Call Center Services, Outsourcing Services, Outsourcing Projects
“All lasting business is built on friendship.” - Alfred A. Montapert
Outsourcing was never just about cost, but also about delivering long-term business advantage. It remains a viable option for organizations to maintain competitiveness and get the ability to focus on core competences. Due the geographically separation several risks appear as a consequence of lack of information about what the partner is doing. Risks, such as handing over sensitive information to another organization, lack of knowledge about security experience or cultural differences are sometimes real problems. In order to get over this threats - trust has been considered a central aspect of successful IT outsourcing. A research, realized by the Warwick Business School, showed that organizations that develop their firm’s outsourcing relationships based upon mutual trust rather than relying on punitive service level agreements and penalties will benefit from a “trust dividend” worth as much as 40% of the total value of a contract. The study analyzed 1,200 outsourcing contracts from across the world since 1990.
According to PAConsultants the ideal “innovation partnership” between the customer and service provider requires two essential prerequisites: First, the service provider needs to have a thorough understanding of the customer’s business and be able to customize its services for the greatest possible benefit. Secondly, the customer must also be willing to give the service provider the necessary latitude to proactively develop innovations.
At the start of the relationship the level of trust between the client and the outsourcing services provider is typically very high; the classic honeymoon period. Once the trust relationship is broken, it is extremely difficult to get the relationship back on a positive footing. Both parties start to develop inflexible positions that can only exacerbate the problems. Most outsourcing deals fail, and are subsequently cancelled, because the person-to-person relationships- the trust, breaks down.
Today,the focus is on increasing the possibilities of IT as well as the company’s overall efficiency and flexibility. Taking these trends into consideration the CIO expects that their external partners contribute also to the strategy of the company. On the other hand the outsourcing providers defined a more innovative way for selling offshore services by changing the long-standing model and by focusing on the quality of services delivered rather than the usual benchmarks of costs per offshore hire. The smart service providers invested heavily in building domain knowledge and functional expertise in order to focus more on building long term strategic partnership with their clients and also strengthening the areas where clients need more assistance.
Example: There is no doubt that professional expertise starts by speaking the customer’s language. The practice of English, (including a very good level), is no longer exceptional. From now on you must be more ambitious than this. The objective should be that all developers are able to work in at least two European languages. Speaking a foreign language for a developer means being able to present his work, to be able to communicate his ideas, but also it allows each associate to evolve towards management positions in customer relations, functional studies and consulting. At Pentalog, we’re really close to doing this because almost 80% are completely trilingual, 25% quadrilingual and some even go beyond speaking 5 or 6 languages fluently. Each year, our trainers provide 1000 days of language lessons. Our staff devotes more than 1500 man days per year and nearly one third of our total budget for training (500, 000 and 600 000 € in 2009). And there is no doubt neither that the best companies offshore/nearshore offer the same services for some time. The problem of British and American markets is that everyone can work there, from Eastern Europe to the Indian federation, to China via the Philippines. Moreover, the average
price paid by the Anglo-Saxon companies is often lower than those accepted on
the old continent.
Offering Flexibility- Sharing the risks
Businesses change very quickly these days and they have to bear this in mind whenever they enter any contract negotiations. The contract is a necessary but not sufficient governance tool for outsourcing. You have to build a contract that allows flexibility. You have to tie service level agreements (SLAs) to benchmarking standards. These change from year to year so it will be reflected in the contract. Firms need to agree a sort of “relationship charter” with their outsourcing partner that sets common values and includes regular health checks, balanced scorecards and metrics for the customer to help monitor the success levels.
Example: The recent fluctuations in the euro/ dollar parity have significantly destabilized the number of companies exporting to other countries in the dollar area. Thus, Pentalog has decided to adapt to these constraints by offering companies to purchase their services directly in dollars, limiting the exchange difference between the client and the supplier. One of Pentalogs clients designs, develops and produces products in France for the distribution of digital television programming and Video on Demand (VoD) which is then exported around the world, including areas of high $ correlation. Our client is delivering the bulk of its production in Europe and we agreed upon on a 50/50 exchange risk…making the risk virtually disappear. From a formal point of view, nothing
easier, 50% of the bill is invoiced directly in $ and 50% in €. But our client, who liked this idea, did not want to stop there and wished to see the price adjustment procedure to be equally as creative. Indeed, he hoped that the revision of our prices would not exceed the inflation rate in Vietnam.
This obliged us to calculate our prices in Vietnamese Dong at the beginning of the contract. The new value is then calculated in € and $ and is limited to 10% maximum per year.
As a conclusion, real trust comes from planning, is steered by the right people, structures, processes and measurement, and is earned from performance. It is all about people - people saying they will do something and delivering that something right on time. Also trust implies transparency- to be open, to listen, to show your clients the right information, to be transparent. I will end with a very meaningful quote from Giddens (1990): “Trust is related to absence in time and space. There would be no need to trust anyone, neither individuals nor abstract systems, if their activities were visible and easy to
understand. So the prime condition for trust is lack of full information”.
Do you have some others examples of gaining your clients trust?