular local markets. Is it more important to have a single technology platform or a single interface? Would a centralized model work better or would it be better to operate out of a hub?

Transition Versus Transformation

Companies often find themselves trapped by the outsourcing model dilemma. Should you re-engineer then outsource, or should you hand over to a provider “as is” then create the change together? The jury is still out on which works best for whom, but once a direction is chosen, you must diligently assess the partner’s ability to walk the same path.

In the first model (re-engineer then outsource), the provider’s ability to provide customized needs such as leverage economies of scale, and tools and processes that match streamlined HR workflows and policies must be assessed. In the second situation (hand over “as is”), the company must consider the provider’s transformational skills. This includes an assessment of the timeframe for transformation as well as the strategy to deal with the challenges, especially people-related.

In summary

No decision is black and white, particularly when it comes to outsourcing. Despite this, each aspect of the decision-making process is an essential part of choosing a long-term outsourcing partner. The eventual outcome of such planning will ultimately lead to a healthy and fruitful partnership so is well worth the time and effort.

For further information on how outsourcing can benefit your business, please contact Anand Shankar.