6 Tips For Startups To Deal With The Outsourcing Pain Points
A successful outsourcing engagement has become a business imperative in the era of cut-throat competition. However, the success of an outsourcing relationship depends on the attitudes of both parties. There is no sure-shot script to achieve success in outsourcing; rather, it depends on how all the stakeholders in the process play their roles.
These pitfalls are common in almost all kinds of outsourcing engagements, but they are more dangerous for startups.
Pay Attention to The Governance Structure
Structural issues often play spoilsport in the outsourcing engagement. There should be a well-defined scope and delivery mechanism. The governance model should have a proper SLA (Service Level Agreement) and mechanism to resolve the disputes. Also, adopting a flexible approach helps in a sustainable relationship.
Dont Chase The Cost
Though, cost-saving is fundamental to any outsourcing relationship, but excessive infatuation towards costs will only harm you. You should keep a reasonable expectation about the cost saving. It is not possible to save 70-80 percent of the cost through outsourcing.
Do A Proper Homework
There are certainly few sweet spots in outsourcing, but it does not undermine the need for having a proper planning. You should never start the Request for Proposal (RFP) and the contract negotiation state before you thoroughly evaluate your needs. You need to evaluate other associated issues such as resistance to outsourcing because of the fear of job loss. An unplanned approach may jeopardize the whole project.
Failure to Develop The Right Business Model
Being a startup, you should thoroughly evaluate your requirements. It is not advisable for you to go for project-based outsourcing. Opting for a remote dedicated model will be suitable for you as it is a highly cost-effective model. You will not need to spend for the overhead cost as this is borne out by a vendor.
Develop A Proper Communication Strategy
Devising a proper communication strategy does not mean focusing too much on technology. Rather, it is more about establishing the right communication process to eliminate the barriers created by distance, time, culture, and language. It has often been observed that communication often takes a backseat. There should be an established communication channel, and a well-defined escalation mechanism.
Know The Cultural Fit
It may seem unimportant, but it has often been observed that outsourcing engagement between parties having the same cultural compatibility has been highly successful. This is because business partners having a compatible work culture can easiy identify with the different report systems and escalation procedures of each other. So, it makes sense to partner with a vendor that has highly standardized business processes. If you are outsourcing IT work, it makes a lot of sense to go for a vendor that is ISO certified.
Final Words
Progressive startup companies understand the importance of the factors discussed above. Businesses that fail to understand the criticality of these fundamentals of outsourcing are prone to bad experiences more often than not.
These pitfalls are common in almost all kinds of outsourcing engagements, but they are more dangerous for startups.
Pay Attention to The Governance Structure
Structural issues often play spoilsport in the outsourcing engagement. There should be a well-defined scope and delivery mechanism. The governance model should have a proper SLA (Service Level Agreement) and mechanism to resolve the disputes. Also, adopting a flexible approach helps in a sustainable relationship.
Dont Chase The Cost
Though, cost-saving is fundamental to any outsourcing relationship, but excessive infatuation towards costs will only harm you. You should keep a reasonable expectation about the cost saving. It is not possible to save 70-80 percent of the cost through outsourcing.
Do A Proper Homework
There are certainly few sweet spots in outsourcing, but it does not undermine the need for having a proper planning. You should never start the Request for Proposal (RFP) and the contract negotiation state before you thoroughly evaluate your needs. You need to evaluate other associated issues such as resistance to outsourcing because of the fear of job loss. An unplanned approach may jeopardize the whole project.
Failure to Develop The Right Business Model
Being a startup, you should thoroughly evaluate your requirements. It is not advisable for you to go for project-based outsourcing. Opting for a remote dedicated model will be suitable for you as it is a highly cost-effective model. You will not need to spend for the overhead cost as this is borne out by a vendor.
Develop A Proper Communication Strategy
Devising a proper communication strategy does not mean focusing too much on technology. Rather, it is more about establishing the right communication process to eliminate the barriers created by distance, time, culture, and language. It has often been observed that communication often takes a backseat. There should be an established communication channel, and a well-defined escalation mechanism.
Know The Cultural Fit
It may seem unimportant, but it has often been observed that outsourcing engagement between parties having the same cultural compatibility has been highly successful. This is because business partners having a compatible work culture can easiy identify with the different report systems and escalation procedures of each other. So, it makes sense to partner with a vendor that has highly standardized business processes. If you are outsourcing IT work, it makes a lot of sense to go for a vendor that is ISO certified.
Final Words
Progressive startup companies understand the importance of the factors discussed above. Businesses that fail to understand the criticality of these fundamentals of outsourcing are prone to bad experiences more often than not.
