Our outline provides a structured approach to gradually and thoughtfully implementing outsourcing in a way that aligns with company goals, involves employees, and ensures a smooth transition.
What to outsource?
When working on identifying items to be outsourced, always think in terms of the actual tasks, rather than entire positions. Most likely each position at your company has tasks that are best to be kept in-house, and there are usually tasks that can safely be offloaded to an outsourcing partner.
The first question to ask when starting such a filtering process is what your core and non-core activities are. Core activities are critical to your competitive edge, customer satisfaction, or intellectual property and these should remain in-house. Non-core activities on the other hand are not directly tied to the company's core competencies, might be repetitive and time-consuming, and can be good candidates for initial outsourcing.
It is also worthwhile to perform a risk assessment to understand the risks of outsourcing specific tasks (for example in terms of data security or service quality).
Additional considerations:
- Can the task be handled remotely? If yes, outsourcing it is much-much easier.
- Does the related workload change? Fluctuations in capacity demand can be handled smoothly with an appropriate outsourcing solution in place. This is also applicable for any overtime requirements.
- Skill and technology considerations: Does the task require expertise and equipment that can be managed more efficiently with an external provider?
- Are there any uncertainties related to the future of this task? Outsourcing partners can enable you to adapt to changes quicker and at a lower cost compared to changing your headcount. This is applicable both to upscaling and downscaling.
About the buy-in of your team
It is very important to get your team on board. If they see the benefits of this transition, such as improved responsiveness and less overtime, they will fully support you, making the transition smooth and sustainable.
Clearly communicate the reasons behind the decision, the benefits and expectations, any potential downsides, how outsourcing aligns with your company’s long-term goals, and how the change impacts the future of your employees. Employees may fear job loss, changes in their roles, or reduced job security, thinking that such a step might simply mean cost-cutting and layoffs. Managers might resist outsourcing due to concerns over losing control or fear that quality might suffer.
Your team might also be worried that the newly established processes become clunky and dysfunctional. It is helpful to involve employees in the decision-making process, especially those whose tasks may be outsourced, getting their input to understand the details, improve buy-in, reassure the in-house team, and make cooperation with the new partner better.
There are various ways to ensure two-way communication, such as regular town hall meetings and one-on-ones. Anonymous feedback opportunities might help you better understand the background.
If there are changes to employee duties and workloads, be sure to help your people make the transition or improve their skills as needed.
Proactively addressing internal resistance can make transition to outsourcing easier, and can ensure that employees feel supported, valued, and part of the company's future.
The time frame
Short-term (3-6 months): Initial analysis, employee consultations, and pilot programs.
A cost-benefit analysis can help compare your in-house and outsourced options. Make sure to consider hidden and/or upfront costs such as those of vendor management, and any transition phases or trainings.
Establishing key performance indicators (KPIs) can help better understand the success of outsourcing and any areas for improvement. Such indicators can incorporate regular feedback from employees, customers, and outsourcing partners.
Medium-term (6-12 months): Outsourcing gradually, scaling up outsourcing partnerships with continuous feedback. Start with small, low-risk tasks to see how it goes and to evaluate outsourcing partners, gradually increasing the scope. Regularly review the outcomes and employee impressions and make adjustments as necessary.
Maintaining strong relationship with outsourcing partners can ensure ongoing alignment and service quality.
Long-term (12-24 months): Full integration of outsourcing, continuous improvement, and optimization of outsourced tasks.
Over the course of years
You can develop a multi-year plan that gradually increases the scope of outsourcing as part of a natural evolution of the company, building on any employee fluctuations that arise on their own. As employees leave due to natural attrition (retirement, career changes), assess which of their tasks can be outsourced instead of being replaced by new hires. This approach allows for a smoother transition with less internal tension, as it aligns with the natural ebb and flow of the workforce.
Make outsourcing an integral part of your company culture, a beneficial strategy instead of a threat.
Such a gradual approach spread over several years and aligning with the natural changes of business allows for outsourcing to be integrated naturally into the company’s operations with the least disruptions and the most benefits through increased efficiency, flexibility, and cost savings.