Contracting-Out or Outsourcing In-House Functions – Doing It Right

By Michael VanBruaene, Big4.com Guest Blogger

Contracting-out or outsourcing in-house functions is many times viewed as a panacea to problems an organization is facing or as a sure way to reduce costs…. which is not always what happens.

Here are some considerations in planning to implement the contracting-out or outsourcing of an-house function and then their implementation.  Use these guidelines as a starting point; the steps you end-up taking should be specific to the process at-hand and your particular circumstances.

• Document your objectives and list the reasons why you want to do it.
• Is it a strategic “asset” of the organization? This can affect what you specifically outsource and how you manage it.
• What are your expectations for the outsourcing?
• Document the process you want to outsource – in detail.
• Document your current costs, in detail. Will be needed when you receive bids.
• Document expected cost savings or improved effectiveness, if any.  Quantify as much as possible.
• Determine the position (not person) in your organization responsible for contract / vendor management.
• Determine how to maintain adequate knowledge of the technical content of the outsourced processes.
• Determine the term of the outsourcing agreement.
• Consider talking in advance with a couple of vendors regarding your intention to outsource to gain relevant knowledge.
• Establish the criteria you will use to select the vendor.

After the contract is signed.  After the contract is signed, the following should occur.

• Establish a project implementation office
• Develop an implementation and transition plan
• Develop a mutual understanding of organization cultures
• Establish formal points of contact between the organizations;
• Establish invoicing procedures and content
• Service review at regular points in time

For more detailed information on contracting-out/outsourcing click this link:  http://www.advancingyourorganization.com/?p=1502.  or contact me at mvanbruaene@pacbell.net

Michael VanBruaene was a KPMG Director and blogs at www.AdvancingYourOrganization.com.  Practical Tools To Improve Organization Performance