Very popular with large companies to outsource level 1 and level 2 services to a vendor who has global presence and where most of the operations are done out of low cost location like India, Philippines and many other such locations. This is a very good strategy to bring down one’s labor costs which nowadays is a must among many steps one needs to take to bring down the operating expense. This ensures IT is contributing to the bottom line which eventually contributes to companies’ ability to give value to shareholders out of the investments they have made. Ability to be profitable assumes greater significance as businesses are currently operating in a very challenging environment. It’s no brainer for anyone to acknowledge that driving costs reduction programs are to be carefully managed so that they not only achieve the desired result but also ensure service quality is maintained at a quite decent level. Hence it is extremely important when you decide to outsource any technology service you should have the ability to measure that very service. If you cannot then holding the vendor accountable for what they have been hired for becomes impossible. One would lose hours of efforts to take them to task if there is a service degradation or risks to financial spend in case the outsourcing has been done on a managed service basis then we can safely say outsourcing did not achieve its goal. This brings me to discuss the various factors I think a company should take to ensure technology outsourcing is a success.
Clear Statement of Work – Critical Elements
• Tech manager should spend lots of time with his team to ensure he or she has articulated the service and expectations as clear as possible.
• List of technical tasks that are to be carried out. Take out ambiguity as much as possible
• Service Owner should spend good amount of time with procurement to analyze the costing per unit is in norm with industry standards.
• Unit levels for tickets/requests and Changes must be clearly documented with agreed deviations.
• Times frames as when the units need to be completed within as agreed by both parties.
• Business Continuity must be documented clearly to avoid service disruption if the vendor is unable to provide services form primary location for various reasons.
• Mechanism to derive credits if Units performed were less than agreed levels or there is a degradation of service quality.
• Clear vendor escalation path defined which is published and updated every month.
Hold Service Delivery Meetings / Metrics Review
• Hold these weekly to give feedback to vendor. Ensure the vendor service delivery manager is attending along with key resources.
• Ensure metrics are being vetted before they are discussed. Ideally service owner should have automated mechanism to generate metrics
• Hold the vendor Service Delivery manager accountable for any deviations or short comings as highlighted by the metrics.
• Ensure vendor service delivery manager comes prepared to the meetings preferably with a deck which is shared one day in advance of the meeting. The deck should contain meaningful data which reflects work done for a month.
• Make it clear to the vendor service delivery manager that any highlights are not BAU but work which was done to make the service better. Helps to save time spent on items which are not productive.
• Spend time discussing quality of work performed by vendor. Service owner to get inputs from his onsite teams to raise any issues in these calls and ensure vendor has a remediation plan to address them.
• If the outsourcing involves huge volumes then one should look at assigning a service delivery manager form the company side who can be single point of contact for internal teams to raise issues with or hold the vendor accountable for remedial action on their behalf.
Run Book Automation
• Service owner should look at repetitive tasks and work to automate them. This can potentially reduce both time spent on doing a task or increase no of units that can be done.
• Once automation is achieved one can potentially push more tasks to the vendor at same price
• Hold Level 3 streams accountable (Engineering in many organizations) to drive automation.
• Vendor staff attrition is a big issue while dealing with service outsourcing. Service owner does not have any Input as how a vendor deals with critical or experienced staff.
• Document in the statement of work clearly implications of service degradation due to staff attrition. There should be ideally a financial penalty clause in the statement of work for vendor failing to get experienced resource replacements.
• Otherwise every time someone decides to leave and you are in constant mode of knowledge transfers.
• There is general tendency to be aggressive towards vendors which is highly counterproductive. Give them ample scope and encouragement to perform and there will be clear increase in productivity.