The outsourcing industry is rapidly growing in Saudi Arabia and has fundamentally changed how businesses operate. Companies prefer to outsource non-core tasks and focus on their core competencies. This approach is useful and helps companies grow, however, to get the most out of outsourcing, companies need to consider how it can be used strategically rather than tactically.
Tactical outsourcing is problem solving based, for example, a lack of capacity in the finance department may force a company to outsource their tax and zakat reporting to fill the capacity gap. On the other hand, strategic outsourcing focuses on aligning outsourcing with the company’s long term objectives. It assists companies in achieving a competitive advantage and repositioning themselves in the market. It also allows companies to spend more time on core activities that are crucial to success and that can’t be outsourced.
Strategic outsourcing can be broken down into 5 main elements:
The first element is an evaluation of the objectives you wish to achieve by outsourcing. Determine the value of the tasks you want to outsource and how outsourcing this task affects your long term objectives. Calculate the benefits and risks associated with outsourcing this particular task. This can help you create a criteria for choosing a suitable outsourcing provider for you.
Secondly, outsourcing should be financially beneficial to your company. If you find that outsourcing does not produce a long term financial benefit then you may need to reconsider your options.
The third element is to determine which outsourcing provider is most suitable for your needs and will be able to provide you with the services and technology required. When searching for a provider, consider their scope of work, the agreed price and breakdown, a short term contract with the ability to extend, and performance measures.
Once you have chosen a provider and have finalised the details of the contract, companies must start the transition process. The company and provider must have clearly defined roles in the process, and merge their individual plans into one consensus plan. Both the company and provider should have an appointed relationship manager to address any challenges that may arise. The agreed upon consensus plan should include a communication plan to the affected and unaffected employees, a personnel plan to address the changes occurring and how individuals should respond, and a transition plan that will explain the schedule of the transition process.
Lastly, to ensure the relationship remains positive and beneficial for both parties. The relationship manager needs to evaluate and monitor the performance of the provider. The original contract should include performance measures, deliverables and due dates; these should be compared with the actual results the provider is achieving, on the performance reports.
Strategic outsourcing can take your company to the next level; it can help you expand into new countries and gain a competitive edge. Depending on your company objectives, the solutions available with outsourcing are immense. Many companies have used outsourcing to enter the Saudi market, and those already present in the Kingdom have used it as a method to expand their efforts and multiply their results.
If you would like to know more about how you can use outsourcing in Saudi Arabia, contact us on +966 11 411 1127 or [email protected].