Offshore outsourcing kicked off in earnest with the administration of former American president Bill Clinton. At the time, the U.S had been trying to fight with inflation so as to revive the struggling economy. This brought about numerous changes in economic policies including the implementation of the North American Free Trade Agreement (NAFTA). This saw businesses using this and other means of staying a step ahead of their competition. Due to the high cost of American labor, offshore outsourcing became an option that many corporations had to consider.

Outsourcing has of course been considered by some as too radical a remedy for doing business. This is probably informed by the fact that it has led to many families in American and other Western nations being left jobless and with no source of income. This is because organizations are contracting other companies to render services that were previously handled locally such as payroll, software and customer service. Political interference and what might be perceived as populism has seen offshore outsourcing increasingly portrayed in bad light.

However, the counter argument is that the distribution of resources is important if productivity is to be increased. From this, economic expansion and job creation is inevitable albeit on a global scale. Despite what many might think, the idea of outsourcing dates back to the history of trade. It started with inshore outsourcing (or contracting as it is better known) which came into effect when the cost of in house labor continued to shoot up to high levels such that the profits of various companies saw a substantial drop.

Today, many companies view offshore outsourcing as a means of having an edge over their competitors. It helps bring down labor costs, lowers the payroll taxes the company must pay and get rids of additional costs of staff benefits and training. With the contracted companies taking over certain processes, businesses are in a better position to focus on in house matters such as the production of company reports and staff meetings.

Unions have been at the forefront of encouraging successive US governments to protect American jobs. Which is good. But ironically, some government policies meant to make more jobs available for locals might not necessarily reduce unemployment. For instance, the attempt to ensure that non-American employees are not allowed to migrate permanently to America but only to get training in America before they go back to their country. These are the same persons to whom US jobs will be outsourced through offshore outsourcing.

Daven Michaels Author of the book Outsource This!

In some instances, companies may opt for offshore outsourcing to enable them to focus their attention on the core values of the firm. Paying small scale contractors on the other side of the world is now possible through online payment channels such as PayPal, MoneyBookers, Xoom, Payoneer, 2CheckOut and many more. Outsourcing enables the organization to cut down on labor costs and the cost of procuring expensive technology.

And it is not just American manufacturers offshore outsourcing their work to Asia, South America and Africa. A number of large companies in other countries are contracting American employees for work. For instance, major non-American automobile manufacturers such as Toyota, Mercedes Benz and BMW have set up huge manufacturing plants in the United States. However even as the company tries to maximize its profits, certain ethical questions beg answers.

Offshore outsourcing is gaining popularity among many businesses but sometimes for completely different reasons. Some companies choose this option in order to avoid paying hefty taxes in their home country or adhering to stringent local regulations. Is this ethical? You be the judge. While relocating the entire company may be an option, this may end up costing more in the long run. Therefore contracting part of the work to a foreign company might be the cheaper option.

While employers might justify this move by saying that they are assisting the poor people in developing countries, in the real sense this is all meant to benefit the company. And since it is a for profit institution, many may argue that there is nothing wrong with that. Outsourcing can cause internal discontent and lower employee morale. Some employees may consider offshore outsourcing as a way of showing them that they are incompetent and leaves them feeling inadequate. Of course, this was likely not the intention of the employer. Outsourcing pushes down salaries significantly.

Many other questions may need to be addressed if an organization decides to venture into another country. Certain laws that are being adhered to by the organization in another country may not be applicable or acceptable in their country of origin. Other key ethics questions that come into focus when a company opts for offshore outsourcing include environmental pollution standards that may be more lax in the host country than in the company’s home country.

Daven Michaels Author of the book Outsource This!

Outsourcing of business processes is an organizational practice wherein a company solicits a third party to conduct various activities on its behalf. This solicitation is usually done under contract to a company that either specializes or has the technical know how to best perform those particular activities. Though outsourcing has been around for years; initially existing mostly as accounting outsourcing, its use has only recently become wide spread. This can be attributed in part to the dynamism of the business environment and the continuous pursuit for higher profits at lower costs.

The main goals in outsourcing of business are to reduce operational costs and focus on meeting the primary objectives of the organization. As a result the activities that are outsourced include operational activities such as billing, payroll and customer service call center services. To get a clear view of business process outsourcing, it can be separated into two categories; front and back office outsourcing. The first deals with activities that cater to the consumer while the second deals with processes that deal with employees and internal office operations.

