How To Identify Business Processes To Be Outsourced?

Submitted by: R Chopra

In today s competitive world, it is critical to account for each investment and maximize the ROI. Outsourcing can certainly help in maximizing the ROI especially for non-core business processes. So once a company has taken a strategic decision to outsource, how it should go about identifying business processes that can be outsourced.

A company should always adopt a methodical approach for evaluating each business process and identifying the ones which can be outsourced. By taking a methodical approach enforced by overall corporate strategy, company can ensure that there will be a consistent evaluation method which avoids erratic decisions if left to teams and individuals to decide.

The key principle is simple, the process of determining WHAT to move offshore or outsource, one must consider all and any parts of the value chain if it is a non-core business process and can be done faster, cheaper, etc. by an external partner.

To help the customer, here is one method customers can use to have a clear view on the process candidates to move offshore. We are aware that there may be other variants of this method, so one should adapt this method before adopting it:

1. Consolidate Business Processes: Most of the times even customers do no have the overall, documented perspective of their own business processes. It is critical to capture and consolidate business processes so that customer s key stakeholders understand the processes.

2. Look at your Industry: One should look at the common processes in the same industry, which are often candidates for offshore model.

3. Identify Core and Non-Core Business Processes: Review your processes and make the first selection of candidates based on if the process is core to the company or not. Core competences and/or processes enable a competitive advantage for the company so they may not be good candidates.

4. Quantifiable Benefits: If one is outsourcing its business processes, it should be able to measure the results. Sometimes the business process is not big enough to deliver clearly measurable benefits.

5. Non-Movable Business Processes: In every organization, there are business processes that are subject to internal corporate politics and emotions, so preventing them to move them offshore. Sometimes business processes are heavily dependent on physical infrastructure, which can not be moved to ensure compliance.

6. Business Process Benchmarking: The business process benchmarking is going to provide a reference point, which can be used to measure and manage the outsourcing engagement, contracts, SLAs and relationships with outsourcing partners.

One may consider complexity (business process, technology), criticality to business continuity, risks involved, benefits to move offshore, and penalties not to move offshore.

7. Establish Outsourcing Framework: All the collected information so far should be analyzed and consolidated to define an outsourcing framework. The framework should provide the following:

Rationale for outsourcing (i.e. high level metric for offshore, outsourcing services) Holistic perspective of business processes Organizational perspective of business processes Infrastructure perspective of business processes Comparative perspective within the industry Consolidated list of internal and external services or business functions Required capabilities of offshore, outsource partners Key directions in negotiating the outsourcing deal, contracts, SLAs Effective Metrics based on Company s Objectives

About the Author: Rohit Chopra is a veteran in IT industry with a focus on offshore software development India(

extendcode.com

). Rohit has enabled solutions for Health Care, HR and Media verticals and written article on business processes to be outsourced.

Source:

isnare.com

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