How to pick your outsourcing or offshoring service provider

So you have been considering in engaging an offshore staff for your business. No doubt you have a friend or a friend of a friend that is offshoring or outsourcing and apparently getting great results – how do you go about choosing who to partner with and how to do it?

The first thing you need to think through is what will “success” in your offshoring or outsourcing project look like? A common mistake businesses make is to judge the success simply on the direct cost savings and not look at the bigger picture.

For example:

A business had an Accounts Payable role in Australia and the salary for that role was $65,000. They now have a staff member in the Philippines who only costs them $20,000 – Bingo they are a mile in front! – or are they ….?

Ask a few more questions to scratch a little deeper and you might also find out that:

  • As a result of not developing an internal communication strategy to ensure that the offshoring plans were well received in Australia, two long term staff resigned, fearing their jobs might be at risk;
  • The business’ accounting fees have now increased by a few hundred dollars a month as a result of the extra time it is taking to fix journal entries that haven’t been posted correctly;
  • The CFO is having trouble supervising the Filipino staff member as they have no reporting on utilization and no point of contact within the service provider to resolve this issue;

To top things off the Filipino staff member has just resigned because:

  • they don’t feel valued (they are working in a “battery hen” style office with rows of identical small cubicles)
  • no one has given them any training;
  • they don’t have an agreed position description/KPIs;
  • they are having some problems with the remote IT connection which is making it hard to work efficiently;
  • they think their Australian manager is rude because they only ever email them and don’t talk to them face to face by video conference
  • they were made to work through the Filipino public holiday on All Saints Day (they had their yearly family reunion planned for that day).

What is often presented as very simple and easy to do is often not and this is definitely the case with offshoring and outsourcing.

If you want your initiative to be successful then the outcomes you, want to achieve, in addition to the obvious cost savings, should include:

  • Australian staff support and engagement
  • Cultural integration
  • Business integration and consequently a “one business” mentality
  • Smooth transition of the functions
  • Low staff turnover
  • Minimal complaints

The only way you will achieve these objectives is with the assistance and guidance of your offshoring service provider. Be careful who you pick – many of the service providers do little more than offer a serviced office with recruitment assistance. Fail to pick the right provider at the start of your process and it is likely you won’t get the result you were looking for.

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