Outsourcing a business function doesn’t mean you abandon steering the ship. If you’re a leader in any capacity, you know your business is charting a long-term course with business objectives and growth targets along the way. Getting an outsource partner can help you on that journey as they take up oars and help you row, but leaving them unsupervised could mean getting lost at sea.
Authors of the book The Outsourcing Enterprise Leslie Willcock, Sara Cullen and Andrew Craig outline what they call an outsourcing learning curve that captures “the voyage of discovery that client organizations have been on” when it comes to onboarding outsource partners. Businesses are characterised as either highly sceptical or too easily taken by the outsourcing sales pitch as they first start exploring outsourcing as an option. As time marches on and learnings take place (both good and bad) this process of discovery becomes more refined – businesses learn how to negotiate contracts and timelines more effectively and how to find a mutually beneficial and collaborative way forward.
The goal on this learning curve is to end up in a position where outsourcing is institutionalised and value-adding, and where collaborative leadership is the order of the day. Where you don’t want to end up is where your outsource partner operates in a silo with no bird’s-eye view of how what they do impacts the wider business, or where they think they run the show and can make executive decisions without your input.
An example of this happening was in 2016, when car rental giant Hertz hired consulting firm Accenture to implement a digitised, self-service system for customers – which would work across electronic devices – to replace its older legacy systems. This system also needed to work for customers using car rental companies Dollar and Thrifty who had been acquired by Hertz. By 2019, the entire project had devolved into a lawsuit, with Hertz suing Accenture for only building a system that worked for Hertz (not Dollar and Thrifty), on top of suing because the system wasn’t responsive or properly tested.
Although there were many factors contributing to this lawsuit, one stands out and is worth quoting at length from writer John Belden at CIO: “In this particular case, it appears that Hertz contracted Accenture to be the product owner for the solution. That ultimately means that Accenture was responsible for defining the scope of what was to be delivered, instead of Hertz being the one primarily responsible, and then holding Accenture accountable for that delivery. Hertz should not have abdicated ownership.” When you outsource, you cannot abdicate responsibility as a business (or business leader), and it also can’t become an exercise of ‘hire and see’. You and your outsource partner must ensure ways of work, deliverables and expectations are clearly laid out from the beginning, and that you have clear lines of communication (just as you would with any partner). This is one of the first ways you can ensure you stay the course.
The second is understanding that an outsource partner is so much more than a simple contract or SLA. Their business, much like yours, is made up of dynamic people and processes that you can use to maximum advantage. As author Susan Cramm says: “When outsourcing, you can’t manage through the contract, you have to manage through the people”. Determine in what area of your business they can be best used and where they can help you substantially reduce costs, improve turnaround times or free up capacity within your internal team.
The outsourcing drawcard is that it allows businesses to focus on core business activities and strategy, while having other activities handled more cost-effectively by “external providers that offer greater expertise or economies of scale” according to researchers in the Journal of Strategic Marketing. Some areas of your business may benefit more from being exclusively outsourced versus others, while some may benefit from a hybrid approach. Customer relationship management is one area that is often outsourced from a technology and automation perspective, but can also benefit from the input of customer-facing internal staff. You need to find the balance that works for your business, and guide your outsourcing partner appropriately.
