• Outsourcing RSS Feed

    by Published on 18th April 2014 08:10 AM
    1. Categories:
    2. Methods and Approaches

    Assessing Outsource Service Quality

    When determining whether service delivery is meeting service expectations, it is useful to seek the views of the actual service users. One tool that we are making available on this site to assess outsource service quality is the OUTSOURCE SERVQUAL (or OUTSERVQUAL). This is a new approach available exclusively from this site as a service to the community.

    OUTSERVQUAL (Service Quality) is a self-administered questionnaire designed to measure how customers view/judge the service quality of suppliers and is based on the SERVQUAL approach by Parasuraman. Parasuraman et al (1994) defined service quality as the degree of discrepancy between customers’ normative expectations for the service and their perceptions of the actual service performance.

    Parasuraman made the assumption that customers judge service quality by making a comparison between their expectation of the service that they should receive and their perceptions of the service that they actually receive. This is a harsh measure of course as often we have perhaps overinflated expectations of what can actually be achieved for a certain price.

    Differences between expectations and actual performance are referred to as 'gaps'. The OUTSERVQUAL instrument can be used to measure any the following five gaps.

    Gap 1: Consumer expectation - management perception gap. This is understanding the difference between consumer expectations and management perceptions of the customer expectations (what they want versus what we think they want!).
    Gap 2: Service quality specification gap. Where the gap between management perceptions of consumer expectations and service quality specifications that are required.
    Gap 3: Service delivery gap. The difference of service performance between service quality specifications and the service actually delivered.
    Gap 4: External communication gap. The difference of communications between service delivery and what is communicated about the service to customers.
    Gap 5: Expected service - perceived service gap. The difference between expected service and perceived service from customers’ point of view.

    Based upon these gaps, five behavioural dimensions of service quality were identified and can be used in the SERVQUAL approach. For this survey instrument these dimensions have been adjusted (based on our research) to be more in line with the assessment clients make of their suppliers in delivering an outsource service.

    There are 5 Service Quality Dimensions.

    1. Tangibles - The physical aspects of the delivery that includes the use of up to date technology, facilities and software. This may also include issues such as robust DR in place.
    2. Reliability - Ability to perform the service to the required standard, at the right cost, accurate/error free work and stick to commitments
    3. Responsiveness - Responsiveness to client issues and the degree of good support provided to clients
    4. Assurance - Knowledge and skills of the vendor staff and degree to which vendor employees instil confidence in their ability.
    5. Empathy - Good account management practices, fair dealing, open working and attention to specific client needs.

    Users of the OUTSERVQUAL questionnaire will rate questions on a Likert scale (1 = strongly disagree to 7 = strongly agree). The instrument comprises 22 statements used to assess service quality across the five dimensions outlined above with each statement used twice - once to measure expectations and once to measure perceptions. There is also a question that assesses the importance of the five dimensions to you.

    I have set up two free on-line versions that 1stOutsource members can use for their own assessments - you can find them here:

    For Outsourcing: Outsourcing Vendor SERVQUAL Test
    Generic SERVQUAL: Generic SERVQUAL Test


    Clients can assess their vendors (if you submit the results you should get a nice short PDF report to download) and vendors can assess themselves by putting 'themselves' in the position of the client. Try it out and as the test is still underdevelopment some feed back as a reply to this thread would be useful.

    Royston
    by Published on 18th August 2013 04:40 PM
    1. Categories:
    2. Research News

    Executive Summary

    This report summarizes the results of a major survey carried out by the National Outsourcing Association and Kingston Business School, on the impact of both national and organizational culture on outsourcing contracts. The survey results were supported by a series of interviews exploring the issues in relationship management which are also summarized in this report. Clients, Suppliers and Independent Consultants were included from both public and private sector organizations with over 100 managers taking part in the survey.
    The results demonstrate the complexity of evaluating a concept such as culture for all concerned, although a significant number of respondents do try to assess culture when negotiating contracts. In this study clients voted ‘service’ as the most important element of culture and this was reinforced by the interviews where slow decision making, misunderstandings and aggressive behaviors were cited as evidence of poor service orientation linked to cultural differences.

