Strategic outsourcing for success

Executive Summary: 

Successful outsourcing, and in particular, outsourcing that drives transformation and helps achieve broad strategic goals, requires companies to follow a disciplined process that keeps them focused on taking the right steps and making the right decisions. In short, outsourcing initiatives succeed by design, not luck.

Outsourcing as a concept was conceived in the 1970’s in manufacturing and its popularity has since spread across virtually every facet of the organisation.

In the face of increasing global competition, the world’s largest companies are engaging in outsourcing to achieve both cost savings through operational efficiencies and competitive advantage through a more strategic transformational approach. 

The need for a strategic approach to outsourcing

In reality, successful outsourcing — and in particular, outsourcing that drives transformation and helps achieve broad strategic goals — requires companies to follow a disciplined process that keeps them focused on taking the right steps and making the right decisions. In short, outsourcing initiatives succeed by design, not luck.

The Deloitte approach

The Deloitte approach to this design is to focus on five main dimensions of the outsourcing process that companies must progress through:

• Rightsizing the deal
• Building a solid foundation
• Vendor selection now means something different
• Striking the deal
• After the deal is signed

In an ever more competitive world, companies need to take full advantage of the tools at their disposal — and outsourcing is a significant one.

We work with clients in a number of ways:

• Identifying what should and shouldn’t be outsourced
• Assisting in identifying key requirements from the outsource contract
• Develop the contracting process and support vendor selection
• Develop and implement performance management metrics

The Deloitte 2008 Outsourcing report has polled over 300 business and IT executives representing outsourcing buyers, outsourcing vendors, and legal firms.The survey found that a large percentage of the companies that implemented outsourcing reached their financial objectives and averaged a strategically-important ROI of over 25%.

However, a much larger than expected level of company-outsourcer conflict was reported, and many of the companies expressed disappointment with the outsourcers’ overall ability to provide continuous process and technology improvements.