Outsourcing of business in front office, includes activities such as advertising and marketing, consumer service and technical assistance through call centers. Outsourcing of such activities has the positive effect of improving the organization’s bottom line however in some cases it negatively affects them by tainting their customer’s perception of them. Examples of outsourced activities that turn consumers in the USA off are the offshore call centers. Outsourcing technical assistance to foreign countries drastically cuts operational costs but it also increases customer dissatisfaction. Most consumers in North America argue that these offshore center employees are not only hard to understand; due to heavy foreign accents but are also not much help; as the assistance they give is often scripted.

The second category in outsourcing of business processes deals with activities such as logistics, human resource, job recruitment, insurance, credit analysis and collection services. By using this technique organizations can reduce the number of departments they have and in relation personnel. Thus management of the company becomes easier and they can retain a pool of capital that can be utilized for speculative purposes. As competition becomes stiffer and companies are forced to find new profit generating ventures, outsourcing is becoming more of a competitive strategy than an operational option. As with most organizational practices though there are proponents and opponents.

Proponents of outsourcing of business not only argue the improved bottom line but also enhanced services as most of the offshore locations they outsource to have a large base of cheap labor more qualified than their counterparts in the home country. Opponents on the other hand argue that the only benefits of the practice are to the organization and that the job seeking public and consumers do not receive adequate consideration. Unfortunately these criticisms have influenced government legislation and taxation that may eventually reduce the benefits of the practice.

Daven Michaels Author of the book Outsource This!

As opposed to trying to develop all business applications in house, using a software outsourcing company is the way to go for businesses that want to make more profits and offer their clients excellent service. The contracted organization is likely to frequently upgrade its technical knowledge base to be able to keep up with the competition. This is important given that the current business environment requires that organizations be fast paced and efficient. And since technology is ever changing, businesses may not always be able to have employees that have the necessary skills to develop world class software solutions.

Training employees may seem worthwhile at the onset but this will only end up eating into the organization’s capital. All this is what makes software outsourcing increasingly attractive. That said, software outsourcing can be a complex process despite its numerous advantages. It would be wise to select carefully your software provider to get the desired results. Before engaging the services of a software outsourcing company, always ask for work samples beforehand. It is always advisable to look into any references provided so as to assess the quality of work the company does. Make sure that the company keeps up with changing technology trends. The software business is indeed growing at a fast rate. Knowledgeable software professionals are being sought after by business owners, both small and large and this increases the level of remuneration such professionals demand.

In the past, a software outsourcing company was not that common a form of business. However, this has changed as more people see the massive opportunities. The market will always need new software to keep with the ever evolving demands of their clients and the competition. And this advantage applies to both small and larger companies. Despite the size of the company, an organization will almost always benefit greatly from contracting its software requirements as it saves on time and money. Even major software houses such as Microsoft outsource a substantial proportion of their software development projects. This way, the company is able to make huge returns for shareholders by cutting down on expenditure while not compromising on product quality.

All this notwithstanding, it would be important to note that the stability of the software outsourcing company is important for software outsourcing to succeed. An unstable company has direct repercussions on the timely delivery of a high quality finished product.

Daven Michaels Author of the book Outsource This!

Company operators in the business sector are currently faced with one major challenge, increased operation costs. As a result of this challenge, they have to find ways of achieving high productivity within the ‘boundaries’ of their income generating levels. Luckily, they can outsource these specific services for a lesser fee than if they were to employ more workers. Companies that have chosen to outsource these services are now enjoying the benefits of outsourcing such as:

One major benefit that has increased the popularity of outsourcing is cost reduction. Companies that have opted to outsource as a way of saving money can proudly boast of having enjoyed the benefits of outsourcing. When you choose to outsource, you get rid of the extra expenses incurred through management of employees, either through scholarships or training staff to improve on their skills, as outsourcing provides you with already trained employees. Thus, outsourcing maximizes revenue and minimizes expenses.

The benefits of outsourcing also extend to a zero infrastructure costs to be incurred by a company in trying to upgrade its systems to keep up with modern technology. Outsourcing clears these expenses as its hired services are usually updated and well in place. Outsourcing further promotes customer satisfaction because of the high quality services it offers and its timely delivery of these services. The customers will in turn remain forever loyal which is a plus to the company.

Besides these benefits of outsourcing, the company also gains access to specialised services enabling its employees to get more expertise and skill in their fields. It is not advisable for a company to perform all its activities internally as it will lack the “outsider’s perspective” of carrying out some certain activities and hence it might lack competence in certain areas. Outsourcing brings in the ‘outsider’s perspective’ to a company, allowing it to improve in areas it previously could not improve on due to its “insider’s perspective”. Alternatively, this also gives the company an opportunity to save big on money, time, and manpower and to increase its revenue.

