Determine Objectives And What Is To Be Outsourced

Let’s first address objectives. From experience it is useful to define political, business, and technical objectives for each type of outsourcing that you will consider. If you just consider the technical objectives, then your evaluation could select a technically qualified vendor, but one that is poison for a specific country or region. You must balance the objectives.

The potential areas to be outsourced are many and depend on the specific project. Figure 8.2 gives a sample list. It is not intended to be comprehensive, but merely to show what you have to consider. Notice that many of these are political—ah, this is the real world.

Figure 8.2: Examples of Potential Outsourcing Areas

How do you determine what is to be outsourced? Well, you would make a list of the various activities and task areas that will have to be addressed in the project. That is a start. Then you have to add to it the political areas. You should consider what other companies who have been successful have done. This is very important. A fundamental guideline is that:

You don’t want to be first in a country to do some kind of work.

If you are first, you are a pioneer and you will likely get many arrows in your back! If you are first, then you have to establish a new way for firms like yours to work with the government. Here is another guideline:

Hire a consultant who worked with an earlier, on-the-spot firm.

This person can provide valuable insight into what is needed and what works and what doesn’t work. You cannot underrate experience. If you do it yourself, you are likely to repeat the mistakes of your predecessors. For a fast food and convenience chain, we suggested that they hire someone who worked with a fast food company to get them started. This can work to your advantage. Many of the people who are good at setting up a company operation are not good at maintenance and operations. They do not fit in. These people have a tremendous amount of knowledge and expertise that will be useful to you.

You also want to be concerned about measurements at this stage. How will you evaluate the vendor’s performance? Can you identify specific milestones and quality standards? For construction or engineering this is rather straightforward. However, for marketing, software, political outsourcing, and other activities, the situation is not crisply defined. Before you go any further, this is the time and opportunity to discuss what constitutes acceptable and unacceptable work. How will the work products be evaluated?

In general, you will be outsourcing more than one activity in international projects. There may be outsourcing in specific countries as well as general outsourcing of a function. Many firms make a basic mistake here. They do not look at what is to be outsourced overall; instead, they address in a piecemeal, ad hoc way one area at a time. This can be a problem for the following reasons:

The activities to be outsourced may interrelate to each other. If there are problems in this interface, then you are in trouble.
There may be some economies of scale in outsourcing in which you can combine several activities for one vendor.

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Determine Objectives And What Is To Be Outsourced

Determine Objectives And What Is To Be Outsourced