Avoid These Outsourcing Mistakes

Posted by: Today's Tip Contributor on January 11, 2011

There are many missteps at the onset of an outsourcing relationship that can be costly to fix and result in added time to market and unwanted spending. Common mistakes include:

1. Mismatching outsourcer goals and provider capabilities. The most successful outsourcing engagements match your business and technical goals with the culture and strength of the provider. A clear understanding of outsourcing objectives and their close match to the attributes of an outsourcing provider is a must for a successful outsourcing endeavor.

2. Having an IT organization not designed for high-performance outsourcing. It is imperative for your IT organization design to support the management of outsourcing engagements. Successful outsourcing relationships are collegial endeavors that depend on shared vision, excellent communication, and transparent, compatible processes between the outsourcing client and provider.

3. Outsourcing your weaknesses. Outside viewpoints and expertise are beneficial for developing strategies and plans for overcoming weakness. However, managerial weakness is never a good starting point for outsourcing, as you are still responsible for managing successful results in an outsourcing effort. Therefore, you should only outsource functions where key management metrics, processes, and success performance measures are well-understood.

4. Underestimating the importance of effective communication. Without clear roles, responsibilities, and collaboration in place, the client and outsourcer teams may adopt divergent strategies that can dilute the value of the outsourcing engagement. Instead, you should insist upon, and outsourcers should participate in, regularly scheduled "transparency" check-ins. This ensures each party is following the intended workflow and helps to avoid unnecessary confusion, delays, rework, and missed opportunities.

5. Not setting clear, measurable objectives. From the onset of the outsourcing relationship, the scope of work and deadlines should be clearly outlined, defined, and agreed on by all parties involved. Without these elements in place, key project components can be delayed and the overall goal of the engagement overshadowed by missed deadlines and added expenses.

6. Not addressing business risks or devising a Plan B. Companies today are at a significant disadvantage if caught off guard by business risks that turn into real problems. While outsourcers are well-versed in effective risk management, most successful engagements happen when contingency plans are readily available and actionable should risks become real during the engagement process.

Dmitry Loschinin
President and CEO
Luxoft
Moscow

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