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Making Transformation Work

Managing relationship equilibrium in outsourcing

Managing the Move to an Outsourced Environment

The Fearsome "O" Word - How change management mitigates the risks of employee resistance to outsourcing

For the last 10 years I bought outsourcing services. As a senior executive for a Fortune 500 company, I was responsible for the company's outsourcing initiative that was part of a corporate turnaround. We utilized outsourcing to help achieve significant cost savings and performance improvements.

Now I'm a senior consultant at the Everest Group, whose consultants have helped over 350 clients in the last 10 years develop business process outsourcing (BPO) strategies and solutions. I'm able to use my experience as a buyer to educate others new to the outsourcing process how select a consultant that best suits their needs. I've distilled a decade of experience into these nine tips.

1. Experience counts.
   
   Select someone who has been there and done it. Experience is crucial to achieving successful outsourcing results.
   
   It's an added plus - but not essential - for your consultant to be an expert in your industry. We generally found it was more important for the consultant to have expertise in the functional area (i.e. IT, human resources (HR), or finance and accounting) rather than our industry. Best practices in outsourcing continue to evolve; limiting your choice of consultants to your industry may limit your leverage and the benefits that result. Given a choice, I would put more weight on the consultants' experience in the functional area and fill in any gaps with your own internal industry knowledge.
   
   
2. Ask for references.
   
   These are crucial, even though you know the supplier is going to give you the phone numbers of the most successful assignments. Even so, having a conversation with a satisfied client can be revealing. People have told me, "They were terrific at X, Y, and Z. They did a great job. But I wished they had done A and B." If A and B are the crucial ingredients for you, you need to keep looking.
   
   Try to find out how the consultant performed on all fronts. What were their strengths and weaknesses? What was their negotiating style? How perceptive were they to your needs? How did they handle disputes? Do they understand culture issues and change management? Craft questions about the things you want to know.
   
   Also, don't be afraid to ask for the name and number of a client who was not satisfied or terminated their engagement. Try to visit with an unhappy client, too.
   
   
3. Learn from your peers.
   
   Checking references has another benefit: it helps new buyers build relationships with other buyers who have done this before. You can learn a great deal from your peers. Don't be afraid to ask their advice. I always say, "Knowing what you know now, what would you have done differently?"
   
   If you can, attend outsourcing conferences or check our Web site and ask questions. Someone probably has already slain the dragon you are about to attack.
   
   
4. Select a consultant that has tools and methodology readily available.
   
   If the consultant has these tools, which contain best practices for the process you are about to outsource, you will benefit in better productivity, reduced cost and more leverage with vendors in the market place. I've experienced poor results with consultants who didn't have these tools at their disposal. If a consultant has refined the work process, the buyer generally will get a better end result.
   
   
5. Find a consultant who understands the vendor community.
   
   The point of having an outsourcing consultant is to help you navigate the business process of outsourcing, including the selection of the vendor who is the best fit for your situation. The consultant must be intimately familiar with the vendors who you select for your Request for Proposal (RFP). They must know each vendor's capabilities and weak spots.
   
   This piece is crucial. Outsourcing is a culture shift for most organizations. You want to do it right the first time. Knowing the vendor universe and helping create a long-term value-added proposition is why you're hiring a consultant.
   
   
6. Select a consultant who has managed transitions..
   
   I've watched first hand how outsourcing impacts an organization. An outsourcing relationship is more than a business contract or procurement effort. It's really a change management effort. For that reason, it's important to hire a consultant who really understands human behavior dynamics and change management techniques. A consultant with the right experience and tool set can help you prepare and manage the people and communication issues, thus minimizing negative impacts to your organization during times of transition.
   
   
7. Rely on the consultant to help you with governance..
   
   Managing an outsourcing relationship is quite different from managing an internal organization. Most buyers have little or no experience in this area. The outsourcing consultant becomes invaluable as an experienced advisor. Your consultant can help you with the necessary knowledge transfer to the new internal leadership and assist you in establishing the proper governance to develop and maintain a win-win value proposition.
   
   
8. Only deal with senior level consultants..
   
   While some may disagree, I have found you are better off hiring a consultant with the required expertise and then engaging your own internal staff to round out the project team. Some consultants will bring in one or two senior people plus an army of young MBAs to do the work. This generates billable hours for the consultant but adds little or no value for you.
   
   Instead, you can leverage the resources you already have by engaging your own people. This allows you to retain the outsourcing experience and knowledge in your own organization. This is also a great way to test your people and find those change champions and leaders that are so important both to the organization and to managing outsourcing relationships.
   
   
9. Only do business with consultants who truly care about your outcome..
   
   As an outsourcing buyer, I always felt everyone in the world was trying to sell me something. So, the first quality I looked for in anyone I did business with was his or her genuine interest in a win/win relationship. I eliminated firms whose only focus was to increase billable hours. I needed someone on my side, someone whose expertise and skills would prevent me from doing the wrong thing and getting into trouble.
   
   Selecting the right consultant is half the battle. Learning the best way to work with a consultant is the next step. I'll discuss those insights in the August Outsourcing Journal.

Lessons from the Outsourcing Primer:

• Experience counts.
• Ask for references.
• Learn from your peers.
• Find a consultant who understands the vendor community.
• Select a consultant who has managed transitions.
• Rely on the consultant to help you with governance.
• Only deal with senior level consultants.
• Only do business with consultants who truly care about your outcome.
• Make sure the consultant has the tools and methodology to do the job.

Publish Date: July 2001

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Copyright © 2001 - Everest Partners, L.P.

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