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Guidelines For IT Management: Planning for Offshore Outsourcing

Many companies quickly conclude that an outsourcing strategy, be it manufacturing, product development, customer support, even the sales channel, makes sense for them. Even if the strategy is sound, there are risks: selecting the wrong partner can lead to higher costs, reduced quality, and other significant business detriments including intellectual property leakage.

A disciplined approach to selecting and establishing a relationship with the right partner mitigates these risks. Four steps make up this process:

1. Develop the relationship specification ... your selection criteria
2. Evaluate candidate providers against the criteria and select the best one
3. Design the relationship structure (including clear definitions of scope, service level metrics tied to business objectives, and effective agreement)
4. Manage the relationship on an on-going basis through formal and informal business reviews and information exchange

Lack of attention to any step in this process increases risk and often leads to inferior results.

The writers are principals at Sunstrum Hanel & Associates, a consulting firm in Ottawa, Ontario, Canada that helps companies develop and deliver better products by improving their business processes in the areas of manufacturing outsourcing, supply chain de-risking, and quality and reliability management. www.sunstrumhanel.com.

Publish Date: March 2004

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