Thursday, 3 May 2012

When Outsourcing Goes Wrong - Top 3 Reasons!

In the land of QX, there is a continuous hum about Quality. After all, it is one of the words that makes the bricks it stands upon: Quality and Excellence. Since its inception, the in-house recruitment team is constantly compelled to churn out top-notch employees. Every day, the overseer: Gaurav Jain, QX’s Recruitment Manager, is prescribed to lineup a trail of distinct candidates - the standouts. Once he filters the wheat from the chaff, these potential candidates are chosen to go through an array of tests to earn the eminent tag of a ‘QX employee’.

As soon as they clear the initial assessments they are presented to the managers they will be working with in the future. These hard-boiled managers have had their immunity shots for any kind of emotion (which fortunately only lasts for the recruitment process). In fact, for the interview period, their feelings for the candidates are driven by the need of quality and excellence.  When a manager meets a budding candidate, they are generally presented with some in-depth questions to judge their aptitude and skillfulness. Only after the candidates survive the offensive do they make it to the extended team.

Chris Robinson, the Managing Director of the company loves this stringent procedure. This 42-year old is very upbeat about things like ISO certifications and can talk incessantly about Quality and the philosophy of it. “Quality is what separates us from the rest; it is in our DNA; this is what QX has gained its reputation for and is the cornerstone of our business”, he says. Chris believes that the quality of any organisation is made up of the quality of the minds that work in it.

You must be wondering why I am talking about Quality when the entire business world is seemingly besotted by it.  Well the answer is simple: a lapse in Quality is one of the top 3 reasons for a bad Outsourcing experience.

Please allow me to veer you from the tale to the truth. The following are the top 3 reasons for a bad outsourcing experience, and the secret lies in blanketing the pitfalls:

1- Language & Cultural Differences

Many an outsourcing deal has been marred by poor communication. There is research based evidence which says that 38% of outsourcing deals fail because of a lack of cultural congruity between the vendor and client. Now, by culture I am not referring to the arts, manners, beliefs and scholarly pursuits of a particular country. What I am hinting at is Corporate Culture: the ethos and shared values of an organisation, the way they get a job done.

Our managing director, Chris, suggests you spend at least a fortnight with your outsourcing vendor to get a first-hand experience of their work ethos and culture.  He says, “Get involved with them; attend the staff meetings; interact with your extended team; this is the best way to experience their work culture.”

As far as the argument about the language barrier goes, I believe it is necessary you think out your options before choosing your outsourcing partner. Today, approximately 6000 languages are spoken in the world even as countries become more inter-dependent. After the United States, India is the 2nd largest English-speaking nation in the world - a huge contributor for the business world turning to India as its favourite outsourcing destination. With the language barrier taken care of, it becomes easy for a company to decide where to turn to. Unquestionably, many outsourcing vendors chalk out communication programs for its employees, but please ensure they have an internal staff training department which includes but isn’t limited to English Classes and Soft Skills.

2 - Quality of Delivery/Quality Issues

Cost is no longer the primary driver for an outsourcing trend. Today, quality has become a highly decisive factor when it comes to choosing an outsourcing partner. What initially seems like a cost-saving strategy can turn into a nightmare when the quality of output turns poor.

Firstly, problems with quality arise when then outsourcing vendor doesn’t have proper processes in place. I perfectly understand that Quality compliances are a good general measure and the best outsourcing vendors should have Quality built into their genetic codes. But it doesn’t hurt to find outsourcing partners that follow a standard model like ISO. Find companies who are certified by the latest, revised ISO standards as these adopt a process oriented approach and emphasize on measuring process performance and effectiveness. Other than helping measure and improve quality standards, it also ensures that a company is following defined processes and abides by quality parameters set by the regulating body.

Chris says, “Look for a company with a proven track record, companies which provide reports on a daily, weekly or bi-weekly basis. These reports help you monitor performances of people who work on your process and take action as the work happens. The only thing that should change when you outsource is the location the work is being processed at. In terms of quality, ensure that your outsourcing vendor delivers similar or better output than your own internal resources. Don’t settle for anything less.”

Lastly, see to it that your outsourcing vendor specializes in a limited number of areas. Consider a specialist company who isn’t a jack-of-all-trades. Some vendors will also lure you with low prices and the last thing you want is a company who claims a know-it-all approach. Ask for references, check how long their clients have been with them, know their attrition rates, see how many contracts they are able to renew at the end of the contract period, and ask if they have UK-based support staff.

3 - Uninvolved Clients

We have often heard stories of outsourcing going bad due to low quality of processed work, unmet SLA’s, differences in language and culture, productivity declines, etc. However, there are a couple of client-centric reasons why an outsourcing deal can fail. I have often witnessed a short-term focus of those involved in the decision to outsource. Many businesses look for outsourcing as a path to quickly cut costs and improve their financial status.

Since clients are looking for a quick fix to their woes they sometimes fail to involve themselves in the relationship. Also, most of the time while trying an offshore service, clients seem unprepared for it. This is further riddled with the non-participation of clients during the trial/pilot phase. I believe, for a successful outsourcing relationship, clients needs to involve themselves wholeheartedly. When you make that informed decision to outsource an activity overseas, don’t adopt the “They will do it” attitude. You must take it seriously at your end and work with the vendors just the way you’d work with people you employ directly.

If you have comments, questions or arguments please leave them in the comment section below. To know more about QX please click here

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