We recently completed an analysis of the value a series of outsourcing programs had created for a very large company. That company had never truly baselined and tracked value outsourcing programs had created. So, the exercise was similar to a paleontology event trying to find the old bones. The client had created value through offshore labor arbitrage, but because senior executives didn’t enforce a “take it to the bottom-line” approach to outsourcing, which is what they had desired, day-to-day operations leaders years later continued to expand outsourcing relationships - with absolutely no savings. Instead, continued expansion was driven by limited investment in automation and process improvement. If the client had invested in technology and process improvements, there would be no need to keep some resources - regardless of where they were located.
Human resources outsourcing has a similar problem…and today we’ll look at the value Human Resources Outsourcing provides. Rather, what it fails to provide.
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Vendor managers often are overwhelmed with metrics, but these metrics do not always give a complete picture of the outsourcing vendor’s operations. We’ve mentioned a variety of metrics to date, and today we’re focusing on the major categories of metrics vendor management teams should focus on.
In short, there are operational service level metrics, key performance indicators, and transformational metrics.
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Vendor managers know this well: It once was very easy to stand-up and count the empty chairs to know who was or wasn’t in the office today. For the more technically adept, it was easy to login to the workforce management system and know exactly what your schedule adherence was for the hour, week, or month. Once you outsourced, you lost line of sight to a fundamental aspect of operations management: ensuring you have enough agents available at peak intervals or days to meet your desired service levels.
Less skilled vendor managers will say, “That’s the vendors responsibility. I don’t get into the details, and making sure people arrive on time is one of those detailed areas that vendors should manage. After all, it’s their own people.”
They are wrong. Very wrong.
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Outsourcing vendors’ sales executives make well more than $200k per year. Needless to say, if you have made the right choice to run a RFP despite the vendors’ sales team’s best efforts (sales teams never want objectivity, they want to sell based on their relationship with your executives), you can pretty much ignore much of the vendors’ written responses. Behind the scenes, a well-paid group of junior salespeople are busy copy and pasting responses given to other companies into your proposal format. Of course, a well-written RFP prevents much of this, and we’ll soon be publishing more on that topic, but needless to say, it’s fairly impressive how much sales jargon, three letter acronyms, and cryptic diagrams a vendor can jam into a proposal.
This is why site visits are essential. You have to see the actual operations management team that will process your work. The trick, however, is to have absolute control over the agenda, otherwise the vendors’ sales team will copy and paste their same lame material into a PowerPoint.
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