    Culture was assessed in the survey by comparison of self and partner across nine dimensions, including service, attention to detail, innovation and focus on end results. Clients and suppliers tended to rate themselves higher than their partners on most of the elements assessed, in particular innovation. Suppliers rated clients as more aggressive, a statistic supported by the qualitative interview findings where ‘bullying’ was a clear issue. There were differences in all responses between those who classed their outsourcing as a success and those who did not, but in particular communications and relationships were viewed as more problematic, and they were less likely to report that their partner had prepared staff for cultural differences.

    Over 75% of respondents stated that they would take more account of culture next time, rising to over 80% for those involved in off-shoring, indicating the importance of national as well as organizational differences. However it is also clear that some differences in culture are beneficial, and that it is critical to assess which cultural elements are important in what circumstances. An important outcome from best practice advice is that organizations need to assess their own culture and requirements as well as that of their partner, looking for potential matches or clashes. Holding cultural workshops, having metrics for communication and clear service expectations were also high on the list of ‘must do’ priorities. The overall conclusion is that a crucial aspect of successful outsourcing - service orientation - is impacted by perceptions of staff attitudes and behaviors, and that further work on development of a service quality measurement is needed. This report also includes a range of excellent best practice advice from leading experts and practitioners in the field.




    A full copy of the report is available here:
    by Published on 29th July 2013 09:00 AM
    1. Categories:
    2. Practice,
    3. Article,
    4. Practice Management

    Five Obstacles to Intercultural Communication and Understanding:

    1. LANGUAGE – Vocabulary, syntax, idioms, slang and dialects all cause difficulty, but the person struggling with a different language is at least aware when he/she is in difficulty.* A more pronounced problem occurs when he/she thinks he/she understands.* The person clings to the meaning of a word or phrase in the new language, regardless of connotation or context.* The infinite variations are so impossible to cope with that they are brushed aside.
    2. NON-VERBAL – Every culture has a special “hum and buzz of implication.”* People from different cultures inhabit non-verbal sensory world.* An individual abstract what is seen, heard, felt or learned into the personal world of recognition and then interprets it through the frame of reference in terms of his or her own culture.* Some non-verbal signs and symbols such as gestures, postures and vocalizations can be learned once they are perceived in much the same way as a verbal language is acquired.* Other signs and symbols, such as time and spatial relations, or forms of respect, status and formality, however, are more difficult to grasp because they are further way from awareness.
    3. PRECONCEPTIONS AND STEREOTYPES – In most general terms, the function of culture is to lay out a predictable world in which an individual is firmly grounded and oriented.* Stereotypes are over-generalizations which help make sense of what goes on around us, but they often interfere with objectivity because they rely on selective perceptions and portions of information which correspond with already-existing beliefs. In this way, they concretize reality – often incorrectly – and rationalize cultural prejudice.
    4. TENDENCY TO EVALUATE – Each individual’s culture appears correct, proper and natural, so each individual tends to endorse or reject the statements or actions of others, rather than try to properly understand the thoughts and feelings expressed.* Communication is stymied by this kind of evaluation, but it is exacerbated by the presence of feelings and emotions as well.
    5. HIGH ANXIETY – Unlike the previous obstacles, anxiety is not distinct but underlies and compounds the others.* The presence of high anxiety or stress is common in cross-cultural experiences because of the uncertainties involved.* The native of one country may be uncomfortable when speaking with a person from another (foreign) country because he or she cannot maintain the normal flow of conversation and non-verbal interaction to sustain communication.* The other person may experience a similar discomfort, with the added tension of having to cope with the alien pace, climate and culture he or she in ensconced within.


    REM
    by Published on 29th July 2013 08:59 AM
    1. Categories:
    2. Practice,
    3. Article,
    4. Practice Management

    Intercultural Negotiation
    As the world becomes increasingly connected, people both at home and in travels abroad, must consider the important issue of intercultural negotiation.* This post is a primer for use by readers in learning about this issue.


