Exclusive Q&A on Outsourcing with Dominique Kindt

How are outsourcing transactions regulated in your jurisdiction?
 
There are no specific outsourcing regulations in Belgium except for industry specific rules and regulations (e.g. in financial services, pharmaceuticals) where “being in control of outsourcing” is required. 
 
In financial services, there are local (Circulaire PPB 2004/5) and international regulations (e.g. mifid, basel, etc). In pharmaceutical, there are predominant international rules (FDA)

What causes companies to outsource and how do they determine what aspects should be outsourced?

Belgium is a country that is moving from staff augmentation (body shopping) contract more and more into service oriented outsourcing. So, many Belgian companies are in early stages of outsourcing maturity. This outsourcing evolutions is driven by efficiency models (standardised services) and cost improvements.

How can you measure the effectiveness of outsourcing?

The concept of relationship management is gaining more and more terrain to measure outsourcing effectiveness. This is in addition to typical performance management techniques (e.g. KPIs & SLAs). This relationship management technique however, requires a higher level of maturity at both sides (hence, not applicable to pure body shopping contracts)

Do organisations need to factor in cultural differences when embarking in offshore outsourcing?
 
Yes and No.
Yes, when high interaction driven services are still required (e.g. software development)
No, when of the shelf services (cloud alike) are being delivered by the provider.
 
Are there any labour & employment issues concerning outsourcing?
 
Belgium is a highly “protective” country when it comes to laying off employees. There are very strict rules (COA32bis) driven by Unions that do not always facilitate people transfers in outsourcing deals. Applying these rules correctly, requires a true end-to-end / TCO business case calculation. Often, these rules can result in significant delays when Unions intervene in the process and do not agree with the envisaged people transfers.

What procedures should a firm take when outsourcing or contracting work which contains important data and security, and are there any legal or regulatory requirements that need to be taken into account?

Making a distinction between “data processing” and “data storage” inside vs outside the EU is an important factor in the outsourcing process.

What should be included in a well-drafted outsourcing contract?
 
The contract should contain a clear split between the legal part (MSA) and the content part (schedules). An important approach in defining the content part of contracts is to focus on the “what” (i.e. design outcome based responsibilities) rather than the “how” (i.e. avoid old school RACI matrices). 
 
Are you witnessing any noticeable increases in industry-specific outsourcing?
 
Not specifically. Industries like financial services and pharmaceuticals have and are relying heavily on outsourcing.  
 
What key trends do you expect to see over the coming year and in an ideal world what would you like to see implemented or changed?

• Vertical outsourcing (end-to-end niche outsourcing)
• Managing all outsourcing relationships in VMOs or BROs
• Going Beyond Labour Arbitrage
• Supporting Empowered Employees in Retained Organisation
• Automation and Robotics will redefine relationships
• Agile sourcing emerges

Dominique Kindt is the co-founder and chairman of the Belgian chapter of the European Outsourcing Association. He has strong advisory expertise in ITO and BPO across a variety of industries, with significant experience working in the financial services industry and with supranational government institutions. Dominique has guided companies through all phases of the IT and business process outsourcing lifecycle including assessment, organizational redesign, financial methodologies, project risk management, transition and governance.

Before joining EquaTerra (now KPMG) Dominique headed the Outsourcing Risk Advisory business unit at Deloitte. There he was responsible for the delivery of many large scale IT and business process outsourcing projects. His past work experiences at Deloitte and elsewhere span multiple geographies, a lengthy list of notable clients, and diverse business operational areas including financial, administrative, IT, logistics and fleet, personnel and research services.

Dominique can be contacted on +32 477 77 25 12 or  by email at dominique.kindt@eoa-belgium.be