3 Key Outsourcing Strategies To Understand
Key takeaway: “Optimising outsourcing requires organisations to fully consider the three key areas of opportunity, and the most effective outsourcing strategies can help address each area:
- Transitioning appropriate like-for-like activities
- Transforming current processes to best leverage the offshore platform, and
- Enhancing the services of support structures through new initiatives
INTERVIEW TRANSCRIPT
Wayne Bucklar: How do you describe your offshoring and outsourcing services?
Jamie McBrien: I think there’s a whole lot more to it, and those who are doing it well are thinking well beyond that traditional view, which is what a lot of people might have had years ago. Of course, there still the one-to-one replacement of taking a resource onshore in Australia, New Zealand, Europe, what you place them in a lower-cost jurisdiction. That opportunity still exists and will always exist.
The people who are making the most of it are those who are using it as part of their business strategy to create sustainable growth. That includes thinking about the processes that they’re currently running onshore and thinking about, ‘How can we transform those?’, ‘How can we take some of the low-value cost activities, push them somewhere else, and then increase the value of what we are doing onshore. The other area is around enhancing business capability, by looking at things that may not be justified from a cost perspective in your home country, but for which the business case stacks up offshore.
Wayne Bucklar: What is the process for like-for-like replacement?
Jamie McBrien: I always think about those things that are enterprise generic and for which cost is a driver. There are always activities around processing, accounts payable, order processing, purchasing, and customer service. All of those activities we can easily document, and we can easily proceduralise. These activities are always going to be the easy like-for-like replacements that we can do at a lower cost.
Beyond the basics, there are also other candidates to start thinking about, including some of the general accounting areas, maybe some of the other sourcing areas and procurement activities, and high-value, customer service including sales. There’s going to be other bits outside of that where you say to yourself that a resource offshore has the equivalent capability, the knowledge is transferable, the system is accessible, but we can do it at a lower cost. Those opportunities are always going to exist, and are where we find most clients start with their offshoring and outsourcing strategy.
Wayne Bucklar: Why have small to medium businesses gone to outsourcing and offshoring?
Jamie McBrien: Small businesses, as I’ve seen, have an opportunity to get access to capabilities that might otherwise prove difficult, in fact we have seen a lot of regional clients that struggle to find capabilities. They’re looking to enhance capability, and they’re also looking to get more out of the team that they’ve got. This is where I start to think about one of the other strategies that organizations have. That is, how can we transform our business processes in higher cost locations – Australia, the UK, New Zealand, the United States- to get the most out of the offshore opportunity?
In our home countries, we need to hire people who have a breadth of capability – they’re on relatively high salaries, they need to be able to do detailed work, but also they need to be able to do the high-value work.
If we can look at some of those processes and look at some of those roles, and say to ourselves, ‘What parts of those roles could we take out?’, we can then look to build support teams or shared services that change the way that we do things.
Two of the key areas that I often see this happening in, is in Sales and Human Resources. If we start with the sales function, a lot of the time, a salesperson needs to be able to go out to speak, negotiate with a client, but also at the same time, update the CRM, do the follow-up, make sure all the admin is done, and cleanse the data list.
If we think of some of these activities and we take them off that person, we might not be able to justify additional headcount in our home country, but they could be justified to be delivered offshore. The result of that is that if we can successfully transform that process, we can actually get our onshore salespeople to be doing a whole lot more. If the expectation had been to do 10 meetings a week with a customer or a client, and we can move those activities, let’s push the expectation up to 20 meetings a week. In the end, you are really getting the onshore resource focused on what you are paying them. This is where we see a lot of these medium-sized businesses have been really successful and innovative in a way that they think about it.
Similarly, around things like HR Administration, you hire an HR professional who might need to do a range of things from recruitment, to letters of offer, to getting out there and actually doing performance management, and then touch on industrial relations. When you’re in a small to medium-sized business, someone that you hire needs to have this breadth of responsibility. You might not be able to justify getting a big team.
