WHAT IS OUTSOURCING? Paying an external provider to assume the operation and day to day management of a business operation. It may be an entire function, or just part of a process.
TWO TYPES OF OUTSOURCING “TRADITIONAL” & “GREENFIELD”
TRADITIONAL OUTSOURCING This type is probably the most easily recognized Employees are no longer used to perform the tasks A contract is established with a service provider
GREENFIELD OUTSOURCING In greenfield outsourcing, the organization changes business processes and methodologies, or The organization assumes new responsibilities previously not managed internally
BENEFITS OF OUTSOURCING Renewed focus on core business Mitigation of risks by reliance on experts Maintain appropriate levels of customer service
BENEFITS OF OUTSOURCING Service improvements Technology infusion Cost reduction
BENEFITS OF OUTSOURCING Improved cost accounting Avoidance of capital investment Asset conversion
WHAT MIGHT YOU OUTSOURCE? You may want to outsource core functions such as HQS inspections, or Project Development
WHAT MIGHT YOU OUTSOURCE? You may outsource non-core functions of your organization such as Human Resources or IT.
FACTORS TO CONSIDER IF YOU SHOULD OUTSOURCE? Understand your employees knowledge, skills and abilities Review your budget What is the job market like?
HOW DO YOU IDENTIFY A FUNCTION TO BE OUTSOURCED? Are there chronic and/or systemic issues?
QUALITY What systems do you have in place to measure quality? Can you maintain quality with more regulations and less funding? How are your audit scores? (PHAS, SEMAP, Worker’s Comp, etc.)
HOW DO YOU IDENTIFY A FUNCTION TO BE OUTSOURCED? Perhaps the function will be expanding or diminishing Perhaps the function has become overly complicated
TRAINING COSTS Do you already pay for external trainers? Do you maintain a training department in- house? Vendors are responsible for their own training
VENDORS PAY FOR TRAINING Make sure you define the certifications you require. Stipulate such factors as the frequency or relevancy of training you expect of vendors Keeping their staff trained is to everyone’s advantage
ANOTHER EXAMPLE… HUMAN RESOURCES WHY? Changing laws Legal Costs Recruitment Difficulties
WHAT DO YOU DO NEXT? Determine what functions could be or should be outsourced. Clearly document all tasks related to the function
DEVELOPING A RFP OR RFQ This will be the foundation document for all future considerations, negotiations and your contract.
SCOPE OF SERVICES Be sure you work with knowledgeable staff and get their input and feedback
SCOPE OF SERVICES Is the Scope descriptive enough?
Outsourcing There are four “truths in outsourcing.” -William Bierce
FIRST TRUTH Truth in Scoping
Truth in scoping requires introspection by the end-user as to the task to be outsourced and the end-user’s ability to manage the process after the contract is signed
Understand the need the need for a monitoring team of senior user personnel to specify tasks Provide guidance for future activities the vendor can provide
Outsourcing Outsourcing is successful when the end-user understands the scope of work And also Tasks the end-user will perform
SECOND TRUTH TRUTH IN FLEXIBILITY
Outsourcing Truth in flexibility requires an understanding of the vendor’s limitations on change.
Outsourcing Flexibility should be built into the obligations of both parties
THIRD TRUTH Truth in Personnel
Outsourcing Identify Benchmarks For Success
Outsourcing Training, retraining, retaining or reacquiring skilled employees is very costly.
FOURTH TRUTH Post-Contract Management
Outsourcing Post-contract management requires an understanding of the change in roles once the outsourcing has begun.
Outsourcing Staff accustomed to managing people, must now measure the work performed under contractual metrics, or guidelines
THE FOUR TRUTHS Truth in Scoping Truth in Flexibility Truth in Personnel Truth in Post-Contract Management
WHAT KIND OF RESPONSES WILL YOU RECEIVE FROM POTENTIAL VENDORS?
Outsourcing Some may seem too far away
Outsourcing Some vendors may just do boring or confusing presentations
Outsourcing Some may rely very heavily on sub-contractors
Outsourcing Some may be too costly – or too cheap
FACTORS TO CONSIDER Throughout the entire outsourcing process, there are numerous factors to decide. Be Prepared!
How do you effectively introduce the concept of outsourcing to your organization? Tell no one? Tell everyone? Tell only those affected?
DO YOU WANT VENDOR STAFF ON SITE? Consider: Space Morale Monitoring
WHO PAYS FOR WHAT? PPostage TTelephones OOffice supplies PPrinting
WHO SIGNS? Insurance documents Worker’s Comp claims Employee personnel forms Communiqués with staff
WHO MONITORS? The overall performance of the vendor Compliance with terms of the contract Quality control
WHAT ABOUT TECHNOLOGY? Who supplies/maintains software/hardware Security of data Define agency access to data
Outsourcing Points to consider
Considerations Define the reasoning for the services to be outsourced Define the type and scope of services Write the RFP and solicit invitations to bid
Consider Who will participate in the evaluation and selection of suitable vendors Who will handle pricing negotiations Who will be responsible for a transition plan
THE TRANSITION PERIOD OUCH !
MORALE CHALLENGES Keeping the department running while outsourcing Employee loyalty to outsourced staff may increase Fear - Who’s going next?
REACTIONS OF THE EXITING STAFF “I CAN’T BELIEVE YOU ARE REALLY DOING THIS TO ME!” “WHAT DID I DO WRONG?” ANGER, DEPRESSION, EMOTIONALISM
REACTIONS OF STAFF REMAINING “I CAN’T BELIEVE THEY REALLY DID IT!” “COULDN’T THEY HAVE KEPT ON SOME OF THE OLD STAFF?” “THE NEW PEOPLE DON’T KNOW WHAT THEY ARE DOING!” “AMEN-IT’S ABOUT TIME!”
Consideration for Staff -Don’t ask affected staff to continue working over a long period -Don’t ask them to train the vendors -Be very clear about your transition timetable
DISPUTES WITH YOUR CONTRACTOR Disputes can be traumatic, costly and affect severely affect your daily operations.
STEPS IN DISPUTE RESOLUTION Face-to-Face Discussions This should always be your first step to voice concerns and propose solutions.
DISPUTES WITH YOUR CONTRCTOR Mediation This is often a successful method to reaching an acceptable resolution. These decisions are not binding.
DISPUTES WITH YOUR CONTRACTOR Arbitration Include a clause in your contract These decisions are binding
DISPUTES WITH YOUR CONTRACTOR Litigation Litigation should be considered a last resort
STEPS TO SUCCESS
KNOW YOUR ORGANIZATION
ESTABLISH A SCHEDULE TO PERIODICALLY REVIEW THE RELATIONSHIP
COMMUNICATE WELL AND OFTEN TO BRIDGE CULTURAL DIFFERENCES
OUTSOURCING MAINTAIN A TEAM OF PERSONNEL TO MANAGE THE SERVICE PROVIDER
OUTSOURCING Can provide an opportunity to focus on your core functions Managing Section 8 programs Managing Public Housing programs
DO WHAT YOU DO BEST AND HIRE THE REST!
Upcoming Lunch ‘n’ Learns July 6 th Common Rent Calculation Errors and How to Reduce Them July 6 th What’s New in Public Housing? July 13 th Performance Improvement with Quality Control for HCV Management July 20 th Fair Housing Issues for Management Register at