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.