Strategic Alliances Part II

Strategies for the Small...

Having said this, the salvation of those third-party call centers that do not have sufficient working capital, lies in:

• Getting over the mindset of waiting for inbound support work and immediately taking on outbound telemarketing work for which there is no shortage. Essentially, they need to ensure that they keep the right kind of sales staff with good communications skills so as to achieve a reasonable sales per hour (SPH). This will make the center viable, or
• Entering into a build, operate, transfer (BOT) contract with a foreign customer so that they can transfer the whole unit to the outsourcing party after the completion of a pre-defined period, say in two to three years. Thereafter, the learnings from the BOT can be used to set up another venture.

... And for the Big

In case the call center firm has deep pockets, it can:

• Set up a marketing office in the US and start working on customer acquisition—this can be a long and strenuous process and cost a tidy sum
• Make a strategic investment in a call center outsourcing or service bureau in the US/UK so as to acquire the latter’s customers and migrate the processes offshore. This too can take time and considerable amount of financial resources
• Embark upon a plan to enter into a strategic alliance, maybe even a joint venture, with some outsourcing provider or end-user client in the US or Europe which helps them gain the customer relationships of the foreign partner as well as its knowledge of successful management and delivery of processes.

On a consulting assignment in the US and Europe, and met a number of companies there in the SME sector. There is tremendous immediate interest in the US in offshore outsourcing, and although Europe is a bit slow on offtake, there too is an active interest in exploring the possibility of going offshore with support services. In sum and substance, due to the enticing value proposition, the business opportunity is very much there and it’s just a matter of adopting the right strategy to tap it.

All in the Alliance

Before we go any further it is important to understand what a ‘strategic alliance’ is.

Strategic is something that ties up with the strategic plan/vision, and is relatively long-term—focusing on long-term goals and justifying a commitment of resources. Strategic also means that it’s not tactical in intent.

Alliance constitutes an interdependent activity with an emphasis on cooperation and collaboration that requires resource commitments from more than one company and often requires continuing parent/owner support.

A strategic alliance can take various shapes—it may or may not entail equity investments, and may or may not maintain independence, multi-product/service, or a full life cycle.

An increasing number of global organizations are finding that a strategic alliance is a fast and flexible way of accessing complementary resources and skills that reside in other companies and an organization’s ability to enter into and effectively manage strategic alliances can provide a sustainable competitive advantage to it.

For a successful alliance it is very important to ensure that the top management acts as the champion and has full commitment to the alliance. But before that, it should be committed to the process and allocate the time required to enter into a successful relationship. It should show the ability to internally communicate the mission/rationale for the alliance, have the ability to obtain, and later ensure, the continued maintenance of the internal team’s commitment, and last but not the least, stay closely involved with the post-closing implementation stages.

Although a detailed roadmap for structuring an alliance is beyond the scope of this article, it is important that a well laid-out process is followed. It all starts with, first, getting internal approval from the owners/top management/stakeholders and conducting a due diligence for the possible conflicts and overlaps. After identifying the probable alliance partner, it is important to check upon its track record, the tenure of its existence, and its financial health over the period of existence so as to be assured of its stability. Initially, it is also better to establish the partner’s exact fit and determine whether it would complement the activities of the call center and help gain a foothold in both onsite and offshore spaces. One also needs to identify areas of conflict and competition as these could even lead to a collapse of the alliance later. Finally, it is very important to ensure that the alliance is equally important and strategic for the alliance partner as well, or else all the efforts will go waste.

For a successful negotiation it is critical that extensive meetings are held internally to identify major issues in advance, establish achievable targets, prepare business openings and even identify the deal breakers.

Once an alliance is in place, it is important to manage the same and ensure that all tasks have owners and deadlines, that the team takes out the time and allocates enough time to focus on overseeing the alliance. Even though alliances cannot be said to be risk-free, if managed well, they offer a very good option to other expensive, time consuming and less efficient options. Today, ‘alliance management’ is increasingly being considered as a ‘competency’ and can deliver rich rewards for an organization that effectively leverages the same.