Outsourcing in the age of digitisation
Outsourcing means contracting out certain tasks which were previously done internally to an external party. Now that digitisation is no longer merely an option but has become a necessity, outsourcing is becoming increasingly important. A ‘pay for use’ approach that allows activities to be thoroughly streamlined and carried out on demand, so that the company is free to focus on its core business without sacrificing competitiveness. But is outsourcing always a good choice? What are the pros and cons? What are the consequences, and what steps need to be taken?
THE ADVANTAGES OF OUTSOURCING
There are a lot of reasons why a company may choose to outsource a specific task, function or process. Here are a few examples:
- Better focus
Outsourcing can allow your company to concentrate on its core activity and the development and rollout of a sustainable strategy for the future. This gives your employees the chance to further develop competencies and professional knowledge within your own field. In the meantime, you can outsource work that contributes to the future strategy but for which you do not have the expertise in-house.
- Cost savings
Outsourcing a project just to save costs is not such a good idea. This type of work always involves costs too. However, a certain cost saving can be achieved when reducing operational costs. You have fewer personnel costs and the infrastructural, administrative and management costs can also be reduced to a certain extent.
- Increased threat to security
The volume and severity of data hacks is increasing. With some of the largest companies in the world having fallen victim in recent years to hacking, it would appear that no organisation is immune to this threat. That is why more and more organisations are outsourcing their IT security to experts. 24/7 monitoring, advanced threat detection, along with access to the toughest security software and firewalls, and the extra advantage of ‘disaster recovery procedures’ in the worst-case scenario.
Outsourcing comes in many shapes and sizes. It is very important to choose the right supplier. Look for a supplier you can rely on, who guarantees support and can provide the services you are looking for.
When you transfer a business function or process to a third party, you are letting go of direct control. What are the pitfalls and risks you need to avoid?
- The system provided is not a good match for the needs of the company.
If you choose the wrong provider, you could end up with a headache instead of solutions. And by wrong, we don’t mean that the provider is ‘bad’, but simply not entirely suited to your company’s specific needs. That is why you should opt for a system that is expandable and modifiable. Do you need to take certain legislation into account? Then make sure that your package is geared towards the same legislation.
- Confidentiality and security are not respected.
The epicentre of any company is the information that keeps it running. If you pass on confidential information to third parties, there is a risk that this confidentiality could be breached. Evaluate the outsourcing company carefully to ensure that your data is protected.
- Political and cultural issues.
With offshore outsourcing (outsourcing operations to a company that is based abroad), there is a risk that, as a client, you will have to take into account certain laws in that country. This could get in the way of a smooth working relationship. With offshore-outsourcing, the cultural differences are also greater. Misunderstandings may arise due to language barriers. Not understanding the culture of the outsourcing provider and the location where the outsourced work is done can lead to poor communication and reduced productivity.
- Quality problems and delivery deadlines.
In some cases, it is possible that an outsourcing provider is simply out to make a quick profit and will do so by cutting corners in terms of costs, thus delivering poorer quality. Delivery deadlines are also not respected sometimes. Be careful, because as long as they fulfil the terms of the contract, your company will have to pay. So, it is a good idea to always conduct a very thorough analysis before getting into bed with third parties and make sure that the candidate you have hired is qualified to do the job and can offer the necessary flexibility, even after the contract has been signed. Here, too, clear agreements make all the difference in maintaining good relationships.
We would like to give you a practical example from our own company. In addition to e-Learning, Onyx has a second business unit, Onyx One, a contractor management system. Basically, industrial companies organise the entire qualification and training process for service providers and contractors through Onyx One.
Outsourcing operations to third parties is sharply on the rise. Industrial players call upon contractors and/or service providers for multiple reasons. They often have specific skills and knowledge that contribute to the proper functioning of the company. It provides greater flexibility in operations and is increasingly forming part of the company’s strategic recruitment and personnel plan.
Confirming the qualifications of third parties is a complex, time-consuming and risky activity. Before a job can be carried out on the site, both the contracting company any each of its team members must complete a qualification process. With a contractor management system, this entire process is automated and streamlined. How does it work? The contract company uploads the requested documents and certificates and follows the required training. This is done in advance. Both parties are automatically notified if a problem arises (such as the expiry of the validity period for a certificate or training, for example).
- It increases safety
The client now has an overview at all times of the third parties who are located on the site. He can be certain that they are all fully qualified, have the necessary work permits, have completed the necessary training and tests and that their certificates are in order.
- It simplifies the administration
The process is largely automated, which saves considerable time. The system is structured in such a way that the contracting company uploads and supplements the information itself. That saves quite a few hours of work for the client. Checking the data, such as expiration dates for certificates and training, for example, is done automatically, which reduces the risk of human error.
- It provides an overview
Outsourcing the contractor management enables the client to maintain a clear overview. It also offers insight into the quality of the job carried out and the safety on the site. This makes it possible to verify whether legislation, guidelines, professional standards and local quality standards have in fact been respected.