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AUGUST 2006

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	The Perfect Storm QUOTE “They must often change, who would be constant in happiness or wisdom”  Confucius		Outsourcing as a Strategy for Globalization Over the past few months our newsletters have examined elements and implications of the Perfect Storm brewing in today’s economy.  We’ve discussed how breaking down traditional silos, developing new employee competencies, and organizing cross-functional groups are all critical success elements for organizations striving to ensure relevance and survival in the global marketplace.  Through these newsletters a common denominator has emerged – the importance of teams in our enterprises of the future. In order for our businesses to prosper in the future our teams must thrive.  We must help teams thrive through a combination of individual, operational, and organizational transformations. In this month’s newsletter we’ll discuss a major player in the Perfect Storm —Globalization — and the trend toward outsourcing as a natural response.  Globalization is impacting most organizations.  No longer are we working within defined confines — information and knowledge are flowing everywhere and anywhere.  Our competitive landscape has become international.  The need to do it better, faster, and cheaper has never been greater, and companies are increasingly looking globally to get it done. In this newsletter we will answer two fundamental questions: What are the potential benefits of outsourcing? How do businesses ensure that potential benefits from outsourcing are achieved?  (Hint: Successful outsourcing requires a team-based approach.) What are the potential benefits of outsourcing? In today’s global economy, organizations are outsourcing for a variety of reasons.  Some of the more common potential benefits are to: Increase focus on core competencies:  Outsourcing lets a company and/or organization focus on its core business by having operational and transactional functions assumed by an outside expert. This allows the company to focus its resources on knowledge work, innovation, and meeting its customers' needs. Improve speed and time to market:  To stay competitive in today’s global economy organizations must rapidly develop products and solutions, and get them to market before someone else does.  Outsourcing can be a means to expedite project turnaround and gain market edge. Cut costs:  An outside provider's lower cost structure, which may be the result of greater economies of scale and/or other advantages based on specialization and location, can reduce operating costs for the company outsourcing the work. Gain access to specialized skills:  Some organizations turn to outsourcing when they do not have the skills and capabilities available within their organization to perform a particular function well.  Outsourcing can give organizations access to world-class talent and capabilities. How do businesses ensure that potential benefits from outsourcing are achieved? It is one thing to project benefits and another to achieve them.  What can businesses do to prepare for and manage outsourcing initiatives to achieve optimum results?  The answers are found by recognizing that outsourcing is accomplished by teams.  These teams are usually composed of people from different companies who must now work together for a common cause.  As we pointed out above, teams work best when a transformation happens at three different levels — individual, operational, and organizational.     The Individual Level — While many organizations outsource to offload transactional work, they are left with a new kind of work that is far from transactional.  For a client/vendor relationship to be successful, all involved employees must adopt the mindset of “business partner.”  Companies must make sure that their employees have the skills and tools to work consultatively as part of a unified team.  To be an effective business partner requires that individuals have essential consulting skills such as the ability to communicate effectively, influence, provide feedback, build trust, and work in teams.  Without these necessary skills, the team breaks down, resentment can build, and the client/vendor relationship can be seriously harmed. The Operational Level — For an outsourcing engagement to be successful the relationship must be examined on an operational level.  Steps must be taken to fully integrate and link business objectives, processes, and measurement strategies across both the client and vendor operations.  When these operational mechanisms are not integrated the efficiency and quality of service will forever be limited.  The Organizational Level — The organization can greatly impact the success or failure of an outsourcing endeavor.  When a company embarks on an outsourcing relationship their culture or “how we do things around here” becomes exposed and a new culture aligning the two organizations must be created.  This can be a challenging time for many companies.  It is important for the client and vendor to examine all aspects of both organizations and their cultures.  For example, are organizational visions and goals aligned?  Will the organizational structures support a joint outsourcing team?  Are employee perceptions accurate and are communications effective?  What is the readiness level of key stakeholders?  Paying close attention to organizational factors will help ensure the success of any outsourcing initiative. At Advance Consulting we’ve helped many organizations with their outsourcing endeavors.  Our products and services can assist you in aligning your business processes, creating a cohesive culture, and ensuring that your employees have the appropriate skills to make your outsourcing venture a success.  For more information on how we can assist you, please contact us at (831) 372-9444 or email us at advanceinfo@advanceconsulting.com.
			FIND OUT MORE Advance Consulting is a professional development company that provides state-of-the-art consulting services, workshops, seminars, and speaking engagements throughout the U.S. and internationally. Find out more at www.advanceconsulting.com, send us an email at advanceinfo@advanceconsulting.com, or call us at (831) 372-9444 for more information.