To
outsource or not to outsource? It's a tricky question.
Outsourcing is a key element of the competition-driven
'new economy'. Companies facing an environment of increased
competition seek to outsource their non-core operational
activities, to help them reach peak-level service improvements
with the added benefit of cost containment. Many enterprises
struggle over deciding whether or not to outsource their
operations; whether to use a captive service approach
or to selectively outsource to one or more third party
outsourcing service providers (OSPs).
As
the outsourcing business in the new economy increases,
it becomes essential to understand the reasons for outsourcing
decisions and their drivers, beyond just their financial
impact. There's also the issue of how to make the outsourcing
operation a continuing success.
Looking
at outsourcing from different angles helps companies use
outsourcing service providers (OSPs) to benefit
from their increased focus on core competencies and from
reaping the benefits of process improvements.
Outsourced
operations usually are a microcosm of the company's overall
operations. They need to work harmoniously with the ongoing
operations and, at the same time, remain tightly connected
to help the company move forward. The continued growth
of a company's service portfolio of outsourced operations
will depend on its fortitude to think beyond the obvious
benefits of cost and labour arbitrage.
OSPs
have to synchronise the outsourced operations of the company
with its existing operations, to ensure that the deliverables
are not governed by practices emerging from service level
management, but drive synchronised operations. This ensures
the maximum productivity and helps the companies maintain
a competitive edge in the market.
Synchronised
outsourcing is about managing customer relationships with
the operations management required to maintain the company's
competitive edge. OSPs need to understand the client's
business, its competition, and the role played by its
current operations in the entire service / product life
cycle. For example, an OSP providing sales services to
a company via telemarketing has to see it as a first step
in closing sales for the company, rather than just the
daily sales numbers and targets defined in the service
level agreement.
Telemarketing
for any company encompasses every aspect of marketing
activity which has a budget allocated, to ensure a constant
inflow of customer contacts to customer order fulfilment,
including closing deals. This requires managing. It is
more than getting sales leads; it is a complete cycle
from sourcing sales leads to creating a custom-built product
or service package for customers, delivering at the right
time and then servicing and retaining the customer. This
involves constant interaction between the OSP and the
company, updating critical aspects of sales and customer
information, and making sure that each customer's needs
are given due attention and fulfilled.
Synchronising
operations on a global scale will require re-thinking
strategies away from traditional concepts. This is more
of a day-to-day collaboration on each event, aligning
the combined business goals with the open and smooth working
relationship of all players. It is built on teamwork,
time, and trust.
Let's
take a case in healthcare outsourcing. In healthcare insurance,
claims adjudication takes 80 per cent of the time and
effort of the insurance carrier, the third party administrator
and the patient, for each claim. The traditional process
in the healthcare industry is complex and highly critical.
A large part of it can be outsourced to OSPs, and the
benefits of cost reduction, reduced staffing and standardised
workflow can be achieved by synchronising the outsourcing
effort.
The
OSP and the healthcare provider function as one entity,
and the process of claims adjudication is synchronised
to ensure that operationally, the benefits of low costs
and excellent process delivery are ensured.
This
helps allay the outsourcing company's fears of loss of
control and spiralling costs. Both entities have to jointly
identify business goals, monitor 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 to the satisfaction of the customer. Delighted customers
make excellent brand ambassadors for the company, and
spread enormous goodwill.
The
prime requirement of synchronised outsourcing is long-term
commitment, from both the buyer and the 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
and selling more products.
Globalisation
has made the buyer and seller enter into a symbiotic relationship,
where each flourishes owing to the other. The success
of outsourcing depends on mutual satisfaction, with a
long-term perspective on the relationship. Benefits include:
- Business
process improvement
- Cycle
time reduction
- Benchmarking
service quality
- Cost
containment
-
Maximum efficiencies
- Increased
speed to market
-
Enhanced customer service
Synchronised
outsourcing creates a streamlined workflow and gives a
market advantage. Using market intelligence will help
devise the
right products for customers, ahead of the competition.
Trusting each other's delivery capability and ability
to keep business goals as targets will generate a flexible
process, to deliver and compete. mber.
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