ThinSourcing: A New Way for Business to Operate
By Arthur W. Conway, President and Chief Executive Officer, DialAmerica
Over the past 20 years, a lively discussion has taken place about the merits – and demerits – of outsourcing. Driven by the desire to reduce costs and focus on core business imperatives, many companies have shifted functions such as manufacturing, software development and call centers to outside vendors.
While numerous businesses have embraced outsourcing, others have adopted an opposite strategy: insourcing. Insourcing is the establishment of an in-house unit that provides a discreet service to a larger corporate enterprise – but operates autonomously. While both outsourcing and insourcing provide advantages, they also have distinct drawbacks. With outsourcing these include the "hidden expenses" of integrating and managing an outside vendor, plus reduced transparency, control and quality assurance.
With insourcing, the drawbacks are typically the difficulty in hiring and retaining qualified employees, maintaining specialized equipment and technology and staying abreast of best practices.
ThinSourcing, a newly emerging approach, overcomes these drawbacks. ThinSourcing is an intimate business relationship between two companies that provides a cost-effective third party service and delivers that service in a manner that is virtually indistinguishable from the way the company itself would provide it. With ThinSourcing, there is, in effect, a very thin line between the vendor and the client.
Several progressive companies have already been operating in a manner that is consistent with ThinSourcing's principles
and practices. For example, UPS has moved well beyond package delivery and now runs entire supply chains for some of its
clients. ADP has expanded beyond payroll processing and now manages other companies' whole human resources functions. And at DialAmerica, we actually become our clients' sales force in many cases, devising their strategy and executing
a multifaceted sales campaign.
These examples are quite different from the narrow outsourcing arrangements of yesterday. They clearly demonstrate that companies are willing to turn over core business responsibilities to outside vendors that operate with a highly integrated ThinSourcing approach.
Further support for ThinSourcing as a valid business model comes from a survey conducted by the American Teleservices Association (ATA) and sponsored by DialAmerica with 24 major U.S. companies that outsource over $300 million in customer acquisition and customer care functions. Among the key findings were these:
The number one reason for outsourcing – cited by 77 percent – was to enable companies to focus on their core business imperatives.
94 percent said it was important that outsourcers have business experience in their industry sector.
95 percent said it was important that outsourcers understand the rules and regulations of their industry.
91 percent said it was important that outsourcers have an impeccable compliance record.
The number one concern in assessing the value of outsourced customer care programs – cited by 94 percent – was
41 percent expressed dissatisfaction with off-shore outsourcing vendors. ThinSourcing as a business model is built
upon five key pillars:
Custom business solutions
ThinSourcing relationships require custom solutions that precisely meet the needs of contracting companies. Initially, the ThinSourcer acts very much like a management consultant, assessing needs and formulating a detailed plan of action. Unlike a consultant, however, the ThinSourcer implements the agreed plan in accordance with a clearly defined service level agreement.
Seamless, secure technology
Seamless, secure technology is critical in a successful ThinSourcing relationship. Flawless integration with the client's IT system enables the ThinSourcer to operate indistinguishably from the contracting company.
Advanced recruiting, training and retention
Hiring, training and retaining a high-performance workforce is perhaps the greatest challenge for the ThinSourcer, which needs to fully understand the demanding requirements of its own business, as well as the needs of its client company.
Timely, transparent reporting
Operating indistinguishably from the client company means providing performance data and analytical information on a continually updated and fully transparent basis. This real-time reporting enables the ThinSourcer and the client to accurately track progress, engage in an open exchange of ideas and rapidly adjust program implementation.
An impeccable compliance process
ThinSourcers must fully understand all relevant state and federal laws and regulations that affect their client companies and adopt operational practices that fully comply with these requirements.
As companies look to lower costs, reduce capital investments, operate more efficiently, serve customers better and, ultimately, compete more aggressively, ThinSourcing represents a powerful, growing solution.