Outsourcing: business opportunity during crisis

Passiveness is the worst response in these uncertain times and organizations should consider a structured approach to evaluate and implement suitable alternate service delivery strategies.

Outsourcing may provide significant opportunities nowadays if companies understand the complexities of the market during crisis. Opportunities to extract value have increased but one should not neglect the risks involved in alternate service delivery.

The temptation now is to move quickly to extract additional value. But, in the face of increasing market uncertainty, outsourcing arrangements demand a higher level of analysis. Here is some advice for organizations either looking to take new opportunities or who already have outsourcing arrangements:

If you are considering taking new outsourcing opportunities:

  • Determine the scale and scope of work appropriate for an outsourcing arrangement, analysing the options to expand it to maximize your new opportunities;
  • Ensure the evaluation of potential service providers includes a thorough assessment of the impact of the economic crisis on current and future operations;
  • Consider new locations that may improve your delivery model. As service providers are moving towards periods of slower growth, you could encourage profit sharing and performance based incentive arrangements.

If you already have outsourcing arrangements:

  • Review the service providers’ expectations and commitments in existing arrangements and identify areas that need additional focus;
  • Assess whether the objectives of the original business model have been adjusted to account for any change to your business strategy/requirements;
  • Consider the need to change scope, scale or terms and focus of the current arrangement to increase commitment level.

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