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The 7As of Effective Outsourcing Deals

by | Published on Dec 15, 2014 | Business Process Outsourcing

Outsourcing DealsToday’s business environment is highly complex and dynamic. The old and outdated system of leadership and governance cannot help organizations deliver a high level of productivity or performance. New command and control structures with distributed power, decentralization, and empowerment are required. High performance organizations should extend the culture of leadership and governance to the BPO company or outsourcing company they partner with. Imposing or adapting to diverse cultures can be difficult, but understanding each other’s governance culture will drive efficient operations. Such attitudes are necessary to ensure effective outsourcing deals.

According to an article published in Outsource Magazine, seven attributes, say ‘7A’ can help organizations to survive and thrive in the present day complex environment. Their outsourcing partners should also understand these seven attributes to deliver high performance.

Organizational Challenges

Increasing complexity is one of the major challenges that organizations face when it comes to attaining/delivering high performance. Rising complexities increase risk levels, blur accountabilities and responsibilities, and lead to frustration in the workforce. This in turn can affect work performance. Many organizations address complexity by increasing the number business units, and by devising new policies to gain control across these diverse business units. However, complex structures and policies are difficult to manage in the long run. The key lies in managing the existing complexities by adapting to dynamic environments. Leadership and governance must play a fostering role rather than being a stumbling block that holds back organizations from adapting to constant change.

The 7As for High Performance

Organizations seeking to attain high performance should work on cultivating the following 7 invaluable attributes:

  • Agility
  • Accountability
  • Awareness
  • Adaptability
  • Alignment
  • Action
  • Achievement

Strong leadership and governance is required for these 7As to get entrenched within an organization. In order to develop strong leadership and governance, the organization should have a real purpose, which should be reflected in all internal decisions and actions, especially when they follow a distributed power structure. It is better to follow an enterprise-wide philosophy, where everyone is responsible for strong leadership and good governance (no centralized command and control) that facilities alignment between the board and operations, between strategies and performance and between risk and rewards and resources allocated to these.

Need for a New Model of Governance

Both strategic governance and operational governance are necessary to drive an organization towards high performance. In strategic governance, aspiration and inspiration are used as the primary means of control whereas in operational governance, instruction, infrastructure and information are used as the primary means of control and influence.

Strong leaders are fully aware of the limitations of traditional top down control structure and work to redesign the governance culture in such a way that employees can also engage in the strategic and tactical direction of the organization. A high level of trust is necessary on the part of the organization and it should also have the oversight to check unacceptable and risky decisions. In fact, empowered organizations need a new model of leadership and governance, with distributed power, coordinated decisions and compliance with organizational policies and regulations.

New Governance Model and Outsourcing

Complexity and change are the basic foundations of strategic outsourcing deals. Unlike traditional outsourcing deals, strategic ones are long-term affairs, which are subject to constant change. These deals also relate to governance. The well-informed use governance as a mechanism to deliver strong leadership, improve performance improvement, and manage the joint teams. Senior managers check the SLAs are keeping to the performance and time schedules.

Outsourcing governance is a distributed leadership concept, which helps organizations to distribute power (to the service provider), coordinate decisions, assure compliance with organizational policies, and procedures, and more.

What the 7As mean for outsourcing

Awareness: – There should be a better understanding of the changing environment, both internally and externally, and it should be evaluated how this will impact the organization.

Adaptability: – The service provider should provide be flexible to the needs of the client. Projects should be adapted to the changing needs of business in a way that it can live up to client expectations and requirements.

Accountability: – The outsourcing team should be aware of the responsibilities of each member. They should be flexible to changes and ready to take up any role based on the changing needs of the clients. Accountability ensures that there is someone responsible for ensuring excellent performance and conformance.

Agility: – It should be ensured that operational teams, processes, structures and systems set up for delivering outsourcing services ensure excellent performance.

Alignment: – It is very important that every part of the outsourcing team should know what the rest is doing. Any improvements or changes in deal, processes, activities, people or methodologies should be communicated and carried out as a joint effort.

Action: – Action has to be coordinated and implemented across the different organizations and teams. Each member of the team should have the responsibility of acting to deliver the desired outcome.

Achievement: – The benefits that can be achieved and their impact on business should be evaluated. Also, consider the additional benefits have been gained. Achievements should always be seen in terms of broader organizational goals and strategic objectives.

Today, BPO companies and service providers are looking for a healthy, long-term relationship. They adopt innovative governance models to drive effective outsourcing deals and create a win-win situation.

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