Now, however, organizations are beginning to rely on outsourcing as part of their broader strategic plans. A common reason organizations explore outsourcing is the need for services that help them focus on their core business and to improve efficiencies while reducing costs. The benefits of outsourcing can include the ability to save money, access technology and services that could not otherwise be afforded, and improve quality and processing time service levels.

One of the main concerns organizations have when considering outsourcing is the loss of control. This concern can be mitigated through proper planning and management of the outsourcing process. Organizations should enter these arrangements with a full understanding of the partner and relationship to improve the opportunity for success. This requires diligence in the selection, planning and implementation of the relationship.

Processes that can be explored for outsourcing include those that a third party can handle more effectively in a cost efficient manner or those that are outside of an organization's core competency. An outsource vendor can often complete a process or activity more cost effectively because they have the necessary tools and staff. They are able to invest in more effective systems that are specific to completing a task because they are spreading the cost over multiple organizations. They are also better able to adjust the amount of staff based upon the workload because the resources can be switched to different clients. This will help to mitigate the impact of fluctuations in volume.

In addition, the staff is dedicated to completing the process, as opposed to it being one of many tasks that they are responsible for. A second category of processes to consider for outsourcing are ones that are outside of an organization's core competency. This will allow an organization to focus it energy and resources to meet the organization's mission.

The planning and execution of an outsourcing relationship is critical to achieving the intended benefit. There are several actions an organization can take to help assure a successful outsourcing relationship. The first is to document your expectations and business rules that you want the vendor to follow. The vendor may have "normal" procedures that they utilize that may or may not be consistent with your expectations. An effective way to accomplish this is by creating process flows that visually show the process. The flows should define the normal flow, but also include the potential exceptions that the vendor may be required to address and the intended process for handling.

After the procedures are developed and mutually agreed upon, supporting procedures should be written. It is critical that procedures are developed on how to handle exceptions because, while it may only occur 10 to 20 percent of the time, it often results in the greatest amount of manual work and issues. The amount of time spent resolving the issues or the customer service impact can increase if expectations are not clearly defined. For example, a vendor was instructed to mark a check as void in certain scenarios but was not instructed specifically on how to handle money orders. The vendor assumed that they should void money orders, which had an impact on customers.

The second action involves documenting the service levels that you expect the vendor to meet. The service levels define the agreed upon time and quality for completing a process, and should be part of a contract.

For example, the process will be completed within two days of receipt with 99.5 percent accuracy. The service level should be based upon realistic benchmarks that the vendor will be obligated to maintain. The service levels need to allow an organization to meet their turnaround time or quality standard, but should not be unjustifiably rigid because it will impact pricing. If your organization has traditionally completed a process in two days, unless there is a business justification, do not set the service level to one day. The service levels can also include turnaround times for enhancements and ad hoc reporting requests.

The third activity requires clearly defining reporting expectations. When a process is completed internally, there is the ability to generate reports to monitor a process or the results of a process. This will often help an organization to identify a potential issue or monitor the impact of a change somewhere else in the process. An organization should include reporting needs as part of the requirements or contract development phase of an outsourcing relationship to assure that this ability is not lost.

The fourth action entails visiting the vendor to observe the work being done. This step is often overlooked but can be an effective way to assure the process is completed consistent with an organization's expectations. In the planning phase, this can help to understand how the vendor completes a process for other clients and to facilitate the development of procedures for your organization. After the implementation, it will allow you to review the process against the procedures that were defined and to identify potential enhancements. The ability to identify and implement changes early will help to minimize the potential impact.

The final activity involves conducting regularly scheduled status meeting before and after the implementation, supported by an issues log. A regularly scheduled meeting will provide a logical structure to facilitate communication and for issue identification and resolution. An issues log should be used to track any issues to closure. The log can include a description of the issue, status (open vs. closed), date identified, scheduled close date, person/organization assigned to, and a space for capturing notes.

Outsourcing should be viewed as a strategic initiative, as opposed to a purely tactical decision to eliminate the responsibility of completing a process. While outsourcing will reduce an organization's responsibility for a specific process, it requires additional time in the planning for the transition. Successful outsourcing can have positive impact on an organization if the appropriate activities are taken in the implementation. In addition, proper planning can reduce the perceived concern regarding loss of control. This concern can be mitigated by assuring the process is completed based upon an organization's documented expectations and business rules, and the appropriate structure is implemented for monitoring and feedback.