Top ten outsourcing innovators

As companies look to scale back expensive in-house operations, outsourcing is once again appearing as an attractive option for businesses, large and small. But there are many pitfalls along the way. Nick Martindale speaks to executives from ten companies with experience of putting outsourcing projects into action


ACCENTURE

Ensuring the full range of activities for the process being outsourced is covered by an appropriate business agreement is essential, says Anoop Sagoo, Accenture’s business process outsourcing cross operating group lead. “For those that are most successful, the entire end-to-end business process is within the scope of the arrangement,” he says.

“This includes elements managed within the client’s enterprise and those run by third parties, as well as related processes that may impact overall performance. Service level agreements are important, but both client and provider need to work together to focus on overall process excellence and business outcomes.”

COCA-COLA

The global soft drinks manufacturer has effectively outsourced its creative thinking by drawing on the input of external marketing specialists based around the globe, using online co-creation community eYeka.

“As brands look for creative partnerships, it makes a lot of sense to tap into a less exclusive channel,” says Leonardo O’Grady, director at Coca-Cola Asia Pacific. Simplicity is the key when it comes to setting a brief for a campaign, he says. “Try to capture the spirit of the project within a minimum of five words,” he says. “For example, ‘Show Coke’s infectious happiness, cause change’ or ‘Switch on Coke’s energising refreshment’.”

DAVENPORT LYONS

Businesses looking to outsource need to ensure any contract they sign is an accurate reflection of negotiations, warns Andrew Priest, a partner at Davenport Lyons, which outsourced its internal IT function to Plan-Net in 2011. “Sometimes it’s too easy for the customer to accept that they will be receiving the supplier’s standard services,” he says.

Bringing in legal advice can identify potentially problematic areas. “The initial draft of the outsourcing contract is likely to be very much in favour of the supplier,” he says. “Your lawyer should be able to identify terms which need to be amended or even deleted.”

GRADWELL

The internet and telecommunications specialist recently outsourced part of its customer service operations and found the experience a steep learning curve.

In particular, Peter Gradwell, the company’s founder and managing director, discovered there was a gap between the expectations that had been promised by the provider’s sales team and what the operations team were able to deliver. “Interview the operations managers to check that their understanding of what they can do is the same as the sales team’s,” he suggests. For their part, businesses should not assume they can outsource responsibility for defining their own procedures and processes to the provider.

KPMG

Problems can often occur on the client side when processes that were previously managed in-house are transferred to external organisations, says Claudio Altini, director, sourcing advisory, at KPMG, with individuals and teams struggling to adapt to their new roles.

“The client organisation is often not prepared enough for the change that is being worked towards and retained organisation re-alignment is absent,” he says. “This allows for shadow organisations to be set up which are either checking the service provider’s work or, worse, duplicating it. Actually doing the work is very different to managing a relationship and requires a different mindset.”

LEND LEASE

In 2006, construction firm Lend Lease chose to partner with Achilles to help improve performance and efficiency in its complex supply chain.

For Nigel McKay, head of procurement and supply chain at the company, an important element to creating a successful relationship is ensuring there is buy-in from the senior team. “This will drive organisational commitment to the process and a potential cultural shift in thinking,” he says. “They will need to understand why the service can’t be delivered internally, whether it’s lack of skills, resources or the simple fact that someone else can do it better or more efficiently.”

MICROSOFT

The computer software giant is now two years into a five-year, £130-million business process outsourcing deal with Arvato. According to Kyle Christensen, Microsoft’s senior director for worldwide business process outsourcing operations, the key to a successful relationship is to remain focused on the bigger picture and to give the provider space to implement their own way of working.

“Concentrate on what you want to achieve, not necessarily how you want to accomplish it,” he says. “It’s easy to get caught up in the day-to-day detail, but that doesn’t leave much room for your outsourcing provider to bring any added value. Empower your provider to define the ‘how’.”

THALES TRAINING & CONSULTANCY

West Sussex-based Thales Training & Consultancy outsources its online marketing operations to local firm Smart Monkey.

“Having worked with London agencies in the past, we specifically wanted to work with a local marketing agency,” says marketing manager Simone Davies. “We are able to meet regularly and work together as part of a team. It also means we get a personalised level of service and we don’t have to spend days out of the office.” Clear communication from both sides is also vital. “Getting your suppliers to communicate with you is just as important as ensuring that you yourself are communicating effectively,” she says.

WORLD DUTY FREE GROUP

Travel retailer World Duty Free Group has a long-standing relationship with ResourceBank to help with its fluctuating levels of recruitment.

Geoff Hall, World Duty Free Group’s head of HR, says it’s important to adopt a partnering approach rather than looking to create a client-supplier relationship. “Choose a company which has a similar approach to you in terms of outlook and business goals,” he says. This is particularly important in the current uncertain climate, when both sides need to be honest with each other. “During difficult times we come to a true, joint agreement of what is realistic and set measurable key performance indicators.”

ZIRCADIAN

In 2011, NHS consultancy Zircadian took its first steps in outsourcing by partnering with Polish software development firm Future Processing.

Product director Angus MacDougall stresses the need for effective communication, complete with the human element. “Things can get lost or meanings misunderstood over email,” he says. “Tools for virtual face-to face communications, such as Skype, are widely available for free and can make a real difference to how the project goes.” Companies should also factor in the difficulties caused by working with partners in radically different time zones, such as Asia or Australia, he says.