The 4 Laws of Building Outsourcing Portfolio for Success - TELUS International Europe

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  • The 4 Laws of Building Outsourcing Portfolio for Success

    Note: The below blog post contains excerpts from “Eight Habits of Highly Ineffective Contact Center Outsourcing Partnerships” by Everest Group and sponsored by TELUS International.

    A common trend among organizations nowadays is working with a number of service providers in order to address their contact center requirements. The main reasons in support of this practice are the access to scale and capabilities including languages and geographic market access, competitive tension, flexibility, and risk management.

    outsourcing portfolioStill, working with many providers can have some negative effects on your business like decline of customer satisfaction, damaged reputation, confidentiality issues to name just a few. To help you avoid the potential negative impact of partnerships with service providers we offer you the 4 laws (plus 1 bonus law) that you need to bear in mind when you are building your outsourcing portfolio.

    Law #1: Create a portfolio of strategic partners to maximize value

    Designing a portfolio with too few or too many providers is suboptimal. Having just one provider is risky and can result in complacent behavior. Having too many providers (a more common problem) creates a fragmented portfolio with subscale relationships that have limited incentives to add value. Conferring strategic partner status to select providers with volume commitments and growth expectations delivers greater value. Identifying the right-sized partners is also important to ensure that your account gets the necessary attention and investment from the service provider.

    Law #2: Eliminate subscale and underperforming providers

    Legacy relationships in many organizations have resulted in larger-than-necessary portfolios. Subscale providers whose performance is significantly lower than the other portfolio companies are primary candidates for portfolio rationalization initiatives. Redistributing this scale to the strategic partners can meaningfully increase value delivered from the outsourcing relationships.

    Law #3: Selectively add strategic partners to drive value creation

    While most organizations are looking to reduce the number of providers they work with, in some cases it can help to selectively add on additional provider to improve competitive dynamics and “shake up” the portfolio. Several deals in the contact center market were signed years ago and not all providers have adapted to changes in the marketplace. In these cases, adding new partners has the potential to raise the performance levels for the entire portfolio.

    Law #4: Choose a provider with experience in your industry

    Understanding the service provider’s previous experience in the client’s industry vertical is also important and likely to create better alignment if the provider has extensive experience with common issues and client challenges.

    BONUS Law #5: Consider culture and value alignment

    “Alignment of culture and values is one of the principle elements we factor into our strategy to rationalize our supplier portfolio for customer contact services” says VP, Operations and Risk Management, Global Payment Processing Company. Alignment of values and culture are important to address because they facilitate and enhance the maximization of value creation from the partnership.

    Selecting service provider will require a lot of due diligence to get it right. In order to get it right the first time make sure you apply those laws in your decision making process of choosing service providers.

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