As businesses stretch to find solutions to increase revenue reduce expenses and enhance profitability, outsourcing continues to be one of the options available.   Those charged with analyzing the benefits vs. the costs of such an undertaking face the challenge of conducting research, remaining objective and finding the best business solution

Most business organizations in East Africa outsource at least one of their business  functions,  like cleaning and security but are yet to consider going further into  outsourcing some none core HR functions.

As an option, outsourcing often calls into focus the cost/benefit of such an undertaking.  Before undertaking such an analysis, however, it’s critical to understand the underlying reasons that outsourcing is under consideration.  Is it to reduce costs?  Improve processes?  Allow HR to focus on more strategic issues?  Being able to objectively answer these questions is a good start into the journey of outsourcing.

The following list indicates the most common reasons cited.

• Improve business metrics
• make up for reduced staff
• Lack of in-house talent/expertise
• Allow HR to focus on strategy
• improve service delivery
• Reduce staff related expenses
• Allow focus on Core business
• Streamline HR Function
• improve statutory compliance

These objectives suggest a transformation thought process with regards to outsourcing, however in many cases only transactional activities are eliminated.   And too often, these activities are outsourced to the lowest-cost bidder.    NFT Consult works with its clients to identify other benefits   and  suggests that cost savings should not be the sole rationale of an outsourcing initiative.

Our internal research and anecdotal evidence suggests that the most successful outsourcing ventures are those that integrate the transactions to be outsourced with a sustained transformation of the affected organization.

The lack of transformation in the work  groups directly affected by outsourcing can be traced to several areas:

• Failure of the outsourcing partner to deliver high-quality transactional value, resulting in increased oversight of the outsourced activities at the gatekeeper level.
• Failure of the organization to provide a strategic framework that changes the roles and responsibilities, and thereby the behavior of internal stakeholders.
• Failure of the organization’s key business leaders to stay involved with the outsourced initiative, helping to reshape specialists into generalists, and generalists into strategic contributors.

At NFT we are putting more focus in the above area with a full team of business analysts that stay with the project through it’s life cycle helping our clients realize more benefits but also adapting the relationship where necessary or as external factors change.