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

By Michael VanBruaene, 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:  or contact me at

Michael VanBruaene was a KPMG Director and blogs at  Practical Tools To Improve Organization Performance

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