Outsourcing can help your startup business grow much faster. However, it can also be quite a complex process. To know whether your efforts are indeed paying off, you need to keep track of the right metrics.
Determining these key performance indicators is itself an art. After all, you have dozens of figures to keep tabs on. Let’s explore how you can go along with this work and ensure that your outsourcing efforts are on the right track.
The Challenges Of Identifying Outsourcing KPIs
Determining your outsourcing KPIs might seem like a straightforward task at first. You just pick up a metric that gives you a specific figure and that’s it. But as you go into the actual work, you will soon encounter several challenges. These can skew your choices, which leads to problematic tracking down the line.
Challenge 1: The Trap Of Best Practices
Best practices represent the ideal service scenario that companies strive to achieve. As such, it is no surprise that companies often peg them as the benchmarks for their KPIs. But as it turns out, this can be a bad idea.
Image from Security Magazine.
As already mentioned, best practices are an idealized situation. Hence, they might not always fit a given outsourcing situation. And if you try to follow these practices as your KPI, you and the outsourced team will be struggling to meet these figures. Hence, it is still best to do a thorough analysis to determine which situations would allow these benchmarks.
Challenge 2. Collecting Your Data
Another major hurdle when creating your outsourcing KPIs is collecting the data. Here, you need a system that ensures the data is continuously collected and processed. That can be a lot more complex than you might think.
A specific hurdle is determining who will be responsible for the data collection process. Here, you need to consider the capabilities of each side. That is crucial as it helps determine which data sets fall into each side’s responsibility. Expect to encounter some back-and-forth as you discuss the assignments.
Image from Toptal.
Consistency is also a challenge here. Both sides need to be on the same page in the procedure to follow when working with the data. Note that you should also ensure that all the KPIs you and the outsourced team use are compatible with others.
Besides these, you might also have difficulty getting the right tool for tracking your KPIs. That is far more common than you think. The challenge here is that even the most sophisticated tools have their limitations. These can limit their effectiveness in certain situations. Hence, you should create the workarounds for these tools.
How Your Startup Company Can Set Its Outsourcing KPIs
With the above challenges, you need to give a lot of thought to the KPIs you choose for a particular outsourcing effort. Here, you should understand that a KPI is not just any other metric your startup business uses.
Here, you need to remember the “key performance” part of the name. It indicates that the KPI focuses on tracking this aspect of specific areas. These performances play a significant role in the success of that area. This definition will help you limit the number of KPIs to identify and track.
The Types Of KPIs Your Startup- Business Should Include
Image from The KPI Institute.
The next part of setting your outsourcing KPIs is determining the types to focus on. Here, you have two to consider: quantitative and qualitative. The first refers to numerical data representing a straightforward measure of the outsourcing performance you track. It is arguably the one that you most associate with the term KPI.
However, qualitative KPIs also play a vital role in tracking outsourcing performance. As the name implies, these KPIs represent the non-numerical data relating to performance. These include things like product reviews and opinions on customer service.
Additionally, you can categorize KPIs based on who they apply to.
- High-level KPI: This applies to the entirety of the organization
- Low-level KPI: The KPI tracks the performance of specific departments within the organization.
You and your outsourcing partner must discuss both levels of KPI thoroughly. While you will often be interested in high-level ones, you still need to know the low-level KPIs they use. These will give you a more in-depth picture of their inner workings and how that affects their overall performance.
Understanding What A KPI Isn’t
While you are already clear about what a KPI is, you also need to know what it isn’t. That is also something worth noting since companies can sometimes think of them as a catch-all measure. That can lead them to struggle to interpret it.
As such, you should be clear about the limitations of each KPI you identify. For instance, identify the areas and situations where they might not work optimally. You and your outsourcing partner should determine other ways to resolve these.
Streamlining Your Startup Business KPIs
Chances are, your startup business already has a lot of KPIs for tracking its performance. Once you enter an outsourcing agreement, you need to review your KPI set again. Your goal here is to clean the list and remove any KPIs that might not be relevant to the current arrangement.
To do this, you need to lay out all your KPIs, such as by using a spreadsheet. You then review each KPI and see if it provides you the information. It would be helpful if you have a clear evaluation framework for this.
Image from Solver.
At this point, you would also want to compare the KPIs your outsourcing provider uses. Here, you will be able to find complementary ones between your sets. On the other hand, you might also encounter KPIs that run against each other. In this case, you and your partner need to discuss the pros and cons of each and decide which ones are best for you to adopt. Note that you might want to do several rounds of review before you arrive at a final list of KPIs for the outsourcing effort.
Helping Your Startup Business Keep Tabs On Its Performance
Virtua Solutions know how vital performance tracking is for your startup business. As such, when you sign up with us, we will help you sort out all of your metrics. Our team can also help in setting up the accompanying tools for monitoring. Contact us today and we are ready to be by your side.