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How to Manage Common Challenges in Outsourcing Transition

by: Karen Cayamanda

Wednesday, October 19, 2011 | Outsourcing News |

Outsourcing is an effective business tool not only to reduce costs in labor and operations but also to enable companies to focus on their core competencies, gain access to new talent pools, and tap new markets. Businesses all over the world, particularly in Western countries, have long been enjoying the benefits of outsourcing.

It may be a popular business tool primarily for cost reduction, but not all companies are convinced that outsourcing can be beneficial for their operations. One of the factors that keep many businesses from transferring work to a service provider is the transformational change that comes with business process outsourcing (BPO). Change is indeed inevitable, but dealing with change in outsourcing can be very difficult. In a survey done by HfS Research and the London School of Economics Outsourcing Unit, more than three-fourths of companies said they chose not to outsource to avoid any disruption to their business operations.

Common outsourcing challenges during transition period

The outsourcing transition needs some careful planning. Of course, there are challenges involved in the process. In an article by Brad Lillis published at businessfinancemag.com, he enumerates the common difficulties companies may encounter in the outsourcing transition period and ways to manage them:

Process documentation is not in place. Enterprises vary, and not all of them do not have the time and resources to standardize certain processes before they outsource. For a smooth outsourcing transition, it is crucial to document processes - creating standard operating procedures, identifying exceptions, etc. Having proper process documentation will pave the way for a smooth knowledge transfer and performance.

Enterprises failed to create key transition metrics. It is necessary to put transition metrics in place to analyze the operational performance during the outsourcing transition period and before the operations become stable. With transition metrics, enterprises will be able to know the impact right away in case these metrics were not met.

Recruitment capabilities of the service provider are not monitored. Many company owners tend to rely too much on their service providers, particularly when it comes to finding talent and turnover. In the transition period, it is essential to closely monitor how service providers handle staffing and ensure that they will meet the recruitment needs.

Be ready for anything. No matter how much time enterprises spend on planning the transition, certain issues may still arise. It is therefore crucial to prepare for anything and resolve problems immediately. Enterprises can assign a team that will handle any unexpected issues and has the capability to provide solutions as soon as possible.

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