The ‘in’ on outsourcing: How to outsource right.

For some, outsourcing can seem like you’re just asking to lose control and introduce an unnecessary business risk in a business and economic environment that already feels pretty risky. Why take the chance on an outside Service Provider, instead of relying on permanently employed staff or hiring specific people to do the functions you’re so keen on outsourcing in the first place? Well, you can find the answer to the above question here – the negative impact of additional responsibilities on employee competency (which we call job creep), can really hinder progress, and permanent hires can also work out far more expensive for businesses overall versus outsourcing.

Dependent on your business, outsourcing can make a lot of sense – not just in terms of cost saving, but also in terms of relying on the expertise of a partner. Business owners often go it alone, trying to master being accountant, HR, project manager and CEO all in one. It’s not sustainable and doesn’t need to be this hard. Outsourcing can solve a lot of problems, but you need to know how to do it right. Here are some tips to get you going if you’re new to the game…

Tip 1: Start your outsourced partner off with a test project

We recently spoke to a health and safety manager at a top supplement manufacturer in South Africa. He was in the process of relooking the company’s outsourced cleaning supplier – the company needs large machinery and warehouse spaces cleaned regularly. His advice for outsourcing was simple: Give them a softball (a small responsibility, an inexpensive project) and see if they hit it out of the park. An outsourced partner needs to prove their capabilities and worth in your business. Don’t just trust the track record. Find out for yourself by putting them to work. You’ll soon see if they talk the talk or walk the walk, and can increase their portfolio of responsibility accordingly.

Tip 2: Make sure you have a fair and airtight Service Level Agreement (SLA)

Setting up a test project (tip 1) and reviewing and approving a Service Level Agreement with an outsourced partner will likely go hand in hand. An SLA essentially guarantees the level of service a Service Provider will give you, and lays out how service is measured, what happens if expectations aren’t met and (most importantly), what remedies and penalties apply if things go south. We’re sure you’re familiar with the saying: Expect the best, plan for the worst and prepare to be surprised. It’s a quote by famous American motivational speaker Denis Waitley, and no words ring truer when it comes to SLAs and working with an outsider.

Here are the main components you need to include in an SLA.

The below has been adapted from South African corporate law firm Michalsons Giles Inc. Remember, it’s normally a good idea to seek out professional advice before you begin drafting your own SLA, especially if you want something both fair and airtight:

• Outline what service the outsourced partner will be giving you. This seems pretty straightforward, but you don’t want any scope creep happening or to step on the toes of permanent staff or other partners.
• Define the criteria for ‘meeting’ this service – this could be a minimum amount of time within which to resolve a telephonic customer complaint. Be very specific in setting these and make sure they’re realistic (both for your partner, and you as a business).
• Determine who forms part of the SLA – which parties are involved?
• Determine who is responsible for what as part of the Agreement.
• Determine what remedies need to be implemented if the outsourced partner fails to meet the SLA, and how you end the Agreement should you want to.

Tip 3: Have a way of work agreed upfront

Having a set way of work with clear communication expectations does wonders for keeping an outsourced partnership on track. If you send an email at 6pm, is the expectation that your outsourced counterpart respond after hours, or can they respond in the morning? What happens for urgent matters? Is it a phone call, a WhatsApp? These guidelines will help keep comms in check and prevent unhappiness from bubbling to the surface. And with dairies filling up at a moment’s notice (the rise of remote work has only exacerbated this), you need to make sure there’s a standing outsourced partner meeting at least once a week. Whether you call the meeting a status update, a state of the nation, a touch sides or a touch base, knowing what’s going on with each other greases the wheels of your partnership and keeps things running smoothing.

These meetings are important for two reasons: one, it means they know what’s going on, what’s changed in your business that may impact them, and how their outsourced solution is working for you; two, it provides a platform for two-way feedback. Just as it’s important that they know what’s going on inside your organisation, so too is it important that you know where their biggest hurdles lie, where slow internal processes hinder their deliverables or cause domino effects that could impact on the SLA. Outsourcing can be effective. It just takes knowing where your business could benefit from a dedicated partnership and outsourced expertise, and having the right plans in place to manage the partnership from the outset.