The outsourcing trend is building momentum. Finance shared services leaders are carving up their processes by identifying the activities they add no value to and the tasks that add no value to the company so they can be ring fenced and managed by an external provider.
As outsourcing matures as a mainstream activity, it brings with it new challenges. The first wave of five and ten-year contracts is coming to an end and customers are deciding whether to stay with their current outsourcing providers or swap. Managing the transition from a Genpact or Accenture to a Wipro or HP, or vice versa, can be complicated and warrants a level of consideration that some companies are ill prepared for.
If you’ve decided to change outsourcing provider, here are sharedserviceslink.com’s five rules to help with a smooth handover:
1/ Training
As a company you may not be best positioned to train your new business process outsource (BPO) provider. You owned the training when you first handed activities over to a BPO provider and you can probably remember the intense weeks together in training rooms and the job shadowing. At that time, both parties had a vested interest in providing robust and effective training.
This time there’s a significant difference: the trainer has lost a contract and has nothing to gain from delivering a successful training programme to the competition. If anything, it may wish to sabotage rather than support the training, especially if the people delivering it may be about to lose their jobs once they’ve trained their replacements. This is tricky but critical to get right. And don’t forget, your trainers also have to maintain their F&A service at the same time.
Action:
When you draw up the contract with your BPO provider, include clauses on how it will hand over and train another provider should you not renew the contract. Ask for the detail and ensure, from a practical perspective, your BPO provider is willing to be highly co-operative.
Logistically, your new provider may not be invited into the incumbent’s premises, so find temporary offices nearby where you can hold the training.
2/ Integrity of numbers and systems
It is likely that your financials will only be accessible from your original provider’s systems. How comfortable will they be sharing their live system with a competitor? This will have an impact on the training they provide. Consider giving somebody ownership for managing the integrity of the financials and the live system during the hand over. This could be a fourth party, outside the triumvirate, like a management consultant or it could be one of your team.
Action:
Try to avoid surprises. How would you feel if your number-one competitor needed to access systems and data that you had owned for 10 years to support a customer you were losing? It’s an awkward moment in business. It requires discussion and agreement upfront when you sign the initial contract with your BPO provider. Ensure this is clearly outlined and understand how the new provider will have access to the information it needs to set itself up.
3/ Ownership and accountability
You need to plan the transition and the various handover points. Consider bringing in a fourth party for this. There are many people involved in the handovers, at the very least the people passing the baton and those taking it.
It is vital to give the ‘passing’ and ‘taking’ teams clear lists of responsibilities that are signed off by you and both BPO providers so everyone understands how the process will be governed.
Action:
Some management consultants have been through this ordeal several times and have built up a useful level of experience so consider bringing in a fourth party. And don’t feel like you need to use your normal management consultants; tender for the work as you would a normal BPO transition.
4/ Stick to your transition dates
When you decide to switch providers, your existing outsourcer may set deadlines for the transition with penalties if they’re missed. If you can, make sure you discuss and agree the dates and consequences between you, your original and your new providers, and perhaps have a fourth party oversee the arrangement.
Action:
Penalties are fine if they’re drawn up between everyone involved. If it’s not included in your BPO contract, it’s worth having a clause that relates to the potential handover between providers, and says that deadlines and penalties will be drawn up and agreed by everyone involved at the time. It’s not really practical to define these details ten years before you need to enforce them.
5/ Post-go-live support
Your original BPO provider’s duties are not over once your new outsourcer has gone live. You will need a small team to stay with the project after the transition to help keep it stable. And you will want that team to be made up of your original provider’s best people. Be careful though as paranoia may well kick in if the first BPO provider fears its people will be poached as they build relations with the succeeding provider.
Action:
When you draw up the initial contract, ensure you have a clause covering your post-go-live support should you switch provider. And make sure this support includes a specific number of people for a set period of time, or until a definitive deliverable is complete (ie it has completed two month ends within two working days).
Conclusion
Changing service providers can be complicated and awkward. But as the shared services market continues to adopt outsourcing into the operational mix we will be better prepared for the challenges. And if you’re just signing a new contract, make sure you know what will happen should you decide to jump.
Acknowledgement:
Thanks to Ben Chapman at Bausch and Lomb. His expertise was very useful when writing this article.
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