Consultant's Role

Business consultants specialized in the disciplines of outsourcing can add value to an outsourcing transaction.

Customers frequently hire such consultants to gauge the prospective deal against similar deals. Consultants should be knowledgeable in many details, including:

• Defining the rationale for the outsourcing.
• Defining the type and scope of the services to be outsourced.
• Defining the service levels.
• RFP development.
• Identification, evaluation and selection of suitable vendors.
• Analysis and advice on pricing issues.
• Facilitation of the negotiations and the transition.
• Over time, review of actual performance against contractual performance and assistance in fine-tuning or other adjustments to reflect unanticipated changes in business environment, corporate goals, management, organizational structure and the like.

Methodologies can vary. In selecting an outsourcing consultant, the customer should understand the consultant's general methodology and, most important, its impact on timing, the pricing, the vendor selection, the vendor's anticipated performance, and generally on the customer's intended goals. 

At the "macro" level, some consultants will provide value by identifying opportunities for outsourcing and structuring a program for consistently generating appropriate opportunities. Opportunities arise from analysis of the value-drivers in an organization and the "return on investment" of the tasks that are performed in supporting such value-drivers. 

• What to Outsource. For example, in a company that trades energy futures and derivatives, the value-drivers may be the human capital of the traders, not the vital yet clerical functions that support the traders' gaining access to different markets. Such "vital yet clerical" functions could include anything that does not result in a trading decision, but that allows the company to trade. The non-core functions might include leased real estate, leased software development and maintenance services, storage of completed deals, development of technologies that get information to the traders faster than under existing scenarios, "help desk," telecommunications infrastructures and services, accounting, finance, meals delivered to the trading desk, and more. A "macro" consultant might identify not only the opportunities for outsourcing of existing business infrastructures, but also more strategic opportunities for the future evolution of the company. 
• Steps towards Outsourcing. A company challenged by rapid developments in the supporting technologies and human resources might call on an outsourcing provider for help in solving short-term problems with a goal of making short-term improvements before longer-term strategic outsourcing. A consultant might suggest a series of initiatives to achieve such a multi-step program.

At the "micro" level, some consultants will provide value by identifying specific individual tactics that promote their clients' interests. 

• Pricing. Some consultants have developed highly complex methodologies that require extensive investment by vendors making their proposals. This facilitates comparison of proposals. Other consultants suggest less complex methodologies with the understanding that there will be more unique responses. This promotes one-on-one sales based on the judgment and skill of the customer or its consultant. Or a consultant might try to get both comparability of goods, services and pricing for "generic" services and special treatment and creativity for non-generic services. The suitability of any of these approaches depends on many business variables, many of which are unique to the particular customer and industry.
• Degree of Specialization. Some consultants provide deep experience in one type of outsourcing, such as information technology, real estate facilities management, finance, accounting, human resources, pension management, logistics or manufacturing. Other consultants cover several industries.
• Service Levels. The key to outsourcing is the quality, or "level," of service being provided. A good consultant can structure service levels for purposes that meet the customer's particular needs and goals at the time. A great consultant will do so in a way that has a good chance of meeting those needs and goals over a significant future period. (To get a great consultant, the customer must be willing to be a "great customer." The customer must make a concomitant commitment to engage in the process and take risks for such a future period.)