    The Intercultural Dimension:

    All cultures have their own preferred styles and strategies for dealing with and managing conflict.* Yet it is quite difficult to be culture-specific when discussion how to deal effectively with cross-cultural conflicts.* Nevertheless, there are some general skills involved in cross-cultural negotiation and conflict management that can be highlighted.
    A basic requirement for effective conflict management and negotiation is to know as much as possible about the other culture(s).* Although experiential knowledge is preferable, research of the culture, norms, values, history, society etc. can be very helpful.*The most significant feature of good cross-cultural relations, as most cross-cultural sources will indicate, involves avoiding stereotypes.* Although certain generalizations may be fairly assessed in regard to how certain cultures deal with conflict, individual differences should always be considered as paramount.* In fact, some cultural specialists suggest that all conflicts are intercultural to an extent, since each individual person has their own personal history and experience, their own set of beliefs, values and assumptions, and ultimately, their own set of “survival skills.”

    The Successful Intercultural Negotiator:
    Successful intercultural negotiators are always cognizant of the fact that people do, indeed, feel, think and behave differently, while at the same time, they are equally logical and rational.* Stated differently, competent intercultural negotiators recognize the differences between people while simultaneously appreciating the intrinsic rationality behind such divergent feelings thoughts and behaviors.* That is to say, individuals, groups, communities, organizations and even nation states possess diverse values, beliefs and assumptions that make sense from their own perspective.* Thus, effective intercultural negotiators are sensitive to the fact that each person perceives, discovers, and constructs reality — the internal and external world – in varied yet meaningful ways.* They understand that difference is not threatening; indeed, it is positive, so long as the differences are managed properly.
    Five Intercultural Negotiation Skills:

    1. EMPATHY – To be able to see the world as other people see it.* To understand the behavior of others from their perspectives.
    2. ABILITY TO DEMONSTRATE ADVANTAGES of what one proposes so that counterparts in the negotiation will be willing to change their positions.
    3. ABILITY TO MANAGE STRESS AND COPE WITH AMBIGUITY as well as unpredictable demands.
    4. ABILITY TO EXPRESS ONE’S OWN IDEAS in ways that the people with whom one negotiates will be able to objectively and fully understand the objectives and intentions at stake.
    5. SENSITIVITY to the cultural background of others along with an ability to adjust one’s objectives and intentions in accordance with existing constraints and limitations.


    REM
    by Published on 29th July 2013 08:57 AM
    1. Categories:
    2. Research News,
    3. Article,
    4. Practice Management

    How to start off a successful outsource project

    1.0 Know what you want

    There must be clear scoping of the demand and what is being put to the market. The objectives for the outsourcing must be consistent and reasonable – cost reduction, as an aim together with increase service may be inconsistent. Sign off internally why you are doing this and agree what is driving the whole process – this is important from the vendors perspective as well. If the vendor knows that cost reduction or technology refresh are key objectives the response can be tailored to your precise needs. Furthermore, objectives can change over time and the original case for an Outsource can be undermined by events. Revisiting the rationale you agreed internally is an important task during the process – don’t be driven by the running train take a time out to check you still need to do this.

    2.0 Put in place a clear process.

    Decide whether you are asking for a sole source versus competitive bid from the market. Sole sourcing is usually suggested (particularly by the vendor) if there is a history with the supplier and there is a time constraint – but there are significant negatives. Loss of leverage, not being able to compare alternatives, less aggressive pricing to name but three – and a sole source could have high impacts such as the legitimacy of the deal. Last but not least, the process may actually take longer as there is no time pressure that comes from a competitive environment.

    In a competitive bid position cost savings have a better chance of being realised and new suppliers can come with more innovative proposals than the in-house incumbent – at least in principle. The process can actually be quicker as the client can drive the competitive process – by a strict time based approach to the process for example. But on the other hand competitive bidding is more resource intensive, for the supplier as well as the client, so make sure you resource well.

    Be precise, not prescriptive, comprehensive but concise in the layout – focus on key objectives. We need the ‘what’ not the how – avoid laying down all sorts of preconditions about how the service is to be delivered – that’s the suppliers job in the proposal. I have seen in several RFP’ s detailed specifications of what packages to use and how precisely the service is to be delivered – effectively closing off all innovative solutions that may have been available from the vendor. Also specific demands will drive up the cost – the vendor may be able to offer off-the-shelf solutions that will work just as well as your specific demands but at very favourable rates.

