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Knowing the Dangers of Cheap Labor Solutions: Security, Shortcuts and Strife

The classical motivation to outsource is usually to cut costs. Shaving spends from a corporate budget is a tricky task, and one of the most straightforward ways to do so is by allowing an external partner to handle a non-core area of your business, enabling your executives to refocus resources and employees on work that generates revenue.

But if this motivation is the only one, and an enterprise rushes to find the cheapest vendor, instead of an outsourcing partner who understands their unique business, industry, and operational needs; you’ll likely be dissatisfied with the results of your new partnership. Or even worse, your external partner can create a security lapse, or cause reputational and financial damage to your enterprise in any number of ways.


Because aiming for the lowest bidder is not an effective strategy for creating savings and efficiencies with an outsourcer, we’ve compiled this article outlining more viable ways to approach this type of relationship. Read on for ways to avoid the shortcuts and strife brought on by a cheap labor solution.

Security

In the document outsourcing industry, security has come completely to the forefront of best business practices. But while hacking events targeting businesses occur daily, PwC’s “US State of Cybercrime Survey” found that only 62% of organizations evaluate the IS programs of third-party partners. While important in any arrangement, for industries like financial services, healthcare, insurance, and legal; information security has become more than a business directive; it is something that clients and prospects are explicitly asking about. Cyber and information-security don’t stop at your front gates, meaning your vendors are on the hook as well. During the vendor selection phase, make sure that any document outsourcing partners you are considering have attained data security certifications such as SSAE16 and ISO 27001. These two certifications, however, are just the base line. Go deeper: do they train employees on security to mitigate human errors? Do they have an IS policy? For transmission of data, do they leverage a Defense In-depth approach, or just a traditional firewall security protocol? For a more in-depth strategy on how to vet vendors for security during the selection phase, visit here.

Establishing Solid SLAs to Avoid Shortcuts

One trend we uncovered in our recent 2017 Trends Study, was that careful vendor selection is also becoming paramount when considering choosing an outsourcing partner. This is because the amount of solutions available to firms looking to outsourcing has grown, and so have the number of vendors supplying them. This is also the phase within your outsourcing process in which you can better ensure that no shortcuts will be taken with the work you send out. Look for vendors who have industry-specific experience as well as those who have handled the types of projects you need before. Seek out references if possible, and take any and all steps you can to understand the vendor’s scope and quality of services, client engagement practices, customer support and project management. If this vendor is to be an extension of your own internal teams, you want to make sure they align with your values in terms of communication, quality of work, and output.

Performance Measurement

Communication lines should remain as open as possible between an outsourcing vendor and their client in a successful arrangement. While maintaining intense oversight is not required when working with a leading outsourcing firm, worthwhile outsourcing partners will be eager to keep you in the loop. Setting and maintaining an expected level of service is a critical element in any successful outsourcing arrangement. Regular vendor reporting on service levels, turnover, disaster recovery, and security is key to successful vendor management. Benchmarking metrics should be set during the SLA establishment phase, and the outsourcing vendor should be regularly communicating their performance in relation to improving those metrics. Regularly meeting with Service Delivery Managers is a great starting point; allowing parties from both sides to share information and ensure that everyone is aligned strategically, although more frequent touch points are preferred by some.

As with nearly every good or service, there are cheap options, and there are high quality options. We've found the old adage that buying quality, and taking good care of your things will save you money in the long term applies here as well; in that the consistency, quality, and long-term partnership you can build with an outsourcing partner will create more value for your organization than any number of race-to-the-bottom labor solutions ever could.

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