Strategic Outsourcing Professionals

It seems pretty easy to outsource IT or Business Process functions. The concept is simple enough. You draft requirements, build a plan for implementation and then transition to your outsourced vendor for execution. Ah, if it were only that simple. Obviously, there is a lot to successfully sourcing the correct vendor to perform services for your business. Any serious sourcing professional understands the process and challenges, but for those that are just diving into the outsourcing realm, there is one ‘gotcha’ that you need to think about – working with offshore providers brings a new set of challenges with cultural barriers.

Most folks in the outsourcing community will agree that one of the largest challenges with successfully transitioning a business function is transferring knowledge to a distributed environment. Further, once the knowledge transfer occurs, results have the potential to vary greatly. I call this effect ‘Lost in Translation’. It is similar to playing the game ‘Telephone’. Do you remember that game from your childhood? Basically, a group gets in a circle and the first person communicates a message and asks the next person to relay that message. The process continues through the circle and by the time the message gets to the last person, it tends to be dramatically different from what was originally communicated. In outsourcing, this unfortunate ‘game’ of communicating is commonplace. When you think about it, collaboration with internal teams can be challenging enough with a virtual environment; when introducing a global collaboration paradigm where broad cultural differences exist, the challenge grows exponentially.

I have yet to find the golden answer to overcoming this problem in the outsourcing environment, but there are things you can do to mitigate this risk. The concepts may seem simple, but then again, so does communicating. So, without further ado, here is my advice to overcome communication and cultural barriers in the global workplace.

• People tend to be more productive and assume greater ownership with face-to-face communication. When outsourcing, make sure key managers get together once a quarter and leverage teleconferencing for other key meetings. It is easier to develop relationships when you are able to see the people you are engaging. Body language is a key indicator; you need to understand if resources have blank stares or if people are onboard with key discussion points.
• Provide a solid training overview of your American business and segue into why the vendor resources are necessary to complete the company objectives. This will provide background and will help facilitate ownership of responsibilities for the vendor resources.
• Empower employees and vendors to collaborate with software. Whether you are in a Manufacturing, IT or BPO environment, there are plenty of tools in the marketplace that will manage both SLAs and Change Management. For success, use tools to your advantage.
• Introduce American cultural in a simple and entertaining manner. Be resourceful and forward movies, commercials, magazines and just about anything else you can think of that provides a reference to American culture. Yes, this really works; especially in a call center environment. Agents will absorb this material and build more rapport when engaging customers.
• Empower communication through instant messenger software. In a global footprint, instant messaging is a great forum for communication and can help your resources get clarification faster.
• Brand the vendor facility with marketing materials to develop a sense of corporate pride. People are more productive and will engage in conversation or email more frequently when they have a sense of belonging.
• Manifest collaboration to deliver positive results by making a point to know your co-workers and partners. Encourage your team to do the same. At the end of the day, the more you know about your co-workers and vendors, the more comfortable, productive and enjoyable the partnership(s) will become.

I hope this post doesn’t seem ‘Lost in Translation’.  If you have other ideas to combat this problem, please let me know or comment to this post.  I am all ears.

Recently, our team sat down to review and discuss proposals from vendors providing services exclusively in the Asian and Central American markets. The conversation flowed like many sourcing discussions; we talked about how the vendors differentiated their service offerings and the value they could bring to our business. For the most part, all the proposals were well prepared and we enjoyed the discussion with the exception of one thing - the global footprint under review.

With the Asian and Central American markets already saturated, it is extremely difficult to keep an offshore BPO provider in these regions operating seamlessly. Vendors in these regions are constantly battling attrition with employees moving for increased wages or better opportunities. The vendor attrition rate puts a strain on customer interactions for the American business, which in turn drives down brand-equity. This is not anything new to an outsourcing professional, but it is flabbergasting to understand how vendors, both large and small, are responding to the market saturation.

It comes as no surprise that the Indian Rupee, Filipino Peso, Costa Rican Colon and plenty of other foreign currencies have gained momentum against the declining US Dollar. When you couple the declining dollar with globalization, you have an issue of thin margins for outsourcing vendors. To hedge risk, vendors are now asking customers to accept a currency fluctuation clause in the contract with regards to pricing. This is what drives me to challenge vendors pitching the acceptance of currency risk clauses in contracts; the concept defeats the key principles of cost and risk reduction with outsourcing.

I understand how it can be hard to stay competitive in the BPO marketplace; especially in Asia and Central America. However, vendors should make an effort to develop creative solutions rather then simply asking for a customer to burden additional risk to an increasing problem. I would offer the suggestions of hedging foreign currency and start researching new outsourcing destinations so your customers don’t need to accept unwanted or undesirable risk. I hear Mauritius is a real nice place, cheap too.

As you begin to engage a Request for Proposal (RFP) process for sourcing procurement, here are a few items to think about before you undergo mass distribution to potential vendors. Typical procurement methodology will generally suggest that you create competition with bidders, clearly outline expectations for services, enable an objective method of evaluating vendors, and setup an avenue to negotiate the best possible terms, conditions, and pricing. While this is all true, it can be challenging to ask the right questions in an RFP. Additionally, most large vendors have streamlined their customer acquisition process to bid on more projects. Essentially, they have templates designed for the high-level and standard questions so they can focus on customizing a few key questions in the response. That being said, vendors will look at an RFP to assess the likelihood and effort needed to win the work. For best results, read the RFP through the vendor’s eyes to understand their motivations for constructing a response.

In my experience, this is what a vendor will contemplate when evaluating the incoming RFP.

• Is this a new service opportunity or is there an incumbent already providing service?
  • If there is an incumbent, why is the customer looking to make a change?
• How unique are the services and is there a way a vendor can differentiate their offering?
• Does the customer know what they are looking for with their RFP or is it necessary to engage in a lengthy procurement process with rounds of interviews and questioning?
• How big is the opportunity if the vendor wins the business?
• Does acquiring the customer have any strategic benefit for developing or winning other lines of business?

While this may seem simple, positioning and addressing these questions in the RFP correctly should reward you with higher quality responses and more competitive bids.

Here is an example of what not to do with your RFP, and a tip for how to get more competitive bids when submitting an RFP for call center or customer care services. It is bad practice to tell a vendor your current seat capacity or what your projected seat capacity may be for the future. This can be a critical mistake, especially if you are exaggerating the capacity to get better pricing. By disclosing capacity, you will guarantee a monthly minimum in the contract or a pricing adjustment after transition. To avoid this aggravating situation and business risk, include detailed information in the RFP that discloses twelve months of call arrival patterns, ninety days of forecast and the desired service metrics you are looking to achieve. This will force the bidding vendor to provide a creative and efficient solution for the right price.

Hopefully, you can leverage these suggestions to improve your company’s procurement process. If you end up getting a heck of a deal or even a promotion as a result of these tips, my favorite beer is Anderson Valley Boont Amber Ale. You will need to email me for my address or come to San Luis Obispo, CA to buy me a pint. Cheers.