Outsourcing provides businesses with the opportunity to provide additional support or expertise without adding additional full-time staff and access to specialized knowledge that may otherwise be unavailable to the business. Many businesses believe that outsourcing a project or business function relieves them of control and makes oversight of these areas unnecessary; however, this is not the case. Even when outsourcing a significant task, in-house managers can greatly improve the performance of outside contractors by communicating with them effectively and directing them appropriately, throughout the process. By setting suitable goals, carefully monitoring progress, and constantly communicating with the outside contractor, managers can significantly shape the outcome of an outsourced project.
The first step in managing any outsourced function is determining the main objectives of the relationship with the contractor. Project managers must create objectives that are clear, concise, and specific. These objectives should be understood by both parties and should be covered in either their engagement letter or other contractor agreement. Doing so ensures accountability for both the business and the contractor. Although overarching main objectives are of primary importance, it is also can be a good practice to break down these goals into smaller secondary goals. Creating these sub-goals provides managers with objective measurements to monitor the progress of the project or engagement and helps to minimize the risk of an unusable solution. Once the manager knows what they want to achieve and how they will measure progress, they should communicate their goals to the contractor and ensure that both parties have a mutual understanding of the objectives. Effective communication of the goals of an engagement will help to ensure that the interests of the business are aligned with those of the contractor.
Once the goals of the engagement are known and understood by both parties, the manager should work closely with the outside contractor to ensure that they have access to all information they may need to complete the project. This will allow the contractor to work more proficiently and reduce the number of basic questions asked about the project. Questions should be expected, and managers should use these questions as a quick litmus test to make sure the project is currently on target with the stated goals. Too often outsourced contractors do not ask enough questions regarding the engagement, leading to wasted resources and efforts. The communication process should be a two-way street, with managers in constant communication with the outside contractor to support them with any additional resources necessary and to be periodically checking up on the project. Periodic meetings can also be scheduled regularly to review progress towards main objectives and to address any open items. These meeting should have a clear agenda prior allowing both parties to adequately prepare and have a product meeting.
Outsourcing certain projects or business functions is an excellent way to accomplish significant tasks that in-house employees lack the knowledge or expertise to complete. Some businesses may believe that by outsourcing they are no longer responsible for and have no control over the project. Managers may have little contact with the outside contractor, aside from one or two planning meetings, and then give the contractor space to complete their project. Although managers must be careful not to micro-manage, it is still entirely possible, and necessary, to manage an outsourced project. Managing an outside contractor requires ongoing and consistent communication so that both parties are synchronized, ensuring the contractor has all the necessary information. Managers must work closely with the outside team to set appropriate goals and ensure that they understand why these goals are important to the business. It is also vital for managers to carefully monitor progress throughout the engagement to ensure deliverables are being met. By following these essential steps, managers can significantly influence and improve the results of an outsourced project
Adam Brigandi, CPA, MBA
Adam is a staff auditor who works with both nonprofit and special education clients. His auditing experience allows him to assist in vital audit functions such as systems testing and analysis.