Certainly, there should be some incentives propelling businesses to outsource their functions. Although there have been some controversial issues around the subject of outsourcing, significant benefits attract companies (both large and small) to outsource. Top tech executives of various companies cannot just place more of their business operations in the hands of overseas workers without cause. In this post, we will review the reasons why organizations contract outsource services.
Lower Cost, Higher Efficiency
This is the major driving factor, a lot of companies achieve significant cost saving without compromising quality. Perhaps, it would cost more to perform such business functions in-house or within the country where the business resides. Amazingly, outsourcing benefits have gone beyond cost saving as you will find out in subsequent reasons why companies outsource operations.
Unstable Political and Business Climate
In 2008, Information Week survey revealed nearly 30% positive responses from CFOs, confirming their uncertainty about business/political climates as one of the major reasons for outsourcing. Of course, it is reasonable for a company’s hiring decision to be partly influenced by political interruptions in business activities, including fears about increased taxes and more unfavorable regulations. So, in addition to cost saving advantage, organizations are also prospecting into the years and even decades ahead as they use outsourcing increasingly to hedge against possible political upheaval that may obstruct business flow.
Small Business Growth Benefit
There’s a general assumption that big organizations hide under the umbrella of outsourcing to lay off their employees and reduce HR cost. However, we should not forget that small businesses are also using outsourcing services increasingly. The main reason is simply “commodification”. This simply implies that small businesses are now capable of paying incrementally for business functions, which were previously affordable to only large corporations. The increasingly low outsourcing service fee charged by offshore vendors has made commodification possible. Thus, immediate cost saving is not the imminent benefit in this scenario; but to achieve rapid growth that wasn’t possible in the past years.
Time to Market is Accelerated
“The first to enter the market usually claims the largest market share”. This timeless business maxim points to another financial incentive for choosing outsourcing. A company achieves accelerated time to market by choosing to outsource some of its business functions. The reason is simple; the outsource services vendors are sufficiently trained and experienced experts in their various outsourcing fields. Therefore, performance speed is faster. Consequently, a company is able to introduce a new product to the market faster than using in-house employees. This also provides a competitive advantage for an organization.
The list of outsourcing benefits is definitely a long one. However, proper selection process is necessary for hiring the right vendor and achieving great benefits ultimately.
Daven Michaels is an award-winning outsourcer and author of the book, ‘Outsource This!’ Daven has been honored more than any other individual or outsourcing organization. You can get more information on outsourcing by visiting www.123Employee.com
Outsourcing is a business practice where a company delegates some of its functions to an external company or vendor who is specialized in the outsourced business function. For instance, a company may decide to outsource its IT operations to an IT vendor in Philippines or India.
Question: what is the immediate benefit of outsourcing?
When a company outsources part of its operations, it gains immediate cost-saving advantage. This is particularly true if such company was previously incurring high costs in carrying out the outsourced operation. However, a company must ensure that it is significantly more cost effective to hire outsource services provider than performing the task in-house.
Question: Can a Small Business Embark on Outsourcing?
Sure, small businesses are increasingly using outsourcing to achieve cost and performance efficiency, and to grow their businesses ultimately. In previous years, only the large corporations had access to certain business operation enhancements due to the cost involved in such enhancements. But today, small businesses are able to access those modern enhancements for business growth. This is made possible through outsourcing.
Question: Is outsourcing a risky business decision?
Every other business decision comes with element of risk, so outsourcing is not an exception. And, just as a company can manage the risk resulting from other business decisions, it can also manage potential risks associated with outsourcing. One of the best ways to manage potential risk from outsourcing is to ensure a strong contractual relationship between your company and the outsource services provider. Also, thorough vendor selection process helps to reduce the potential risks associated with outsourcing.
Question: Is cost saving the only benefit of outsourcing?
Certainly not, there is a long list of benefits accruing from outsourcing. They include tax incentives, access to large talent pool, shared risk, increased speed in entering the market and other competitive advantages, staffing flexibility, reduced overhead costs and more.
Question: Is outsourcing a legally binding venture?
As mentioned earlier, providing a strong contractual platform between your company and the outsourcing vendor is a great way to manage potential risks associated with outsourcing. All necessary legal documents should be provided and signed by both parties. There should be extensive provision for compensation, so that a party that suffers breach of contract would be compensated adequately. Contractual certainty is one of the top benefits of business outsourcing.
Finally, when a company contracts outsource services for the right reasons, it will enjoy loads of benefits. Also, the need for proper vendor selection process cannot be overemphasized. Some of the consequences of shabby vendor selection include late delivery, substandard service or no delivery. So, do not be lenient with the vendor hiring process. If you don’t know what to do, contact an expert for help.
Daven Michaels is an award-winning outsourcer and author of the book, ‘Outsource This!’ Daven has been honored more than any other individual or outsourcing organization. You can get more information on outsourcing by visiting www.123Employee.com
The increasing rate of business outsourcing is not in vain, there must be some incentives that compel companies to outsource some or all of their business functions. Philippines outsource contract is a popular trend. Most businesses prefer to use renowned offshore outsourcing destinations in achieving their business outsourcing needs.
