Introduction

The benefits of outsourcing in the 21^st century have brought virtually all multinational companies to outsource part of their non-core services, may it be to manage their consumer interactions via call center or 3^rd party service center agents, to manage their payroll operations, their transactional finance services, their PR activities, or management of their IT infrastructure. With the emergence of new digital media such as Social Media and Mobile, a new kind of outsourcing increasingly comes into play: Digital Assets maintenance outsourcing. However, the rules of outsourcing have not changed, and every manager is bound at one point or another to ask himself or herself the following question:

• What process should I outsource?
• What outsourcing model is right for me?
• What are the outsourcing pitfalls that I should avoid, and what can I learn from outsourcing best practices?

What outsourcing model is right for me?

Traditionally companies have been considering 3 distinctive outsourcing models: each bringing their own advantages and drawbacks:

• Offshoring: Outsourcing a specific process or operation to another market, often for cost reasons.
• On-shore off-site outsourcing: outsourcing a specific process or operation to an expert company, located in the same market as the outsourcing client. This is often the case where a strong link to the local market is required, such as for PR operations outsourcing or Customer care outsourcing for instance.
• On-site outsourcing / on-site contracting: outsourcing a specific process or operations to a 3^rd party, located in the same facilities as the outsourcing client.

In the recent years, as companies started to realize the importance of on-site control while keeping a cost advantage, a new hybrid model emerged:

• On-site Management / off-shore operations outsourcing: outsourcing a specific process or operations to a 3^rd party expert. On-site presence for internal communication, direction, control and communication of insights gathered, while keeping an off-shore operational presence for cost effectiveness.

Off-shoring outsourcing

Off-shoring is the most visible and talked-about outsourcing model. Its advantages and drawbacks have been discussed at great length over the last 4 decades It is the most cost effective model and as such continues to attract the most attention.

Off-shoring will help you:

• Manage your seasonal demand through variable headcount planning
• Keep your operational cost low
• Manage your office real-estate effective, by having a team located outside your facilities
• Focus on developing your headcount on your core activities
• Services multiple markets, with a standard – if often slightly customized – approach

However, full offshoring will not necessarily be the best model for your organization if:

• Your outsourcing management maturity is still at a low level
• The outsourced process requires a high level of interaction with your internal team
• The recipients of the services outsourced require a specific local knowledge that affect the level of service
• The outsourced process is still not stable and relevant objectives are still fluid

In this light, off-shoring your web content management or your payroll operations – relatively stable and market independent processes – will make sense. However, fully off-shoring your PR operations or Loyalty program activities – which require high local insights and high interaction with your local marketing teams – is not recommended.

On-shore Off-site outsourcing

On-shore off-site outsourcing is the second most common outsourcing model. It will help you:

• Manage your seasonal demand through variable headcount planning
• Manage your office real-estate effective, by having a team located outside your facilities
• Acquire all the local market insights necessary to effectively run your operations
• Focus on developing your headcount on your core activities

However on-shore off-site outsourcing will not be the solution of choice if:

• The outsourced process is standard and market independent
• Cost effectiveness is essential to the viability of your company
• The outsourced process requires a high level of interaction with your internal team
• The outsourced process is still not stable and relevant objectives are still fluid
• The process services multiple markets each with their local specificities

With this in mind, most multinational companies have already successfully used that model to outsource their PR or Recruitment operations. This is also the model of choice for Call center operations or Social Media community management for brands where local knowledge and local language proficiency is required: call center support for your local Taxi or ambulance services, social media community management in the local dialect for the local town hall, and so on.

On-site outsourcing

On-site outsourcing is the solution of choice for companies with limited outsourcing experience. Its incremental outsourcing approach will help you

• Manage your seasonal demand through variable headcount planning
• Acquire all the local market insights necessary to effectively run your operations
• Focus on developing your headcount on your core activities
• Keep a high level of interaction with your local teams
• Ensure flexibility and reactivity if your process is still very fluid

However we should note that several of the off-shoring advantages will not be covered through this model:

• Limited cost advantage
• Limited drive to standardize processes
• High utilization of company real estate space

We, at F5DIGITAL Operations, recommend this model for new processes that are both critical to the organization, require a very specific expertise and demand a high level of flexibility. As F5DIGITAL developed its award winning loyalty program for Philips, this model was in the initial stages one of the key components to getting marketing support, understanding consumer care interactions, getting management visibility and adjust course of action when required. As the program gained in stability and maturity we prepared the organization for its natural outsourcing evolution: the Hybrid model.

The Outsourcing Hybrid model

The Hybrid model is the natural evolution of the on-site outsourcing approach. Its concept is simple: keep on-site the critical elements that require a high level of interaction with the local teams, while offshoring the process portions that are standard and require operational efficiency.

The Hybrid model will allow multinational companies to:

• Leverage on a cost effective base in a relatively risk-free environment
• Expand their market coverage as needed
• Manage seasonal demand through variable headcount planning
• Acquire all the local market insights necessary to effectively run operations
• Focus on developing headcount on its core activities
• Keep a high level of interaction with the local teams
• Ensure flexibility and reactivity if parts of the process are still slightly fluid
• Obtain real estate space efficiencies
• Help manage outsourcing operations even with limited outsourcing maturity

The Hybrid model increasingly becomes the solution of choice by implanting a small high value team sitting within the client’s facilities while ensuring that standard operations continue running smoothly and efficiently. Applications include management and maintenance of marketing campaigns, call center activities, Social media management, transactional finance management, HR operations management, Web Content management, and the list can continue.

Bringing it all together