How Managed Outsourcing Can Work Wonders For Your Business Growth
Offshore outsourcing

How Managed Outsourcing Can Work Wonders For Your Business Growth

By Mainak Biswas December 06, 2013 - 1,640 views

Managed outsourcing is the practice in which the clients (outsourcing company) give greater control to the vendors (service suppliers) to manage their outsourced projects by following a Service Level Agreement (SLA). It is often the most preferred choice for the clients with clearly marked out service deliverables and where the vendor is completely in-line with the client’s requirements. The contracts and pricing are based more on the project outcome rather than project inputs employed. It is beneficial for both the client and the vendor considering a long term outlook.

As per the client’s preference, managed outsourcing can be based on a BOCO (business-owned, contractor operated) or a COCO (contractor-owned, contractor operated) model. Besides this, the client and vendor can also come to terms with combined ownership of the project in case the risk factor is high and the outcomes are tough.

Let us take a look at how managed outsourcing can help your business grow and get excellent service deliverables.

Benefits of managed outsourcing for your business

  1. Measurement of supplier’s operational performance – As the SLA is agreed upon; the vendors take extra care to abide by the terms and conditions. And it arms the customers to reward or penalize the vendor depending on the quality of service delivery/service excellence (mostly applicable when the outcomes are clearly defined by the customer).
  2. Focus on core business activities – By hiring IT expertise with greater vendor accountability and involvement, you put your business at ease. And ultimately you get more time in dealing with core strategic issues and focus on decision-making process.
  3. Cost economy with reduced ownership and investment – It reduces your investment in IT infrastructure including hiring of expert IT staff and investment in their training. It also helps you in maintaining a balance in your capital investment in hardware and software and frequently evolving IT technology.
  4. Reduce daily pains and pressures both for your company and vendor – You don’t have to take pains in dealing with day-to-day issues and getting the results. The key task of your company is to deploy a project manager to supervise the vendor and provide support in case of complicated issues. On the other hand, the vendor gets freedom in decision-making process and employing best practices to deal with project implementation including the number of personnel to be hired or method deployed.
  5. End to end service fulfillment – The client can clearly specify performance requirement through pre-agreed terms and conditions including degree of control, support, accountability in case of failures, service continuity, security and risk management and so on. The vendor thus takes complete responsibility of end-to-end service deliverables.
  6. Improved follow-up of service delivery schedule – Keep your project manager well-fed by following an integrated project schedule in association with the vendor, to keep a real-time track of project’s progress. He can do so by reviewing and tracking budgets, key milestones, checkpoints, core deliverables etc.
  7. Value creation by vendors – The vendors add a lot of value to the project by strictly following a documented set of rules, tools, processes and holding ownership risk. The vendors make sure that the cost is optimized towards service equilibrium besides adhering to the clients’ need.
  8. Highly experienced vendors – The managed outsourcing vendors have a vast experience in dealing with multiple clients from multiple locations with their skilled labor base.  As opposed to staff augmentation services, they are more knowledgeable, flexible and expert in providing solutions as per the client’s suitability.
  9. Transparency in pricing – As the pricing in managed outsourcing is tied to service level and business objectives rather than number of hours worked, it ensures transparency in the price charged by the vendors.
  10. Increased business productivity – The productivity of your outsourced business is bound to increase. It reflects long term perspective of your company thereby boosting confidence of investors and stakeholders.

Though managed outsourcing can do wonders for your business, it is advisable that you gradually shift from in-house staff augmentation services to managed services as complete unawareness and over-dependence may create a trouble for you in dealing with service delivery issues. One step at a time is one of the best ways to move forward in this arena.

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