03
Comparing competitors
What are the right criteria when drawing up a short list of potential outsourcing partners and which pitfalls do government agencies need to avoid?
03
Comparing competitors
What are the right criteria when drawing up a short list of potential outsourcing partners and which pitfalls do government agencies need to avoid?
(Time to read: 1.5 mins)
An open dialogue will increase interest in and competition for government contracts. But how can the public sector accurately assess which solution provider is best suited to deliver, especially when there are more potential partners to choose from?
Not all BPO organizations are created equal in terms of size or capabilities. And while balance sheets and capitalization are critical metrics, organizations should also be judged on the maturity of delivering the services, solutions or assets in question.
However, the maturity of that delivery should be across as many different business sectors as possible. Although organizations that specialize in public sector engagement can certainly add value and peace of mind, businesses that have a diverse client base also have a greater depth and breadth of experience, which is crucial to grounded innovation and problem solving. Organizations that engage across different markets and industries are typically more robust and less financially exposed to volatilities within specific business sectors.
Often, the specialty needed with public sector engagement is the working relationship, rather than the service being delivered. The traditional view of BPO that can still hold government back when it comes to accessing innovation can also have an adverse impact on engagement. There can be a tendency to view outsourcers as suppliers or vendors and treat the resulting relationship as transactional.
If the goal of outsourcing is to add value, unlock efficiencies and access innovation, irrespective of a BPO’s capabilities, the potential benefits of the engagement will hinge on the strength and structure of the business relationship.
The problem with limited competition
If the potential market for a service is small, emergent, or limited to a few specialists, the lack of competition makes outsourcing riskier concerning quality and costs. How can you confidently measure the performance of a novel or specialized service? What metrics are applicable, and what independent data sources or benchmarks exist to assess its success?
Limited competition outside specialist organizations can create confusion in evaluating whether the engagement is beneficial or problematic and could open the door to opportunistic behavior.
Even organizations with strong track records in a specific service area can become overly reliant on public sector contracts, making them vulnerable to economic shifts, regulatory changes and heightened direct competition.
The problem with limited competition
If the potential market for a service is small, emergent, or limited to a few specialists, the lack of competition makes outsourcing riskier concerning quality and costs. How can you confidently measure the performance of a novel or specialized service? What metrics are applicable, and what independent data sources or benchmarks exist to assess its success?
Limited competition outside specialist organizations can create confusion in evaluating whether the engagement is beneficial or problematic and could open the door to opportunistic behavior.
Even organizations with strong track records in a specific service area can become overly reliant on public sector contracts, making them vulnerable to economic shifts, regulatory changes, and heightened direct competition.
Checklist
Establish criteria that goes beyond financial metrics to assess potential outsourcing partners.
Foster open communication to increase interest and competition for government contracts, ensuring a broader selection of capable BPOs.
Prioritize building a collaborative relationship with the selected BPO to maximize innovation, value and efficiency.
(Time to read: 1.5 mins)
A point on partnerships
The level of scrutiny applied to government policies, actions and spending can necessitate comprehensive oversight of any outsourced service or asset. But oversight doesn’t mean adopting a master/servant relationship, it’s a byproduct of implementing a partnership model based on collaboration, openness, transparency, and flexibility, alongside contractual commitments. This will ensure a shared focus on service delivery and a collaborative approach to resolving disputes and implementing changes or improvements.
But for this approach to work, any potential BPO partner will need established governance models and a proven history of tailoring oversight and accountability to meet the specific needs of clients.
Regular review meetings and open, direct communication are crucial in maintaining a proactive relationship, and audits should also be part of the oversight process. It's important to have a playbook outlining mutually agreed-upon actions or levers to engage when performance metrics change. This allows teams to take immediate corrective actions as soon as issues are identified, rather than having to escalate concerns or wait for specific time frames or shift rotations.
If the process, solution, or asset in question has never been outsourced before, the governance framework must be even more robust to address potential shortcomings on either side of the relationship. This may require additional onboarding or change management sessions.
The BPO must be prepared to assemble a specialized team and allocate resources — potentially across various functions or operations — to facilitate a smooth transition and assist the agency or department in establishing its own account management team.
Regular review meetings and open, direct communication are crucial in maintaining a proactive relationship, and audits should also be part of the oversight process.
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