Outsourcing is a great way for a startup company to get its operations rolling quickly. However, getting just one company might not always be enough. In such cases, you will have to sign up with several providers. That can create a challenge when it comes to managing them. Here is a handy guide on how you can effectively work with multiple outsourcing partners.
Why Outsource To Multiple Partners?
For the most part, working with only one outsourcing partner is often preferred. This is because it is the simplest to implement. However, there are several reasons for you to opt for this setup. Note that you can subscribe to all of them at the same time, giving you greater impetus for choosing this route.
Multiple Requirements
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If you are outsourcing several areas of your business, you can’t always expect a single company to handle everything. For instance, an outsourcing provider which mainly focuses on customer support might not necessarily work on internal support. Thus, you have no choice but to opt for a different provider for the latter.
Risk Reduction
One of the main challenges of outsourcing work to a single partner is demand variability. This is when demand for your company sharply rises but the single provider can’t handle that demand. With multiple providers, you can spread out that demand easily. That ensures that your services will not be hampered.
The Challenges A Startup Company Faces With Multiple Partners
However, working with multiple partners is also considerably more challenging. The challenges that you encounter when outsourcing to a single partner get magnified several times over. That can affect the efficiency of the whole setup. As such, you need to plan out for them before entering into contracts with different providers.
Complex Information Sharing Process
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With a single outsourcing provider, you only have to share company information to them. But when working with several providers, information sharing can become more complex. For one, you need to ensure that each provider can get only the information they require. There are also more data security concerns you need to take into account.
Reduced Bargaining Power
Since you are distributing work to several providers, you end up giving a reduced service order for each. That can lessen your bargaining power, as the provider doesn’t get as much profit from you. Note that it becomes a challenge mainly during the negotiation phase, as you might not get a more preferable deal. You can mitigate that by choosing providers that are more willing to negotiate deals under such a setup.
Quality Control And Efficiency Challenges
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Quality control can also become a challenge when working with multiple providers. Since each has its own control processes, you need to work out how to bring them into a consolidated procedure. This can also create efficiency issues, as you need to go through a lot more to complete delivery.
Less Savings Through Economies Of Scale
While you do still get savings through multi-sourcing, these can be relatively smaller than when partnering with a single provider. This has to do mainly with the different prices providers offer. Those differences can make it harder to create a cost-effective budget. Thus, you need to be more conscious of the prices to maximize your savings.
How Your Startup Company Should Manage Multiple Outsourcing Partners
To effectively work with multiple outsourcing partners, your startup company needs the right management strategy. Your goal should be to give each provider the freedom to perform their tasks without interference from each other. On the other hand, you need some collaborative system that will make it easy for them to work together if they need to.
Defining And Aligning Responsibilities
The first step here is making sure that every one of your partners understands their responsibilities. Gather all the outsourced teams and discuss with them the work they have to do. Go over things like goals, workflows, and timelines. You then need to take a look at how these would affect the work of other teams.
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To help teams get a clear grasp of their responsibilities, you can create a responsibility assignment matrix. This is a simple visual tool that lets teams quickly see who is in charge of specific tasks. It will also help them determine the people who need to be informed about task and deliverables completion.
Creating Agreements Among Participants
You also need to establish agreements between the different providers to ensure that they interact with each other accordingly. One of these is the operational level agreement (OLA). This agreement outlines the conduct teams need to follow to meet the service level agreements between you and them. OLAs serve as a safeguard against issues like missed hand-offs between one provider to another.
Another agreement you would want to include is an outsourcing cooperation agreement. Unlike the above, the OCA contractually requires the different service providers to work together. Thus, the providers as a group carry the liability for service failures. This type of agreement is mainly used for projects that require a tighter working relationship between providers.
Maintaining Control For Your Startup Company
With the different providers working with your startup company, it can be hard to maintain control. To solve this, invest in service integration and management tools. These tools help you enforce the various agreements you have, such as contracts. They can also help you do a better risk assessment and lessen integration issues.
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But even with these tools, you should be more proactive in managing the interactions between your providers. One particular role you should take to heart is acting as a mediator between them. Keep in mind that you have to be careful when stepping into the role. Here, you might want to first let the providers work out the issues by themselves. But you should also be ready to jump in should they need your assistance.
Get Your Startup Company Working With Several Providers Effectively.
Working with several outsourcing providers at the same time can look like a hot mess at first. But as you get the hang of it, your startup company can get a significant amount of push from the setup. Follow the strategies that we have outlined here and you can create the ideal outsourcing environment for your business.