Insourcing/Hybrid/Mixed Economy

There are a number of key considerations, but in principle:

• Terminating for convenience. If you are terminating the outsourced supplier because of ‘convenience’ (not for supplier service failings), then relationships between you and the outgoing supplier have to be very carefully managed to ensure any exit costs are minimised and performance levels are kept high during the exit and transition process. Clear communication to the appropriate senior stakeholders within the supplier is key.
• Terminating for poor service delivery. If you are terminating the service for breach of the outsourced supplier’s poor service, then relationships are likely to be very frayed. We often act as a critical friend to both supplier and client, and at the same time, ensuring your contractual position is protected. In turn, we continue to motivate the supplier to provide assistance (or at least not get in the way) during the exit and transition process to the insourced target operating model.

There are many challenges with moving to an in-sourced/mixed economy delivery model. Some of the key issues are:

• Internal resistance to change from both operatives and senior management
• Not measuring costs or service levels before moving from an outsourced service to the insourced service and therefore, being unable to assess whether you are achieving better value for money to senior stakeholders when the insourced service moves into business-as-usual status
• Not having clarity of the processes being operated by the outsourcer pre-in-house implementation
• Not appointing a full-time project team early in the process
• Not focusing sufficiently on the transition period
• Not having a robust project plan clarifying employee resources
• Becoming bogged down standardising technology and processes pre-implementation
• Having little risk management, monitoring or contingency planning
• Not undertaking an appropriate options appraisal to independently validate whether insourcing or outsourcing is the most effective option.

Some key principles can be implemented to assure success at an early stage. Some of these include:

• Articulate your service expectations so that it is clear what your organisation can achieve that it could not before the service is brought in-house
• Share the in-house vision on a collaborated basis
• Baseline your existing service levels and costs pre-in-house-repatriation, so you can measure progress
• Clarity over the business case
• Plan to have a clear governance process, across the relationships with the outgoing provider and in-house Subject Matter Experts (SMEs)
• Implement an appropriate performance management structure
• Govern change management
• Develop a fit for purpose target operating model, along with supporting technology considerations
• Have clear SLAs for internal service delivery
• Pilot test in-house services in defined areas to assess implementation practicalities
• Develop an appropriate exit and transition roadmap
• Implement knowledge transfer governance
• Develop a service and contract re-shaping process and on-going performance benchmarking to assess value for money against pre-defined baselines.