Outsourcing is simply a strategic use of external resources (especially humans along with their material resources) to perform organizational activities that could as well be handled in-house. By embarking on outsourcing, a company contracts out its essential functions to service providers who are specialized, as well as effective in carrying out the contracted functions.
What Compels Companies to Outsource?
Basically, the following incentives compel companies of various sizes and types to outsource their major functions;
• Lower and controlled business operating costs
• Opportunity to access world class expertise and capabilities
• Company’s focus enhancement
• Speeding up turnaround time for process performances
• Maximizing the benefits of the World Wide Web and the internet as a whole
• Sharing the organization’s potential risks with another company
• Internal fund constraint
Initially, the driving force to embark on outsourcing (whether Philippine outsource services or other offshore outsourcing destinations) is cost reduction. However, the reason for outsourcing has metamorphosed to more strategic benefits such as overall improved efficiency in running an organization. Also, outsourcing provides a platform for a company to re-direct its efforts and resources to the core in-house activities that add extra value to the corporate image.
However, successful outsourcing is necessary for maximizing all the benefits inherent in outsourcing. Thus, there are major factors that influence successful outsourcing, they include the following;
• A company that intends to hire Philippines outsource services or other offshore destination outsource services must understand its goals and objectives first.
• Selection of the right outsourcing vendor is highly essential
• A strategic plan and vision is required
• An outsourcing contract must be structured properly
• The parties involved must engage in open communication
• The support and involvement of the senior executives is necessary.
So, achieving outstanding success with outsourcing requires putting the necessary contractual infrastructures in place. First, a company must examine its objectives and goals critically in order to adopt the most suitable outsourcing strategy.
Then, thorough research is required to select the right Philippines outsource vendor or provider from other locations. Specialization in the business area that needs outsourcing is something a company should pay close attention to when hiring an outsourcing vendor.
A company should not completely leave the strategizing to the outsourcing provider, it should have its own strategic plan and vision, so that performance quality can be measured in the light of the vision and plan.
Subsequently, stunning result will accrue from business outsourcing decision.
Daven Michaels is an award-winning outsourcer and author of the book, ‘Outsource This!’ Daven has been honored more than any other individual or outsourcing organization. You can get more information on outsourcing by visiting www.123Employee.com
Successful outsourcing begins with successful vendor selection process. When your company is considering Philippines offshore outsourcing or vendors from other offshore outsourcing destinations, thorough selection process should be followed in order to achieve success on the long run.
Most times, selecting a vendor is usually a daunting task, even complicated at times. Unless you follow a systematic approach, you may end up choosing the wrong vendor for your business process outsourcing.
In this post, you will discover a systematic approach to selecting the right vendor, a step-by-step vendor selection guide;
Step 1: Business Requirements Analysis
If possible, set up a committee that would take up the business requirement analysis task. This would involve defining and putting down in writing, the business function or process that you intend to outsource, including what would be required. Also, spell out your expectations from the project – this is what you intend to achieve by using an offshore company to handle such function. You also need to be proactive in defining what a vendor may likely require for the accomplishment of the task, this would help you formulate questions for interviews. It will also help you to negotiate favorably. Remember, the entire analysis should be drawn in paper.
Step 2: Search for a Vendor
The second step in selecting Philippines offshore outsourcing or vendors from another location is to embark on real search for the vendor. In summary, vendor search
would follow the following procedures;
• Write a list of potential vendors, focusing on the ones that have experience in the business aspect you intend to outsource.
• Do a deeper research on the listed vendors and narrow down your list based on the outcome of your research.
• Contact the vendors you have in your new list to ask for more information. The request for information should be formally written, it is called Request for Information (RFI).
• Evaluate responses from the interviewed vendors critically and narrow-down your list again.
Here’s a summary of the sections that would likely be in the proposal or quotation;
• Details of submission
• The background and overview of business
• Introduction & Executive Summary
• Criteria for selection
• Detailed specifications
• Constraints and Assumptions
• Terms and Conditions
Step 4: Evaluation of Proposal and Vendor Selection
The following steps will be involved;
• Groundwork (in form of extensive review) on all proposals submitted
• Analyzing business requirements and vendor requirements side by side
• Evaluate each vendor’s requirement in the light of the business requirements
• Each requirement should be assigned a performance value
• Draw a total score for anticipated performance
• Brood over the entire process again before doing the final selection.
This guide is only a summary of the steps you need to take in hiring Philippines offshore outsourcing vendor or any outsource vendor from other offshore destinations.
Daven Michaels is an award-winning outsourcer and author of the book, ‘Outsource This!’ Daven has been honored more than any other individual or outsourcing organization. You can get more information on outsourcing by visiting www.123Employee.com
Outsourcing strategy is needful for achieving outstanding success with outsourcing. The strategy you employ in managing the process before and after signing the contract would determine how successful the outcome will be. Thorough vendor selection process is needful for peak performance with outsourcing. Do not just award the project to the lowest bidder without delving deeper to find out other things about the provider.
