What does the right course of action look like once a company has decided to optimise its operations? How to understand whether a business needs outsourcing? How do you make sure that outsourcing does not bring unpleasant surprises? What is the preparation for transferring processes to a provider? To answer these questions, we have analysed and summarised our many years of experience of working with customers from various industries. We tell you what you need to do, step by step.

1. Analyse the current situation of the company

Any change starts with understanding what the object of the change is. Do you know exactly how things are in your organisation, particularly in your accounting department, in human resources? Can you back up your view of the situation with figures and real facts? If not, you need to:

• analyse the company's financial situation, its place in the market and its competitive environment;
• identify business development problems;
• update the goals and strategic development priorities of the organisation;
• identify the functions or tasks that can/should be optimised and determine their projected scope.

Next you need to figure out whether to perform these functions or business processes in-house or outsource them. Organise a working group to investigate the issue - gather information, discuss, analyse the information received. To start with, assign the working group to estimate the cost of owning the function or process in-house. The cost will include the rent of the space, the price and maintenance of the hardware and software used to perform the function, and the payroll of the staff needed to perform the projected workload of the function.

2. Understand which is more profitable - outsourcing or in-house

Knowing how much it costs a company to maintain, for example, an accounting department, knowing the planned workload of that department and its functions, you can select several outsourcers and ask them to estimate how much their services will cost you. More often than not, the decision to outsource is based on price, and this is the right business approach. However, when comparing the cost of in-house and outsourced ownership, don't expect to save by times or anything like that. The point of such a comparison is to understand that outsourcing will not be significantly more expensive than doing the function in-house. If the prices are roughly equal, that's fine, and outsourcing is not a contraindication for your business. You can proceed to further analysis of the prospects, benefits and risks. Let the working group prepare a consolidated analytical report on the feasibility of outsourcing, and the results will be discussed by senior management. The CEO or business owner makes the final decision.

3. Choose a provider carefully

If the decision to outsource is made, the first step is to formulate project goals and objectives and to agree with senior management on the scope of the functions to be outsourced and the requirements for the provider. A project team is formed and a project manager appointed.

Then there is the need to choose an outsourcing partner, and here a mistake can be very costly. Choosing an unreliable provider can lead to process failures, late delivery, fiscal risks and even fraud. Such stories usually end up with a change of partner, and the process of restructuring processes and functions is restarted in a new way, which does not affect the health of the business in the best way.

So when choosing a provider, do your research on the outsourcing market and check the reputation of the candidates you see. On our blog, we have written several times about the rules for choosing an outsourcer.

So when choosing a provider, do your research on the market. If you are outsourcing your accounting, for example, and you have fewer than 50 employees, you can choose a smaller provider that accounts for a few dozen companies similar in size to yours. Then you will be a welcomed customer with a better service. If you have a few hundred people on staff, don't choose a provider with five billing agents, look for a bigger one with 20-30 billing agents. The cost of services will increase, but the ability of such partner to comply with their obligations is much higher. So be sure to ask the outsourcer about the number of billing agents and settlement sheets they produce on a monthly basis. According to current industry standards, an average of 600-800 worksheets per billing agent.

So, the following criteria should be used to choose a provider:

• official, decent office and a long-established and actively updated website;
• availability of in-house specialists and their qualifications;
• the number of billing agents and settlement sheets;
• time on the market, pool of customers, their references;
• the list of services provided and the conditions of their rendering  (what is included in the contract, what is paid for separately/not done);
• cost of service rendering;
• impact of changes in the structure of the customer's company on the cost of services rendering (increase in the number of employees,
• opening of separate subdivisions, branches);
• outsourcer's careful monitoring of its specialists, reliability of the security system;
• speed of response to customer enquiries for on-site visits, remote administration or advice;
• interacting with the customer in case of unforeseen situations;
• content of the procedure for terminating the contract and returning the data;
• availability of insurance from a reputable insurer.

In a table format, compare the providers you like according to all of the above criteria and choose the most suitable one.

4. Formulate the request and draw up the terms of the contract

For outsourcing to take place, the customer and the service provider must have a common understanding of the needs, the current situation and its development in the future. The lack of a common vision often leads to mistakes in project implementation. Therefore, when discussing the terms of the contract, it is necessary to be very clear about the tasks and goals that are set for the provider, define the transition period, voice expectations and discuss all the controversial issues. When discussing complex issues, it makes sense to listen to the provider's suggestions, if only because they have more experience in practical project implementation and setting up business processes.

Be sure to include a lawyer, in-house or external, on the project team dealing with the outsourcing process. If possible, don't rush things, formulating a request is the most difficult stage of outsourcing and you need to be prepared for it.

The contract itself must stipulate the structure of cooperation with the outsourcer. It is also worth signing a separate service level agreement (SLA), which regulates in detail all aspects of cooperation, describes the principles of evaluating the provider's performance and so on.

5. Ensure smooth transition to the new format of work

Firstly, it will allow the preparation of appropriate documentation for the new process - a project work plan, perhaps a new staffing table. New job descriptions may need to be developed or existing job descriptions may need to be amended.
Secondly, when outsourcing a function or part of it, as with any major change in the company, it is necessary to work with staff. Particular attention should be paid to employees whose work is directly affected by the change, and to those whose services are no longer needed by the company.
The staff should be given all the necessary information about the transition to the new format, and the contents of the new documents should be made known to them against their signature.

6. Monitor performance of the provider at the end of the reporting period

The project team can be split up - within the workflow, the main person becomes the person who coordinates the project and provides management with final reports at certain intervals.

Summing up the results of the reporting period includes:
analysis of performance of the outsourcing system based on feedback from employees, managers and partners;
benchmarking the provider's performance against the outsourcing KPIs;
discussion of the interim results of the project by the participants.

The quality of the outsourced functions must be constantly monitored. The extent of monitoring depends on the importance of the process outsourced and the risks involved. Often, the reasons for problems detected may lie in inadequate contract performance or in inadequate planning. Once the causes are understood, they should be eliminated and this aspect should be monitored more closely in the next reporting period.

This is approximately what it looks like for any company that is focused on optimising and improving the quality of its processes and has chosen outsourcing as a tool to achieve this goal.