    A request for informartion (RFI) is a high-level document inviting a general response and can be used as a test for possible solutions and to pre-select candidates for the bid. Usually there is no bid price given by the suppliers – nor should we expect too much detail here. An request for proposal (RFP) invites a formal response and takes longer for the vendor and the customer to evaluate. In a large bid this cost can come to millions of dollars so make sure before you issue a RFP you really mean to go ahead. Ensure you are being realistic in your demands and take care that the quality and clarity in the RFP promotes conformance in the proposals received.

    3.0 Manage the Communication Channels

    In negotiation avoid shortcuts and set specific goals – and ensure they are delivered. Evaluate, clarify and frame negotiations to keep competition alive. Document all discussions and carry out frequent self-assessment. Use a term sheet as this helps drive and track the discussion and allows apples to apples comparison – over time the term sheet can evolve into a contract so it is well worth the effort to create one.

    Manage the up and down communication channels carefully. Make sure no seniors speak to vendors and control vendor access to senior management carefully. Some vendors are good at getting around the formal process to the senior management and exploiting this access to short-circuit the tender process. We all know of ‘golf course’ deals that cut through a bid process and enable vendors to return to the customer team informing them they ‘know’ the requirements of senior management. Most golf course deals end in disaster so should be avoided like the plague.

    Keep talking to vendors and meet frequently to discuss the proposals – the more open and interactive the better the eventual outcome will be.

    4.0 Cover the Details

    First of all vendors to this for a living – often the vendor sales team have been doing this for years and when this is done will move onto the next. The customer side on the other hand may have not done this before or at least the team carrying out the supplier proposal evaluation may be completely new compared to the last time the outsource process was done. Also some of the customer team will have a day job to contend with – don’t forget this (or holidays etc.) and plan capacities well. Plan well, resource well and set realistic time scales – time pressure can act in the vendor’s favour and allow skipping of important details.

    Never let issues that should be solved at negotiation drift into ‘we will solve this later’ discussions. They never are and these can be a source of major conflict later. A trade union official some time ago told me: ‘It is better for the negotiation to break down rather than the agreement’. All-important details must be cleared before signing a contract.

    Partnership rhetoric will appear at some stage in the discussions from the vendor side. Partnership usually means giving all the risks to the vendor from the customer side or closing out competition from the vendor side (sole sourcing). Partnership can be invoked to get over tricky points and put them off until later stages or to close out competition. Partnership should be based on performance and strict business principles not waffle. I know it is often said we can handle the things we forgot later in a change process – I have personally never found this to be free of major problems and cost – so beware of this.

    Final point maximum gain minimum vendor pain during the proposal stage – and remember to ask yourself what you are looking for from outsourcing until you know what it is!

    REM
    by Published on 29th July 2013 08:53 AM     Number of Views: 756 
    1. Categories:
    2. Article,
    3. Practice Management

    Outsourcing is it creating or destroying jobs in the US?

    I was reading in the outsourcing trade press this week about the political debate in the US about job losses in the outsourcing market. The debate centres around one of the most vexing questions in the outsourcing market as to whether outsourcing, or more specifically off-shoring, creates or destroys jobs in the outsourcing home country. This furore is particularly felt in the US where a political backlash threatens to develop that may result in government measures to remove some or all of the advantages of outsourcing – such as denial of tax relief on expenses as one example.

    The problem is particularly acute if we consider off-shoring where the jobs in the home country are transferred to a receiving country such as India. And as a result the jobs disappear in the host country and those people in the US are let go. So what is the truth in all this and what factors are at play when we consider work restructuring due to outsourcing?

    There have been several attempts to justify job losses by recourse to ideas that outsourcing actually creates more jobs than are lost – ergo we threaten this process by any talk of protectionist actions. Although there is no evidence base for any of these ideas they are starting to gain traction as the industry fights back to try and extinguish any legislative activity that may restrict their current free rein.

    The arguments seem to boil down to three main points:

    The savings yielded by outsourcing leads to higher investment in the business and as a result further job opportunities are created.
    The inward investment in the offshore country increases their standard of living and the demand for American goods and services which leads to increases employment in the US.
    Any form of protectionism (or legal protection) acts to increase employment expenses and thus to reduce employment opportunities.

