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Ask the Pro: Getting Good at Outsourcing

Marc Mancher, Principal, Deloitte Consulting LLP

Question: 

When I led our company’s finance services organization, I slashed costs while still satisfying the users by outsourcing most of accounting. Now, I’ve been put in charge of global service delivery with the mandate to replicate those results in HR, IT, and procurement. But I’m not familiar with the providers in those areas – and even if I were, I can’t possibly run everyone’s outsourcing program. Short of cloning myself, how can I help the other functions outsource effectively?

Answer: 

HR, IT and procurement can benefit from your experience without you having to do any heavy lifting. Instead, you can put in place a couple of processes to help institutionalize some effective approaches in leading these additional areas of your organization.

The first support is a standardized outsourcing process that gives the functional teams step-by-step guidance on appropriate outsourcing procedures and that allows leadership to make go/no-go decisions along the way. At a high level, these steps are fairly consistent regardless of what’s being outsourced, although the specifics should be executed by people with subject-matter knowledge. Important activities include determining what elements of each function would be appropriate for outsourcing in light of your strategic priorities; which functional and other leaders need to be engaged during the decision cycle; determining the short list of vendors for your RFI/RFP cycle; and starting both the transition and the vendor management efforts early enough to execute them effectively. The standard process should also incorporate leading practices that you want the functional teams to follow, such as performing a risk assessment, engaging tax specialists, and formalizing selection criteria,

The second support is a centralized outsourcing “center of expertise” (CoE) that can house skills that are important to outsourcing but that could be hard and/or expensive for the functions to maintain on their own. The CoE’s capabilities could include project management to help shepherd functional teams through the outsourcing process, change management specialists to help identify stakeholders and plan change activities, and vendor management (VM) to handle process-agnostic VM activities such as budget management, issue resolution, and governance. Besides the potential cost and efficiency benefits, an outsourcing CoE can allow your company to execute vital outsourcing tasks with specialized, dedicated professionals who can learn from each other, and who could therefore probably outperform the relatively inexperienced local resources who would otherwise be doing the work.

Marc Mancher, principal, Deloitte Consulting LLP

 

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This publication contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of this publication, rendering business, financial, investment, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this publication.

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