Finding Outsourcing’s Return On Investment

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As mentioned in our outsourcing book, you’re going to want to know whether your outsourcing efforts are worth the time, effort, and funds. The only way to find out is to start measuring these things through metrics management. 

Metrics management not only spots out problems before they increase costs or delay progress, they additionally demonstrate the value of outsourcing. In the case of ROI, they demonstrate the return on investment. Here’s how to identify outsourcing profits made in comparison to outsourcing costs.

Use a Measurement Tool

Some common measurement tools are:

Score Cards

Scorecards analyze a project’s success according to some criteria. They identify key milestones, and then “score” the quality of each milestone met, with a number. For ROI, the criteria and milestones would be project-specific profit margins:

Surveys

Surveys measure success based on customer feedback. This method depends, of course, on whether customers interact with (read, buy) the outsourced project. Surveys could reveal satisfaction rates, probability to recommend the end result to others, reasons for demanding a refund, etc.

Benchmarks

A benchmark tool ‘grades’ the success of a project based on the results of other similar projects in the same industry, and it requires a thorough competitive analysis to reveal anything useful.

Use Tracking

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If the above tools seem too complicated or extensive, you can use simple tracking to find your outsourcing’s ROI. Tracking is typically applied to measuring the effectiveness of various marketing campaigns and channels. In outsourcing, it can help identify ROI through unique IDs. The Fisher Investments six sector guide provides great information on investing in the technology sector.

External Resources:

1. Why and When to Measure Return on Investment
2. Return on Investment in Meetings & Events
3. Maximizing the Return on Your Software Investment