Rash vendor selection may ultimately result in issues such as low quality, missed delivery dates or bad customer service. In as much as you want to achieve costs savings with outsourcing, don’t just jump on a ridiculously low bid, issues usually arise afterwards; this does not go without the saying “You will get what you paid”. So, take heed and embark on a profound vendor selection process. Successful outsourcing starts with successful vendor selection.
In this post, we will examine top outsourcing strategy (not just one) for achieving outsourcing success;
Strategy 1: Your Reason for Outsourcing Should Be Right
This may sound more like a tip, it is also a strategy. If you outsource for the right reasons, you’ve taken the fastest track to achieving exceptional success with outsourcing. Although the vendor is expected to add value to the client’s business, the company should not rely on the vendor to fix its core issues. Do not outsource your information technology department just because the department is not keeping up with deadlines, you may not achieve sustainable result by choosing to outsource the IT task. In fact, choosing to outsource may increase frustration and cost.
Strategy 2: Profound Vendor Selection Process
An outsourcing report in 2008 showed that over 20% of executives interviewed expressed regret for not being thorough in vendor selection process before entering into a contract agreement with outsourcing vendors. The final outcome could be catastrophic when proper selection process is not undertaken before choosing a vendor. So, adequate selection process is a vital outsourcing strategy for any company considering outsourcing.
Strategy 3: Performance Measurement
Also, there is need to spell out realistic service levels which would be in line with the goals and objectives of the company. In essence, proper analysis and definition of service levels and quality measurement is necessary for measuring the vendor’s performance as the project progresses, and also for the final outcome.
Strategy 4: Set Up a Follow-up System
A follow-up system is also helpful for performance measurement. It is natural for complacency to set in when there is no monitoring or follow-up system. The system could possibly be in the form of a committee that would monitor the project throughout its lifespan.
Finally, there should be proper legal backing and documentation put in place, this would provide grounds to prosecute breach of contract.
Daven Michaels is an award-winning outsourcer and author of the book, ‘Outsource This!’ Daven has been honored more than any other individual or outsourcing organization. You can get more information on outsourcing by visiting www.123Employee.com
A company that embarks on outsourcing of IT (Information Technology) is simply entrusting its computer and/or internet-related task to an external company. The outsourcing vendor is usually an expert in IT. Some of the aspects of a company’s IT tasks that may be outsourced include programming, data processing as well as technical support. Information Technology Outsourcing is also known as ITO for short, it is also called ITES (IT Enabled Services).
The Driving Force Behind IT Outsourcing
Just like any other business function outsourcing, the driving force for outsourcing a company’s IT tasks is insufficient resources and cost-saving. The cost of obtaining quality IT services offshore is comparatively low – in terms of weighing the cost in-house or within the country. Luckily, there are IT specialized offshore destinations that companies can focus on to ensure the best IT practices and services. Philippines, India and China are the leading locations for information technology outsourcing.
Typically, the American and European companies depend massively on Philippines and India for quality IT outsourcing services, while Japanese companies focus on China for IT services. These offshore destinations are renowned for the best quality IT-related services at amazingly affordable rates. Thus, outsourcing of IT to these locations provides huge cost-saving for businesses and companies.
Other advantages of IT outsourcing include;
Access to world-class IT experts; as mentioned earlier, Information Technology experts from renowned offshore locations have global recognition. So, the degree of IT expertise that a company could not have possibly afforded in-house or within the country is accessed with ease and cheaper through outsourcing. Access to the best IT intellectuals and wider knowledge is one of the excellent incentives for outsourcing IT.
The core activities of the company are re-visited; when the complex aspects of a business are entrusted in the hands of an external company, it helps to re-focus on the core values or activities of a company. Such core activities are usually associated with the fame or growth of any organization.
Enhanced Quality:Outsourcing of IT is also a great way to enhance quality, since the task is entrusted into the hands of experts.
Improved capacity for innovation; organizations employ external knowledge as a strategy for supplementing limited in-house capacity. Ultimately, companies achieve improved capacity for innovation by taking advantage of external knowledge (outsourcing). This is particularly very beneficial in the area of information technology.
Liability Transfer; when a company outsources its IT tasks, some of the potential risks associated with such tasks are indirectly transferred to the outsourcing vendor as well. Even if the company has to share the risk, the percentage that would accrue to them is usually lower.
Indeed, outsourcing of IT is one of the meaningful operational decisions that a company can take, especially when it is done for the right reasons.
Daven Michaels is an award-winning outsourcer and author of the book, ‘Outsource This!’ Daven has been honored more than any other individual or outsourcing organization. You can get more information on outsourcing by visiting www.123Employee.com
Certainly, there should be some incentives propelling businesses to outsource their functions. Although there have been some controversial issues around the subject of outsourcing, significant benefits attract companies (both large and small) to outsource. Top tech executives of various companies cannot just place more of their business operations in the hands of overseas workers without cause. In this post, we will review the reasons why organizations contract outsource services.
Question: What is Outsourcing?
The increasing rate of 
Successful outsourcing begins with successful vendor selection process. When your company is considering 
Outsourcing strategy
