Stage 1: Determine what it costs you currently to deliver that service to the organization with your internal resources (this where you activity-based costing skills come in). If you can, project this cost over a two or three year time span.

Stage 2: Determine what it would cost, including management and set up time, to have this delivered by an outsourced provider. If you can, cost provision over a two or three year time span.

Stage 3: Calculate the difference between the outsourced provision and the internal provision. This gives you a baseline benefit to work from.

You should calculate the returns after one, two and three years to show the extent of the savings over time. It may not be cost effective in year one to make the change but should be after year two and three.

Before you move to the next stage, it is important to know that your outsourcing is going to be either cost neutral or will reduce the cost to serve at the same level of quality. If there is no cost saving then look for an area with more bang for the buck.

The next step is to determine what other benefits will come from outsourcing this piece of your function. Often the real value is not just in the direct costs saved but in the freeing up of other resources to do work which is more value adding. For example, instead of processing change in information requests your HR staff can spend more time coaching and supporting managers to get the best from their people. This value adding work is a great business reason to outsource more process-oriented tasks.

Once you have both the hard cost comparison and the less tangible business benefit comparison, you are in a position to make the decision whether or not to outsource. You are also in a position to properly present and justify this to your executive team.

Once you have made the decision to outsource there are seven stages to implement effectively.

Stage 1: Map out your existing process to fully understand each step and who is responsible for it. (This should be part of your process for costing the task in the first place.)

Stage 2: Working with the supplier, map out the new process so that you can see how information, actions and responsibilities flow between you and the supplier. This step is key to realizing the potential efficiencies in any outsourced relationship.

Stage 3: Agree on goals, variances, quality levels, monitoring processes and penalties with the supplier so that you receive the services promised and are recompensed properly if you do not.

Stage 4: Create, review, test and communicate your transition plan ensuring that everyone remotely connected to the change knows, when, how, what, why and where things will change and exactly what they need to do to support it. This type of change is hard to do and requires tight planning as well as relentless communication.

Stage 5: Go live. Focus on monitoring the first series of transactions very closely and then, once things start to flow steadily, reduce your monitoring to maintenance levels. Do not expect it to just work. People are too complex and habits are hard to change so it will take energy and focus to make this shift.

Stage 6: Review and, if required, revise your process on a quarterly basis and look to increase the value of the outsourcing opportunity.

Stage 7: Congratulate yourself and your team and start focusing on those strategic, value-add priorities you now have the resources to deliver on.

Identifying, deciding and then switching to outsourced provisions are not simple activities. When done well, you will enjoy significant rewards including more time to do strategic work as well as a demonstrated contribution to organizational priorities. As with many of these issues, the real challenge is in the detail and specifics of each different project. By following the processes outlined above and using your change management skills, you will be well on your way to a successful project.