Manage risk through an Outsourcing Management Office
/As more companies look at both onshore and offshore outsourcing for Finance and Accounting processes, there is a greater need to coordinate efforts to manage the risk inherent in outsourcing. Risk is inevitable in any relationship. In an outsourcing relationship, the major components of risk include:
- Strategic risk
- Operational risk
- Financial risk
Fortunately, companies are developing effective ways to mitigate that risk. One way to mitigate outsourcing risk is through an Outsourcing Management Office (OMO). The OMO is similar to a PMO in that it creates a central standard for policies, procedures and tool sets used to initiate, manage and end outsourcing relationships. And like PMOs, the OMO can vary widely in its influence over an organization. On one end of the spectrum is a consultative OMO that provides tools and coaching to govern the outsourcing process. At the other end is a highly directive OMO that coordinates and aggregates outsourcing relationships and enforces standards.
Some of the activities of an OMO include:
- Coordinate efforts across business units to manage enterprise level risk,
- Provide training to business units on the corporate approach to outsourcing,
- Rationalize outsourcing suppliers to negotiate the best deal,
- Standardize approach to outsourcing to minimize up-front costs,
- Provide contract templates to leverage knowledge from previous contracts,
- Provide coaching to business units involved with outsourcing execution,
- Establish performance monitoring metrics
As outsourcing continues to grow, companies will need to put in place a stronger governance function to ensure that the benefits of outsourcing are realized. An Outsourcing Management Office is one way of managing that process.