If we think about those processes, again thinking of what we could push off, we could potentially push them to another layer, that ‘offshore layer’ as I call it, to actually support those onshore resources, and get them focused on what you’re paying them the higher money for. That means getting out there, and doing more engagement with the business, more leading more training, focusing more on organizational development and learning. Focusing on all those things that really are where their capability is focused on, and really giving the money and paying them is where the energy and focus should be.
Wayne Bucklar: Will outsourcing help specialists devote more of their time to their specialization rather than administrative tasks?
Jamie McBrien: Yes. It’s always interesting that when you start to bring these discussions up with clients, and you do see the people in those roles start to fall back on what they know, and have a little bit of concern. It is sometimes the case that there is still the potential that easily rest on their laurels, they can easily sit there and go well, ‘I’ll do my 10 meetings a week and the rest of my week is filled with X, Y, & Z’. If you do take those activities off, you increase what it is that I need to do in the value-added sphere; they need to get out there. That’s something a little threatening to people onshore when they’re told, ‘These activities are moving. You now need to step up and do more of X, Y, and Z.’
But really, at the end of the day, that’s what you’re paying them to deliver, and sometimes this changes benefits the organisation onshore as much as it does offshore.
Wayne Bucklar: How does optiBPO help enhance business capability and new services?
Jamie McBrien: Look, if the strategy number one is ‘Think about like-for-like, let’s do it lower-cost, let’s do it quicker, faster’. Number two is, let’s transform some of our business processes to improve the value-added component that we deliver here face to face. Really, the third area is thinking about enhancing business capability, and that means doing more with the offshore resource potential.
Some of the areas that we see organisations considering enhanced services are in areas such as research, getting out there and doing more market and competitive research on new clients, which again might not justify headcount or resources onshore.
Digital analytics, getting in there and doing a whole lot more work around those areas, and be it in SEO or other parts of the digital world.
Lead generation, helping with building in those databases, getting that first part of a sales funnel going, and getting it up to a point. There is also the opportunity for new service areas, and we have had several clients build new services through leveraging their outsourced team. We have people in the engineering sphere building quantity takeoff services, and accounting firms building bookkeeping and financial analysis services, as two key examples.
Building these additional service offerings might not stack up if you’re a small or medium business, or even a medium to large business, many times in Australia. Now, even for ourselves, as a provider of services to help people plan, build and manage teams in the Philippines, one of the services we provide is a documentation service of standard operating procedures (SOPs) and work instructions. We have built this team in the Philippines, drinking our own medicine.
There’s no way we could justify a team like that in Australia, mainly due to the cost impact on the amount we would need to charge clients, which just wouldn’t be acceptable. So, there are a lot of people across a range of industries doing these additional services, providing further income streams that are either supporting, an addition to, or an enhancement of their core business.
Wayne Bucklar: What makes optiBPO unique?
Jamie McBrien: optiBPO helps organisations plan, build and manage dedicated teams in the Philippines. They’re an extension, not a separate part of your onshore organisation. We have offices in Sydney, London, and, of course, the Philippines. Importantly, a key part of getting things right in the offshoring space is understanding the best strategy.
We work with clients to build their strategy, to think about how we should approach this problem. As well as that, another key enabler is ensuring that we have processes offshore and outsourced ready, and that means well-defined standardised as much as possible, with detailed work instructions. A lot of the time, clients don’t have those things in place.
We help them rapidly and cost-effectively get those things up to speed. So we help them, hand-hold them through that whole process to deliver outsourcing as a managed service. We work with you onshore to help create your offshore success.
Wayne Bucklar: Jamie, it’s been a pleasure having you with me again. Thank you for your time.
Jamie McBrien: Thank you, Wayne. I look forward to speaking with you again.
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optiBPO provides a unique service offering in delivering BPO as a managed service. We help manage your outsourcing risk by starting small, clearly defining scope, proving the concept, building confidence, and then extending.
