International Standard Offers Guidance on Outsourcing

UK-based business standards company the British Standards Institution (BSI) has published BS ISO 37500 Guidance on outsourcing, described as the first overarching International Standards Organisation (ISO) standard to set out the generic principles and procedures of outsourcing.

For the first time also, it helps businesses to access a common vocabulary on which to base their communications.

BSI comments that the value of outsourcing has already been noted by organisations seeking to increase their efficiency and reduce their costs by sending work to external third-parties. The practice, which encourages mutually beneficial collaborative working relationships, has grown over the past 20 years and is estimated to generate revenues in the region of trillions of US dollars a year.

“Nevertheless there are challenges and hazards. Not all outsourcing deals are a success,” the BSI adds. “Some can fail dramatically – and publicly – while others simply fail to perform well. BSI ISO 37500 can help organisations to boost business efficiency, gain better value and help avoid costly mishaps.

“BS ISO 37500 can assist and support customers, service providers and third-party advisors (such as lawyers and consultants) involved in outsourcing. In particular it will help organisations to identify the business case for outsourcing, select the most appropriate customer or provider partner, transition to the new operating model and deliver value through the relationship. It is relevant to all markets such as manufacturing, retail, financial services, public sector and facilities management.”

Dan Palmer head of market development for manufacturing and services at BSI added: “Outsourcing can apply to any business, in any industry, anywhere. By providing common practices, concepts and procedures that can be used to manage the outsourcing life cycle, BS ISO 37500 will improve the understanding of everyone involved and lead to greater success.”

Benefits of BS ISO 37500:

– Improved operability by harmonising communications between organisations engaged in, or in the process of engaging in, outsourcing in national and international markets.
– Includes the terminology, concepts and procedures to improve the understanding of all parties involved in outsourcing.

– Uses a common vocabulary for outsourcing communications, avoiding misunderstandings and incorrect and/or unrealistic expectations, and reducing transaction costs.

– Boosts business efficiency, which will benefit everyone involved.

The international standard was developed by experts from countries such as Canada, Germany, India, Malaysia, Netherlands and the UK. Additional UK input came from organizations including AEGON, BP, CapitalOne, DWF, Gartners, IBM, the National Outsourcing Association and PwC.

Adrian Quayle, chair of the ISO committee which developed the standard said: “The benefits of using a standard such as BS ISO 37500 are clear and it provides the cornerstones of what businesses need to get right when outsourcing.The application of this guidance provides all parties involved in outsourcing activities across the lifecycle the assurance that business objectives can be achieved through the utilisation of common governance and processes.”

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