65% of companies who outsource do so in Europe. Here are 7 tips to help you find the most valuable partnership.
Outsourcing to Eastern Europe is more popular and profitable than ever. According to Deloitte’s 2016 Global Outsourcing Survey, 65% of companies who outsource do so in Europe.
The Eastern European region is increasingly attractive to companies seeking to cut costs without sacrificing the quality of output.
The level of education is high in Eastern Europe, especially in key areas such as engineering and technology. The talent pool is deep and English is widely spoken. This lets businesses focus on more complex tasks with greater impact, such as innovation.
The region’s appeal also stems from the cultural alignment and nearshore proximity to Western Europe. You can expect compliance with business operations, as well as security and intellectual property protections from the European Union.
So how can you find a quality outsourcing partner in Eastern Europe? Here are 7 tips to help you find a short- or long-term outsourcing partnership:
- Detail your expectations
- Share your business goals
- Hire a proactive partner
- Review their innovation
- Assess the talent pool
- Train as needed
- Check for management compliance
1. Detail Your Expectations
Clear communication allows for productive cooperation. From the request for proposal to the service agreement, governance is your responsibility. Set tasks with a specific purpose and provide all the information needed to implement your ideas.
“It all starts at the quality of specifications for an external partner to understand,” says Ole Jeppesen, CEO and founder of Resiport. “Governance, reporting processes and qualified and available staff need to be in place to receive and accept the delivery.”
Knowing what to do (and when to do it) gives the team a target and helps them perform their best. A mutual understanding is the basis of any trusting and beneficial vendor relationship, so remove all ambiguity about what you want.
2. Share Your Business Goals
Sharing your business goals adds context to your expectations. This insight will allow your external team to improve their strategic processes and achieve the best outcome.
For example, the end goal is very helpful to software developers. It helps them to grasp the desired user experience and align that with your vision. When your team sees the big picture, you can expect improved innovation, better productivity, and a smoother vendor management relationship. Transparency on all levels will generate trust, which is key to fostering a meaningful partnership.
3. Select a Proactive Partner
The best service providers will adopt responsibility for your business. According to Deloitte, the number one issue with outsourcing (46%) is that vendors are reactive rather than proactive. Seek and foster a true partnership.
“Engaged relationships don’t just happen,” says Jeffrey Puritt, President and CEO of TELUS International. “They are envisioned, intentionally nurtured, and diligently built, and there are many factors that can positively impact relationship value and partnership engagement.”
You can identify a proactive partner by their independence and flexibility. Where is the synergy between your vision and strategy and ours? What are your financial goals and planned changes? Vendors that answer these questions with confidence will better help you maximize the value of the relationship.
Experienced vendors are less likely to need continuous leadership. However, you shouldn’t discount newer companies. Startups can have great talent and be very receptive to feedback and support.
4. Review Their Innovation
Innovation is one of the primary benefits of outsourcing in Eastern Europe. Despite this, 65% of companies surveyed by Deloitte were unsure how to motivate, define, or track the value of innovation.
Perform your due diligence with a focus on innovation. Check the vendor’s tech stack, industry experience, and success with companies of a similar size. Do they have what’s needed to innovate? To lower the cost of delivery? To increase the level of quality? If you believe the team is capable but lacking a key tool, you could supply this to help achieve your goals.
The work environment also has a huge impact on the potential for innovation. Research shows that innovation is fostered by a proactive and flexible company culture. It’s difficult to evaluate these intangibles online, so consider a visit to your top locations. Vendor selection is pivotal and an innovative partner can lift you above of the competition.
5. Assess the Talent Pool
Good employees are key to effective outsourcing. Ask your service provider how they acquire, train, and keep their best employees. An ideal partner will have both a good recruitment strategy and minimal turnover.
As this graph from Mercer shows, turnover in Eastern Europe is higher than in Western Europe.
Reference the attrition rates by country, then compare those to turnover for the potential vendor. Also consider what percentage of the staff is trained for your specific needs. People do leave, and the loss of a key employee will impede productivity if there’s no substitute. A potential vendor should have a plan to replace team members and keep your goals on track.
Can the current talent pool create the outcome you want? If not, consider investing additional resources to help acquire and retain the best talent. For example, you could chip in with health insurance, online bachelor's degrees, or an onsite game room. These incentives will increase the appeal for prospective team members while improving morale.
6. Train as Necessary
Training must equip the outsourced team with all the skills needed. Fortunately, training should be a core competency of a quality service provider. Be clear about your standards and your training practices in the service agreement.
89% of the companies surveyed by Deloitte continue to leverage their relationships with the same vendors following the initial contract. These “sticky” relations suggest that companies find their partners receptive to training, in both the short- and long-term.
Training can be done online or with a team lead who arrives at the onshore location. This process is made easier by the familiarity Eastern European countries have with English. You can also ask the service provider about training programs they’ve found to be effective.
7. Check for Management Compliance
The operational integrity of a service provider shouldn’t be taken for granted. According to Deloitte, 25% of vendors don’t observe leading practices and 23% lack qualified resources. To avoid issues with management and task completion, check that vendors comply with EU regulations for quality management documentation and meet global standards.
Vet the service provider’s management skills by whether they’ve met the expectations of previous partners. Ask if they have one or more clients with a similar portfolio of products or services – then ask for an introduction. First-hand information is best, but you should also check portfolio and review sites.
How to Outsource to Eastern Europe
Outsourcing in Eastern Europe is a cost-effective way to succeed in the digital era.
Successful vendor relations are grounded in due diligence, open communication, and strategic alignment.