    Is there anything in these points?

    The main problem with the first one is the assumption that outsourcing yields value at anything like 50% as claimed by some writers that can be invested per se. As an example I attended a recent conference in London where it was revealed (from a large scale European survey) that although around 60% of outsourcing organisations claimed some financial savings of these only around a quarter had any idea how this was measured – the rest had no way of assessing success and had no clue where or if this was done in their organisation. This means only15% of organisations can state that they have achieved any savings with any surety. Other researchers and consultancies have also shown that getting any benefit from outsourcing is proving to be a surprising intractable nut to crack – so where’s the money coming from for this investment?

    Secondly all of the main offshore countries are notoriously closed as far as inward business is concerned – we have been hearing for years these potential advantages in the UK but we have yet to make any real impression in business terms in the very protected markets in Asia. In the UK we send unemployed princes on foreign trade missions that seem to yield very little of substance and just involve giving away our technology at knock down prices. American trade missions have had little more success and you don’t have princes with time on their hands! Furthermore, the idea that Indian sweat shop workers are queuing to buy American high tech goods is fanciful at least.

    Lastly employment law and protectionism are stated to be one of the core reasons preventing job creation. Any restriction on the ability of businesses to move employment from one place to another or to offer any protection as far as workplace rights or working practices is seen as an anathema and opposed by recourse to a ‘jobs being destroyed’ rhetoric. From this perspective outsourcing is seen as an efficiency mechanism acting on employment cost – and the target (of the outsource) depends entirely on where the cost advantages lies at a point in time whether in the US or not. Thus if used correctly outsourcing can allow cost advantage to be maintained over time by switching between suppliers. It is in affect a re-working of the investment idea where the removal of all restrictions on organisations to do what they want can facilitate job creation.

    My take on this is that job losses are inevitable in outsourcing but the problem is it is a particular type of loss that occurs and is felt differently across society. It is the entry level IT jobs, lower skilled activities, voice services or manual production tasks that are going offshore – and they are not being replaced like for like. What this means is that specific sectors of our society are being affected and their ability to make a living stopped by outsourcing – it is their jobs that are going offshore. Jobs that used to be for high school graduates or those less successful in education or could only work part-time are going and are not being replaced. So our fundamental question is are we happy with this – is it justice?

    It strikes me that the arguments for or against employment losses misses out on another fundamental aspect – the experience of outsourcing of those who go through it. Loss of identity, stress, and feelings of powerlessness occur all to frequently when we carry out an outsource badly. One of the key points about this type of employment structuring is it acts to move workers from the primary sector to the secondary sector. In the secondary service sector employment tends to be fragmented, short term with wages set by the market and overall is much less secure. All this acts to make the experience of work much more instrumental and tightly controlled and denies people any of the positive aspects of work.

    We must do better than this. People do want to do a good job, be loyal, and serve customers well – and be rewarded and treated fairly for doing so. Outsourcing is unstoppable but it is controllable for the better good of our society.

    REM
    by Published on 28th July 2013 08:06 AM
    1. Categories:
    2. Methods and Approaches

    Summary

    Outsourcing can be strategic in reducing costs, enhancing competitiveness and enabling focus on core competences. This paper clarifies what outsourcing actually is, the potential risks and benefits, and sets down management guidelines concerning when outsourcing may be beneficial, how to maximise chances of success, and how to ensure a successful transition which maintains staff performance.

    Introduction

    More companies are considering outsourcing than ever before, and research indicates the trend will continue. Whilst most western companies outsource to save on overhead or induce short-term cost savings, consideration is also given to related aspects such as avoidance of building in-house skills and access to specialist functional capabilities. It has been suggested that outsourcing can also free up management time to facilitate focus on core competencies, and enable companies to become more competitive in increasingly dynamic and uncertain markets. Although there have also been suggestions that there are risks involved in outsourcing, smaller enterprises in particular are often unclear regarding what these risks are, how to minimise them, or indeed, what outsourcing actually is compared to other related activities such as contracting and facilities management. To understand outsourcing then, requires consideration of clear definitions and an awareness of the processes involved.