Offshore Outsourcing Best Practices Increase Your Profit Margin

By: Rich McIver

When your company is forming long-term offshore outsourcing
relationships with another company, the foundation of the
success of this venture should be laid during the negotiation
period itself. The centerpiece of this negotiation period is the
Service Level Agreement.

The aim of outsourcing is to gain value for the host
organization. There are several contrasting views however
regarding how to maximize value and minimize risk by
outsourcing. The following best practices can serve as a guide
when structuring your SLA, and then implementing and maintaining
a relationship with the chosen provider.

Five Golden Rules For Offshore Outsourcing

1. Develop enduring relationships between key management
personnel.

The usefulness of the relationship between the key management
personnel of both teams depends on good understanding and strong
working ties between them. Studies on outsourcing success
stories have demonstrated that working chemistry in management
and peer friendships among employees have proved to be important
determinants in forming long-term relationships that yield real
value.

2. Present a Quantifiable Objective.

A useful performance criterion includes quantifiable objectives
and clarifies expectations of the quality of service. If you can
get ahold of SLAs for comparable projects, they will serve as
reasonable starting pointsóbut remember, these are negotiable.
In any event, ensure that exact objectives and expectations are
included in the SLA and are understood by both organizations
prior to implementation.

3. Pre-determine the Incentives and Penalties Schemes.

The provider should be driven to meet the established customer
expectations or even exceed it by adopting the performance based
pricing criteria. If performance of the service provider exceeds
expectations, then incentives should be given; conversely,
appropriate penalties should be imposed if objectives are
consistently missed.

4. Review Periodically to Maintain Successful Relationships.

Organize formal review meetings often. During the meetings, both
sides can discuss the performance of both teams and determine
the future objectives or goals of the company accordingly. They
can also discuss product reviews and deliverables during these
meetings. Keep in mind that performance objectives may need to
be continually revised according to changing market conditions
and the opportunity costs of both firms.

5. Communicate Well & Often to Bridge Cultural Differences.

The parties involved in an outsourcing relationship belong to
distinct cultures, these differences have to be accepted and
bridged. The cultural understanding between the two
organizations can be enhanced by organizing social events,
educating about company background, participating in each
othersí quality programs, etc. Communication really is the key
to a healthy relationship. It may be helpful to send a loyal
employee to the BPO site for a few months to facilitate
understanding in the implementation phase.

Rich McIver:
Rich McIver writes for http://www.blogsource.org ,
a free informational resource on outsourcing. See http://www.blogsou
rce.org/call_centers/ for more information on call center
outsourcing.