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Outsourcing Fundamentals

Independent guide to Outsourcing: BPO strategy, Service Provider selection, contracting and implementation projects. Assessing and improving your current service.

Review & Recover > Assessment

Carrying out an assessment of your services

Reviews tend to be triggered when there has been a history of under-performance perceived or real, or a senior client stakeholder develops a belief that things could be a lot better.

The causes of such under-performance are many and varied. Often for the most serious cases, the client has not provided sufficient attention to governance; perhaps the provider has moved their better managers onto other clients. [In one case I reviewed, the client had negotiated too hard and provider taken on unprofitable business. Subsequent provider operational managers were charged with excessive cost cutting to return a margin].

Dissatisfaction arises when:

  • The service does not match the agreement
  • The service meets the agreement but no longer meets business needs.
  • The service is perceived as not being market competitive

And hence a comprehensive review would test the degree to which the following are aligned:

  • Service expectation
  • Services required
  • Services defined in the contract
  • Services Delivered
  • Market standards

Of course, you can choose to focus the review on a specific aspect of the service. The questions in the box to the right are a selection to show the potential coverage. It is usually better to start broadly and then focus more after some analysis.

What is involved in carrying out an assessment?

As with all projects of a sensitive nature, a clear terms of reference and positioning in the organisation is important to success. Senior stakeholders from both client and provider should be briefed and be ready to support if and when required.

The person or people undertaking the review must have a broad experience of BPO services both to support insight into potential issues and to give confidence to client and provider. They must be able to engage effectively with the range of stakeholders. Most companies need external support for this type of review.

A typical plan of action would be:

  1. Have a briefing from the appropriate manager to explain the purpose and position of the service.
  2. Ensure that the review objective and scope are clear and that all information and access to people will be available for the review.
  3. Review the documentation describing the intent of the service - RFP and provider response.
  4. Review the contract and significant change orders.
  5. Review the operational reports - planning, performance and issue management, governance meeting minutes.
  6. Interviews with governance organisation, service customers, provider operations
  7. Develop draft service review report.
  8. Validate assumptions and test potential improvements.
  9. Finalisation and sign-off of report and action plan.

Typical questions for the review

  1. Current performance of the service
    • Are the services being delivered according to the contractual service levels?
    • Do the contractual service levels meet business requirements?
    • Do the customers of the service have a good level of satisfaction?
  2. Future performance of the service
    • Do the agreement and the provider have the capacity to adapt to the likely range of possible changes in requirements?
    • Is there a process to systematically and continuously manage process improvement and learning?
    • Is there continuous improvement delivering annual lowering of prices and/or increasing quality?
  3. Service Management
    • Does the actual governance process follow the contractual governance framework?
    • Is the governance structure efficient and effective at managing and controlling the delivery of the services?
    • Are the resource units, the measure of service quantity, appropriate for the service being consumed and are they being properly measured?
    • Are important service characteristics/performance measured and performance reports made available?
    • Do client and provider representatives meet regularly to discuss service performance and demand, with a record of meetings kept?
    • Are issues, including operational and commercial, logged and tracked from identification to resolution?
    • Is there a clear understanding of how decisions are made and which role is responsible for making decisions? Are there client process owners active in managing the service? Are decisions taken rapidly and with undue hesitation?
    • Is there evidence of clear communication aimed at establishing accurate perception across the various stakeholders within both parties?
  4. Commercial and Business
    • Are charges predictable and reflect the service demand.
    • Does the pricing model help to align provider and client on achieving a good service.
    • Is the invoice thoroughly checked for its accuracy before it is paid?
    • Are benefits being tracked and is the service on track to delivering against its original business case?
    • Is the total contract price competitive with the market given the nature, scope, scale and geographies of the services being bought?
    • Is the quality of the documentation material that explains how the process operates, the positions /organisation / units involved sufficiently accurate and detailed to allow the service to be taken over by another provider?
    • Are the service documentation and the contract kept up to date?
  5. Risk Management
    • Are standards and controls (including but not restricted to legal obligations) defined and covered by the contract
    • Are there adequate business continuity and disaster recovery planning and facilities to cope with all foreseeable situations and are they regularly tested?
    • Is there a programme of audits to confirm that controls and safeguards are in place and effective?
  6. Organisation and Culture
    • Is the provider organisation staffed at the appropriate size and by people with appropriate skills and experience?
    • Do the provider organisation and its staff have clear objectives and rewards that are aligned to the success and improvement of the service?
    • Does the provider staff management processes result in highly motivated workforce with low staff turnover?
    • Do both service customers and client service management staff have a positive perception of working with the provider?