Company President, Rob Mattern, delivered this presentation at the 2020 COO CFO Forum. Here is an excerpt:
Why do firms outsource? Primary reasons are efficiency, expertise, flexibility and costs--but one of these alone does not stand well without the other.
Altman Weil Law Firms in Transition Surveys from 2016 to 2019, state that less than 50% of firms indicated that there was a significant improvement in the operations of the outsourced services. Less than 50%. 20% of that 50% said that there was no improvement at all.
When it comes to outsourcing, ideally, firms are taking an area that is not operating well and outsourcing the service to make it run more efficiently and cost-effectively through improved workflow, technology, less headcount, different pay scales, or moving the operation to a lower cost location where the services can be performed at a lower rate.
Additionally, if an outsourcing contract is structured properly, you will have flexibility over the labor and the equipment. In addition it will contain the proper service levels to be able to measure performance and properly manage this operational area of your firm.
Half of firms don’t get what they want out of their engagements, however, because some firms don’t know what a successful operation looks like—and if you don’t know where you are headed, it is difficult to get there. Another issue is that many firms believe that all outsourcing service providers are the same, so it doesn’t make sense to make a switch or it is not worth the pain of the transition.
Still other firms sign contracts that tie their hands in regard to how they can manage the contract, or get out of it if it is not working. Many of these contracts don’t have any type of penalties tied to service levels, and many firms, believe it or not, sign non-cancelable agreements, or have to pay a terrific penalty to cancel.
You know you are in a “foe” outsourcing situation when the performance initiative stalls, if you are not receiving useful data, key metrics are missing, and you don’t have detailed performance standards in your contract to rely on to hold the partner accountable.
