Project Management

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A blog that looks at all aspects of project and program finances from budgets, estimating and accounting to getting a pay rise and managing contracts. Written by Elizabeth Harrin from GirlsGuideToPM.com.

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5 Issues With Outsourcing (And What You Can Do About Them)

Categories: supplier management

Outsourcing on projects isn’t without issues, whether you’re outsourcing part of the project delivery or managing a project to put in place a process to outsource something for the company such as a shared service centre.

Here are 5 issues that you might face when outsourcing and what you can do to mitigate them.

1. Partner Is Not Creative

According to Deloitte’s 2016 Global Outsourcing Survey, 35% of respondents are already focused on measuring the value of innovation in the partnerships they have with outsourcing firms.

That means 65% of people are not.

Creative thinking and innovation can help solve problems with capacity, give you global scalability and provide access to assets that you wouldn’t have otherwise. Innovation can look different to different organisations but you could leverage your outsourcing partner to:

  • Transform processes
  • Reduce implementation times
  • Deliver better, or different functionality

Manage the issue: Talk about it. Have you specifically asked your outsourcing partner to think creatively? Make it part of your conversations with them. Ask how they are support innovation, and then work with them to help them deliver it. Otherwise they may be following what they consider is good-enough levels of service delivery. Be explicit about what you are expecting and what you would like.

2. Quality of Service Is Poor

One of the biggest concerns with outsourcing is that once the initial honeymoon period is over, the results will be…mediocre. And this can happen.

Manage the issue: Training. Set your expectations and offer training to help your partner meet them: it’s in both your interests.

You can also escalate the issue to the vendor management team, starting with your account manager. No one wants their company to be thought of as mediocre. Sometimes suppliers don’t know that you rate them in that way. Other times you need to accept that you aren’t a big enough customer, or you don’t pay for a higher quality service, for them to offer you anything more than they already do, which might be what they are contracted to do.

You can renegotiate the deal if it’s the arrangement that’s at fault (and your expectations) rather than the fact that they aren’t meeting the basic terms of the agreement.

3. Reactive Approach To The Service

You outsourced because you wanted someone to be totally on it, in a way that you couldn’t be for whatever reason. Unfortunately, what you’ve got is a partner that is reactive. They deal with things, but there isn’t any preventative work or proactivity. You aren’t seeing any additional benefits from the arrangement.

Manage the issue: This could be because the overall governance is poor. You can put in place more levels of communication or knowledge sharing or governance to ensure that there’s the framework for proactivity and they have the access to the people and processes they need to be able to work in a proactive way. You could also look at changing the metrics for measuring success of the agreement. If they are tasked on resolving service desk tickets in 4 hours, for example, they might not be compensated for reducing service desk tickets by x%. If you want proactivity, you might be better off incentivising for that.

4. Unskilled (Or Poorly Skilled) Resources

One of the reasons people outsource, especially on projects, is to quickly get access to skills that you don’t have in house. The people you met during the vendor procurement process certainly showed you that they knew what they were talking about.

But  when you are into the project proper, the resources you find yourself working with daily might not be as good as those that you met at the beginning. And then there comes a point where you think that they really aren’t the right people to offer you what you were hoping for in terms of a skilled resource base.

Manage the issue: Additional training might help when the problem is specifically to do with your processes, but it isn’t much help if you are facing a partner project manager, for example, who doesn’t seem to know a Gantt chart from a RACI matrix. I’d be to say that it isn’t your job to train their staff in non-company specific skills like project management, business analysis, team leadership and so on.

Either ask your account manager to sort out the problems of competency or ask for the poorly skilled resources to be removed from your account. You should be able to do this under the terms of your contract – check first, and if you don’t have this kind of clause in your contract you should negotiate to get it in.

5. Partner Does Not Communicate

Communication can be something that falls through the cracks. When things get busy on projects, often (and wrongly) communication is the thing that suffers most drastically, most quickly. Everyone is off doing what they think needs to be done and those regular supplier/customer meetings get shortened or postponed or just cancelled.

Manage the issue: Better communication might start with you. Are you able to spend more time on it from your side? Can you make the right people available, or set better expectations about what you want to hear about and how? Collaboration tools or shared software might help, or even simple things like making sure people have direct contact details for each other.

If you’ve done all this and the communication you have in place is still not adequate for you, then you need to escalate this to the vendor management.

Have you hit any other problems managing your outsourcing arrangements? Let us know in the comments below.

Posted on: July 22, 2016 12:00 AM | Permalink | Comments (5)

5 Considerations for New Vendor Relationships

Categories: supplier management, video

In this video I talk about the 5 things that you should consider before you start a new professional deal or relationship with a vendor.

Posted on: June 01, 2015 08:32 AM | Permalink | Comments (0)
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