A fresh approach to SME outsourcing

In a previous recent blog entry I discussed the various consulting styles that could be applied to outsource projects. The majority of industry analysts believe that the largest growth area in outsourcing over the next 5 years will be within the SME sector. Most MNCs are already outsourcing and the only concern for them is renewal or further opportunities. Everyone has witnessed a decline in the mega budget relationships over the last few years. As vendors and support services (consultants, lawyers, etc) shift towards the SME sector a re-think is required in the way projects are engaged.

SMEs are more cost conscious when approaching an outsource project. As discussed earlier a “Light Touch” style of consulting would suit them better than full engagement. A new breed of consulting organisation is joining the fray with pricing models to suit this style of outsourcing. The project costs will be fixed at the start of the contract between the client and the consultancy. Terms are defined regarding levels of engagement, staff commitments on the client side, and the project kicked off.

The fact that a more mentoring, knowledge transfer style of consulting occurs, means less time is required on site and therefore costs are reduced. Even the Legal, contract negotiation fees are wrapped up in the overall costs. This means a SME can enter the project with a set of fixed costs and with this they are better able to judge the ROI. More and more SMEs want the confidence of fixed costs when they enter a consulting project and the additional benefit of knowledge transfer means that the staff managing the relationship, post contract signing, are better able to do this with the knowledge they have gained and the intimate time they spent during the outsource project. SME outsource agreements are smaller and the benefits are sometimes harder to judge in overall terms against the organisation as a whole.

Post contract signing these organisation maintain an advisory role in regular updates ensuring both the client and vendor are in a partner like rather than adversarial relationship.