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OUTSOURCING OPERATIONS:. THE UNANTICIPATED INTRICACIES/DETAILS. Scope of outsourcers : Data processing & telecommunications Client networks Computer maintenance Call centers Customer service departments.
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OUTSOURCING OPERATIONS: THE UNANTICIPATED INTRICACIES/DETAILS
Scope of outsourcers : • Data processing & telecommunications • Client networks • Computer maintenance • Call centers • Customer service departments.
Routine data processing functions are the core of a service oriented corporate strategy. • Issues of the development of new systems: user participation, need for continuous monitoring
Dynamic interfaces between outsourcers and clients Some strategic questions : • Will outsourcer’s requirements delay user’s ability to introduce frequent & major changes in products/methods? • How willing & able is the outsourcer to make changes in standard operating practices & how quickly & at what cost?
The Financial Trap of Outsourcing : • Cost cutting / cost savings / Profitability • Profit sharing on loss revenue Some Hidden Costs of Outsourcing Operation: • Contract flexibility needed for operations • It may not be a lifetime contract, but divorce is tough
Seek Partners, Not Just Vendors The main criteria for partnership : • An outsourcer who doesn’t simply ‘package’ its service or accept what clients say they want. • A contractor who will continue to explore the cost saving possibilities inherent in technological advances.
Client Failures to Educate Outsourcers • Client must be willing to put together a cross functional team and willing to learn a great deal about what outsourcers might do and how to do it.
Outsourcer – Client Coordination • Knowledge of the coordination issues. • The downtime issues. • Specifying response time and performance objective.
Client / Outsourcer Interdependence is Usually Understated. • Documentation of procedures for internal coordination. • Failures to interlock or coordinate properly, can create enormous costs. • Astute/smart clients select a contractor who already is working with sophisticated users in their industry. ASSIGNMENT : p.112 – p.119 Best Travel Service and Alton Magazine
Learning how to make continuous improvements • Ensure that ongoing operations coordination is effective. • Maintain high quality and effectiveness. • More attention given to customer retention / renewals. • New incentives to contractor for making / suggesting changes that improved service quality.
Critical Dimensions of Outsourcing Operation : • Very experienced outsourcers will developed routines that will not be totally compatible with existing client systems. • Most operations have more complex dimensions than are usually appreciated. • Be careful that the team that courts your business is not overselling (& over committing). • The client also needs to keep in mind the possibility that some competitive advantages will be lost.