Outsourcing remains a big support strategy when you are growing or facing a downturn. Outsourcing of Manufacturing, Information Technology, Services including Finance and Accounting Services are client’s every year, a couple of main reasons for outsourcing over and above cost savings are 2 S- Scale and Specialization. Whatever, the business cycle you may be in, it’s always better to look Outsourcing as an option for achieving Cost Reduction or Scale or Specialisation. When you are looking for Outsourcing as an option, here are some of the factors you should consider before selecting Outsourcing Partner:
• Trustworthy:
Outsourcing is a long-term relationship and Trust and Communication are 2main ingredients for any successful relationship. Few of the ways to establish trust are as follows:
• Company Age: How many years the company has been business. The longer they are in business, trust factor will be high and they will honour the commitments they make
Types of Clients: What is the existing set of clients. Does the company have diverse set of clients in terms of numbers and experience?
References: Does the company provides references of its existing clients proactively
• Communication:
Assess the communication structure of the outsourcing company. Does the company proactively reach out about improvement initiatives, cost reduction ideas, internal controls, mistakes made etc. The communication structure/ Governance Structure can play an important role for making outsourcing company a Strategic Partner in your business
• Management Team Experience:
Great Leaders don’t just tell you what you do, they also guide you through. This is true for any Organisation you are going to work with. Assess whether the Management Team has the right mix of people with diverse backgrounds. If you are going to outsource Accounting work, check if the Management Team has Chartered Accountants and has rich experience working with large accounting firms such as Big4, etc. If you plan to outsource Management Accounting, check whether the Management Team has MBA’s who can guide you through to Managing Business
• Culture of the Company:
As Peter Drucker points out, ‘Culture Eats Strategy for Breakfast. Get Culture Right first, Success will follow’. Outsourcing is a long-term relationship and not just a short term bandage for your pains. It’s important to assess if your Outsourcing Partner has the right culture that fits into your company’s culture. There are several types of cultures including Customer Oriented, Innovation Driven, Respect Individual, etc. Some of the companies have only had profit Oriented Culture.
• Talent Pool:
One of the anonymous quote that reminds me is ‘I am not Afraid of Storms for I am Learning How to Sail My Ship’. So is true with any Knowledge based Industry. Before you outsource, check what kind of Talent Pool is available with the company. Does the outsourcing partner have internal education programs to create a strong talent pool? Assess whether the team has Chartered Accountants, Accounting Graduates and there are right internal and external training programs. If there is a right kind of talent pool available or training systems, you know you are in Safe Hands.
• Certifications:
Assess if the Outsourcing Company has right certifications such as Xero Champion, Quickbooks Certified, Sage Membership, etc. If the partner is certified, this will certainly help in ensuring your processes are managed efficiently.
• Data Security:
Data Security is of Paramount importance and many of the companies do not have right data security policy check. Check if the outsourcing company has right Data Security Policy including Data Security Certifications such as ISO 27001, etc.
• Technology Expertise:
Never in history, Technology would have played so significant role in our daily lives and day by day human kind is getting controlled by technology. While it’s important to have right talent and certification for managing your accounting processes but at the same time it’s important to have outsourcing partner who can develop applications, technology to make the processes seamless and efficient. Assess if your outsourcing partner has right kind of Technology Team to support any application development to make processes efficient
• Geographical Location:
It’s important that your outsourcing service provider is based in right location. Check if they have near shore, on shore presence so that they are available at shout if any problems were to arise
• Flexibility:
Determine if your outsourcing partner is rigid or flexible in their approach. Usually, outsourcing contracts are in place for a number of years. Over time a situation may arise that necessitates renegotiation of the contract. The partner must be flexible enough to understand its client’s concerns and act accordingly.
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