10 Tips on Strategic Outsourcing

Tip #1

Research shows that many struggle to get the best out of their suppliers and to develop the kind of relationship required to move organizations forward in line with strategy. Ten tips from Drs. Paul Boerboom Msc, Founding Partner at Avida International and program manager of the Strategic Outsourcing Program in the pension sector at the SPO - Nyenrode Business University: 

📌 Know what you need and look holistically. 

A strong awareness of what you need and expect from your suppliers is a prerequisite for a healthy outsourced relationship; pension funds must have a crystal-clear mission and strategy. Solid plans that are future-proof with tasks and mandates for the outsourced relationships that match well.

Tip #2

Research reveals the need for dynamic governance when it comes to outsourcing. In the words of Drs. Paul Boerboom Msc, Founding Partner at Avida International:

📌 Invest in a modern outsourcing function and good commissioning.

Traditional governance of outsourced relationships is no longer sufficient. Provide adaptive governance that takes into account the type of product (for example, looking at the degree of standardization and scarcity) and the services and the dynamics in the environment. Invest in the outsourcing profession at all levels of management to management. Consider the merits of a centralized outsourcing function in this context.

Tip #3

A human touch is invaluable in the outsourcing realm. Here's insight from Drs. Paul Boerboom Msc of Avida International:

📌 Have an eye for human scale.

Human dynamics and behavior are the bedrock of successful outsourcing. Understanding your organizational DNA and ethos is foundational to fostering a healthy outsourced relationship. Success in collaborations pivots on mutual trust.

Tip #4

Contracts can make or break your outsourcing ventures. Drs. Paul Boerboom Msc, Avida International, shares wisdom:

📌 Ensure the right incentives and avoid conflicting interests in contracts.

Look critically at the fees and follow a holistic approach. For example, occasionally compare all contracts and simulate in various scenarios whether the incentives at individual and total levels work out well.

Tip #5

Preparation is key, especially during uncertainties. Drs. Paul Boerboom Msc from Avida International explains:

📌 Ensure sufficient reserve and capacity in the value chain.

Especially in times of crisis, capacity problems can arise and all hands must be on deck. Keep this in mind when negotiating contracts.

Tip #6

Measuring ESG is crucial. How do you get it right? Here's what Drs. Paul Boerboom Msc has to say:

📌 ESG is DNA. How do you measure that?

Which ESG criteria and KPIs can we use when selecting suppliers and partners? This is a complicated question because many ESG-related matters are currently not measurable, and data is not always reliable.

Tip #7

Outsource, but why? Drs. Paul Boerboom Msc enlightens:

📌 Think carefully about the make, buy, and partner question.

 Determine the purpose of your outsourcing. Whether it's for cost-efficiency, expertise, or to prioritize core competencies, make the right choice.

Tip #8

Risks are inherent, but understanding them is crucial. Wisdom from Drs. Paul Boerboom Msc:

📌 Map the current outsourcing risks well and keep an overview.

 What are the main points of attention in fiduciary asset management, in executive asset management, in pension administration, in custody? 

Awareness of fiduciary asset management risks and those in pension administration is essential.

Tip #9

Embrace innovation. Here's advice from Drs. Paul Boerboom Msc:

📌 Dare to experiment with new ideas in pilots that offer opportunities for the organization.

Your dynamic environment means that you constantly must consider whether the strategy and its execution are still adequate given the mission. The pension fund has many stakeholders. Furthermore, developments in the field of digitization and technology are lightning fast.

Tip #10

Building relationships is central. Drs. Paul Boerboom Msc emphasizes:

📌 Make your suppliers an ally.

This requires open and transparent communication with suppliers, where not only the supplier but also the client is transparent and creates a co-creation atmosphere.