Johannesburg, 14 Apr 2008
Outsourcing: a business conundrum for many companies. According to Lucky Khumalo, CEO of M-IT, this shouldn't be the case at all. The complete opposite in fact - find the right outsourcing partner and you'll soon be an industry leader.
When it comes to outsourcing non-core parts of their businesses, South Africans are still proving far more hesitant than their overseas counterparts. The reason for this? "We still equate outsourcing with losing control," explains Khumalo. "We also expect the incorrect things from our outsourcing partners, in effect preventing them from delivering before they've even started their work."
Khumalo uses the overseas market as the perfect example of how outsourcing can work - and is already working, "Outsourcing has been comprehensively embraced by companies overseas. The market is ready. The customers are ready. Companies know what they want." This stands in direct contrast to our local experience of outsourcing, where the market is seeing companies frequently switch from outsourcing to multi-sourcing or more in-house models - thereby retaining or increasing their control of non-core activities. Recently we have seen a more positive shift towards outsourcing with a few large outsourcing deals pending or awarded.
While outsourcing is often incorrectly equated with losing control, Khumalo explains that it's also incorrectly associated with immediate cost savings, "Companies need to realise that while economies of scale and efficiencies will kick in, these are longer-term benefits that the company can look forward to. It's no good going into an outsourcing agreement to slash your IT budget for example. Cost reduction alone should not drive your outsourcing decision."
The key driver of your decision to outsource then? "You employ a specialist - who lets you focus on what you do best, whilst doing what they do best. As a manufacturing company for example, you just don't have access to the best possible pool of ICT experts and resources available. Your outsourcing partner does. That makes them an integral part of your business, able to add value to your processes through their skills and knowledge. By outsourcing, you're broadening your skills and expertise base effortlessly. You're keeping up with trends and developments that could make a huge impact on your business - through your specialist partner."
Khumalo goes on to explain that the key to successful outsourcing lies in selection of the correct partner, "Outsourcing is a long-term commitment. You need to choose a partner who consistently adds value throughout your relationship. Look at the depth of their offering, and see how your own business strategy aligns with this. Above all, make sure that there will be a cultural fit between your companies: your outsourcer must enable your business. You must be comfortable with them taking control of your ICT and making it work."
As to evaluating your partner, Khumalo says there are a couple of things you need to look out for, "As a partner, your outsourcer must empower and enable you to meet your business objectives. This means they need to be proactive - holding strategy sessions where you're updated as to new technology and trends, and how these can assist you. They should also continuously be re-assessing and re-visiting their strategy and objectives as the partnership progresses. You shouldn't just see their management team when it comes to signing the contract. Your business is their business. They need to act accordingly."
Outsourcing would thus seem to be more than just a viable option for most businesses - no matter their shape, size or industry. Perhaps it's time for your business to find a partner who will take on your non-core responsibilities and make these their core business. Who knows? By getting the experts in, you could very well end up taking your rightful place as the expert in your own industry.
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