Speaking to Dr. Robert Fichter, Managing Director of the IP law firm Dennemeyer & Associates, we learn about the importance of identifying effective outsourcing providers and the benefits it can reap. Why should a company outsource the management of its IP portfolio to an external provider? Find out below.
Can you share more about the internal analysis process and what you try to decipher at this stage?
The analysis process concerning an IP outsourcing decision comprises four areas. First, the organisational structure needs to be taken into account. What core competencies are strategic and need to be kept in-house? What are the core processes, and which activities could be outsourced and to what degree? Does the current staff situation require temporary support from external providers, or should / could key activities be completely outsourced? Finally, how do other players in the same market segment apply outsourcing concepts? Can outsourcing make IP management more competitive? Potential outsourcing providers should be selected based on these questions and added to a long list.
What are the benefits of keeping core competencies and value creation in-house?
If you outsource your core competencies or value-creating activities, your company will be nothing more than an empty shell. Staff initially contributing to the company's core business and values will see no future and decide to leave. Therefore, keeping core competencies and the major part of the value creation chain in-house makes your company a reliable and skilled business partner with the knowledge and competencies needed to benefit your customers.
What should be considered when identifying potential outsourcing providers?
Why would a company want to outsource the management of its IP portfolio to an external provider? Usually, the need to reduce operational costs is the number one reason, but also the opportunity to free internal capacities from tedious work and consequently promote the staff by offering them tasks of higher complexity and challenge, is a legitimate reason for outsourcing parts of the activities in the IP value chain. Potential outsourcing providers should primarily meet the company's culture and working style. Operational compatibility, at least on the level of the interfaces between the provider and the company, is an essential factor for success. However, further criteria are also relevant when choosing a suitable provider including confidentiality standards, IT integration capabilities, language skills and size of the provider. The latter criterion needs to be considered from different angles. The larger the provider, the more experience could exist in onboarding new clients.
"Potential outsourcing providers should primarily meet the company's culture and working style. Even the smallest changes in operational processes can have a substantial impact on daily business routines," said Dr. Robert Fichter.
At the same time, the personal touch needed for a successful project may be missing. Smaller providers may not have the capacities to digest huge additional workloads so that IP assets may be put at risk. As for the IT integration capabilities, these are of rather high importance for the new interfaces between the company and the provider. They include sending instructions to the provider, receiving reports from the provider, e-billing issues, and avoidance of multiple docketing at both the provider's and the company's ends. Lastly, the external costs should not exceed internal cost reduction; only if the main reason for outsourcing was freeing internal capacities, this criterion might be less relevant.
What are the common red flags which outline that the provider is not the correct one for your needs?
Delays in correspondence demonstrate a lack of interest in onboarding new clients or a lack of capacity. Neither is a good starting point for a collaboration. A reliable outsourcing provider will refuse to offer just a cost estimate. They will always try to learn about your needs, your internal operational setup and capacities to assess whether a business relationship can successfully be established. The absence of communication in this regard is a huge red flag.
Missing language skills is another issue. While, admittedly, the first contact with an outsourcing provider is often with a salesperson speaking your language perfectly, language skills on the operational level need to be assessed as well. If the operational staff does not speak your language on a proficient level, this is a red flag.
Finally, listen to other customers of the provider. If the provider cannot offer customer testimonials, or speaking to customer references reveals issues, then this is another red flag.
Once everything is negotiated, how does budgeting enough time for testing and training help in these situations?
Even the smallest changes in operational processes can have a substantial impact on daily business routines. When an entire business process is outsourced, as is typical in IP outsourcing, staff on both ends need to familiarize themselves with new interfaces, communications paths, contacts, response times and the like. Without proper training and time for practicing the new way of working, the risk exists that IP assets are imposed unnecessarily to threats.
This article was first published on Lawyer Monthly in September 2019.