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Selecting an Outsourced Solution

Selecting an Outsourced Solution | Human Resource Executive Online Guidelines for the successful selection of an outsourcing provider are spelled out by Bob Danna, executive vice president of Bersin & Associates.

Monday, March 16, 2009
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The market for learning outsourcing is broad and is served by many companies offering a wide variety of solutions. These range from end-to-end providers offering global program development and transformational services to niche providers with deep levels of industry or technical expertise in content, systems or vertical solutions.

Generally, no single outsourcing company addresses all of these elements for the wide spectrum of business situations faced by most organizations.

Bersin & Associates has studied the outsourcing market over several years; our most recent research encompassed 80 corporate buyers and 20 solution providers. Following are three important considerations for selecting the right provider:

1. Establish the primary reason you're considering outsourcing.

Our research shows five major business drivers for using learning outsourcing:

* A specific business outcome (such as improving sales performance).

* The need to increase scale and improve speed of program development and delivery.

* Cost reduction (for example, through a more efficient process for administration or better program alignment).

* Implementation, integration or improvement of learning technology.

* The need for a total transformation (the result of a corporate merger or rapid change in business strategy).

2. Know the relationship you're seeking.

For example, if you want to outsource content development, you have a range of options -- from fully outsourcing the analysis, program development, delivery and administration to outsourcing only the content development, delivery or administration.

You may choose different options for different programs. When evaluating providers and benchmarking pricing, it is important to know in advance the outsourcing model that's right for you.

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3. Understand the impact of model and culture on cost.

Our research finds that organizations that seek strategic business relationships with outsourcing partners not only spend more but get more in return.

For example, companies that emphasize quality in relationships pay more than those focusing on capacity or speed. Respondents who state their organizations have an "outstanding" cultural fit with their vendors pay 15 percent higher prices than average, implying that ease of doing business is well worth the price premium.

Organizations with a poor or very poor cultural fit with their vendors pay 67 percent less than average. In this market, you truly get what you pay for.

Our bottom line advice: Clearly identify your key business drivers and your preferred outsourcing model. This information will get you to a short list of solution providers that potentially fit your needs.

Then, get to know the culture of the solution provider and benchmark solutions within ranges. Do not focus solely on price. Your due diligence will increase your chances of a successful outsourcing relationship.

Bob Danna is executive vice president of Bersin & Associates.

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