The power of Outsourcing of tasks is being increasingly realized by organizations. The concept is being exploited in various areas, latest being that of 'outsourcing lives'. However performance evaluation remains the tricky part.
Plenty of ways exist for this task. One of them, KPI (Key Performance Indicators) stands out and scores over many traditional methods as these indicators are a direct measurement of performance. The parameters should be chosen in such a manner that they help in remaining focused on improving the organizational performance. KPIs are organized along various dimensions, structured as a BSC (Balanced Scorecard) and values assigned to them to have a holistic view of the organization.
In the context of outsourced tasks, KPIs can be classified under four following categories- financial, service quality, strategic perspective and operational efficiency. KPIs for financial perspective can be percentage savings in operating costs, percentage deviation from pre-set ROI, percentage increase in revenues and percentage savings in infrastructural costs. Service quality can be had from percentage of projects timely delivered, accuracy and privacy of tasks. Strategic perspective can be assessed from number of strategically aligned goals and number of competitive advantages derived. Operational efficiency can be obtained from KPIs like number of creative solutions, operational expertise and adaptability.
The challenges differ according to the party being considered. For the organization which is outsourcing its operations, spotting the right task to be outsourced is one of the many hurdles faced. Only those tasks should be outsourced which are not the part of core competency of the organization. This is because the core activities must stand unique for every organization and should be cultivated on own, for these constitute the identity of an organization. Finding a trusted partner to work with is yet another challenge since the partner must come up with the same quality of work as is needed by the client organization. A number of factors like costs involved, resource planning flexibility, IP rights etc. affect the decision of outsourcing. An integrated effect of these factors should be considered. The organization which is to do the outsourced task must possess the required skill and expertise to perform the job assigned lest would feel the brunch of being uncompetitive fast enough to drive them out of ma rke
t. These problems can be overcome by employing KPIs to provide a magnitudinal base to the decisions taken, thereby making the working of the organization more scientific and logical.
KPIs make the management scheme more transparent, showing each employee's and division's contribution to the organization's goals. This can be used to know the under performing areas and suitable steps to improve the progress can be formulated. A periodic reviewing for resetting the target values may be done for reflecting any favorable (e.g. installation of a new and advanced machinery) or unfavorable (high labor turnover) change that has occurred in the course of time. This will help the organization in moving on the desired path and achieve the pre-set objectives.
To sum up, assessment of performance of the outsourced tasks is a must as in some cases they may be very crucial for the successful completion of the core activities. This calls for an almost accurate evaluation of the way they are done. This can be attained by utilizing KPIs which are the parameters used for quantifying the performance of such jobs.
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