Outsourcing Project
Is your company considering a significant outsourcing project? Doing so has become a very popular way to accomplish such goals as
- Leveraging your strengths.
- Reducing costs.
- Converting fixed costs into variable costs.
- Filling in gaps in your skill set.
Outsourcing can be an excellent choice for solving some of these problems, while neatly sidestepping many of the issues that come with many alternative solutions. However, making that determination can be difficult, especially for companies with limited experience with outsourcing. The Chesterfield Group can help you with the process of determining when outsourcing is the best solution. We bring to you fresh eyes, backed by years of experience sorting through exactly these situations.
Once we determine that outsourcing is the best path, we are faced with how to best structure the relationship. Although the structure of an outsourcing arrangement is usually considerably simpler than, say, an acquisition, there are still some structures that will work better than others.
For example, attention needs to be paid to whether there are different levels of service quality possible. If so, what will motivate the service provider to keep his offerings in the high end of that range? Building detailed controls into the contractual agreements typically doesn't work very well because measurement is often difficult, and enforcement is unwieldy and expensive. Besides, once you get into the arrangement and eliminate your own infrastructure to perform those services, it becomes very difficult to get out of it. Better to take a more positive approach up front by allowing the service provider to increase its own prosperity by providing better service. The Chesterfield Group has a great deal of experience sorting through these sorts of issues and creating structures to motivate the parties to both contribute to their joint prosperity.