Many companies concentrate on fulfilling their core activities first and then turn to the less important ones later, this affects their efficiency negatively. However, a company can perform its main tasks in-house then outsource the less important ones. Doing this will ensure that all tasks are performed concurrently thus taking efficiency a notch higher. This will be seen in the company’s upward increase in profits, productivity and general business performance. Thus increasing a company’s efficiency is another benefit among the benefits of outsourcing.

Companies that outsource also gain a competitive edge to compete with others in the market. Due to the specialised skills offered, customers get top of class services that keep them from the competitors and close to the company.

Daven Michaels Author of the book Outsource This!

When looking for a top business processing outsourcing company, it is impossible to avoid a number of challenges. It is therefore important to lay down strategies that will ensure the maximum realization of the benefits that come along with outsourcing. Thus you should make sure that your strategy is strong enough to ward off any challenge that pops up during its implementation. This is very important because once it falls short of that, your business might be left with a huge negative impact, growth wise.

In order to come up with the best business processing outsourcing company, there are several factors related directly to your business which must be considered. First, it is essential to think about the economic and political stability of the country you are outsourcing these services from if it’s foreign. Since politics and economy are entwined together, it is good to first confirm their stability as a shaky political environment might have a direct effect on the economy of that country, thus affecting your business.

The second thing to consider is the technological and infrastructural status of the business processing outsourcing company you are targeting. This is to ensure that there is no hindrance when it comes to communicating with your clients, otherwise, you might usher your business into massive unexpected losses. Third, consider the qualifications of the staff in the company you are outsourcing. This is very crucial to guarantee the maximisation of profits by your business. Settling for a company that has laidback workers might work to the disadvantage of your business.

There is also a need to look into how the company offers its services. You can gauge this by looking at the hours they work per day or how many days in a week they are operational. Remember the more hours they work the better, since you are assured of enjoying their services at any time, hour and day you need them. In short, a round-the-clock company is the best to outsource from. As a matter of fact, a good business processing outsourcing company will always put the interests of its clients first hence many of them might be willing to adjust their schedule for your sake.

When outsourcing for the best business processing outsourcing company, minimizing costs should be a key factor for deliberation. When outsourcing, a company should look for an easy option on how to cut on high costs. Consequently, one must go for the cheapest company in terms of cost cutting.

In summary, all the above factors should be considered when outsourcing for a good company for the sake of your business’ success.

Daven Michaels Author of the book Outsource This!

Companies try to reduce the cost of operations as much as is practically possible. One way is by outsourcing some of the company’s processes. By engaging a business process outsourcing company, companies can not only reduce their costs, but will also improve the quality of services delivery and free up financial and non-financial resources to other aspects of the business. These advantages have seen businesses hiring business process outsourcing companies to handle the payroll.

But what does a business stand to gain by outsourcing its payroll? First, using a business process outsourcing company reduces the pressure and the risks that come from late payroll filings to the taxman. With someone else handling your payroll who is an expert in payroll processing, US companies can avoid the hefty penalties from the IRS for late or incomplete payroll filings. It is a well-documented fact that the IRS has penalized almost half of all businesses in the US due to incorrect or late payroll filings. Do not let your company be another negative statistic.

Outsourcing your payroll allows only expert and trained payroll personnel to handle and manage it. The IRS also penalizes US companies that are unable to keep up with and apply the tax laws, codes and procedures that accompany payroll management. The outsourced payroll service provider usually has tax experts on board or retainer that provide input on latest legislation around payroll processing and remuneration.

Engaging a business process outsourcing company also allows a business to more efficiently utilize payroll information. The outsourcing services provider will usually have programs that can make it that much easier to not only process but also protect electronic payroll data. Many payroll processors use advanced applications with multiple functions including the ability to process and complete an employee’s W-2 form electronically. If there are problems with the information, corrections are easy to carry out and can be quickly applied before the next payment cycle. Payroll software is far better than a manual payroll processing procedure.

Your business can dictate the terms of service to the business process outsourcing company and develop a service level agreement that the outsourcing company must commit to as condition for the continued business relationship. If you are unsatisfied with the service offered by the outsourced company, you should have an exit clause that allows you to move the payroll process to a more capable company.

Daven Michaels Author of the book Outsource This!

If you choose to engage an offshore outsourcing company for your business, it is important that you understand the outsourcing model that will best meet your business goals. Choosing the wrong business model can be a risk to your business especially if you are outsourcing a critical function. The types of offshore outsourcing business models can be looked at from two perspectives – Ownership or Relationship structure and Geographical location.

The Ownership structure is further subdivided into three different areas – pure contract offshore outsourcing company, joint venture and captive offshore subsidiary. Pure contract offshore outsourcing involves the full control of the business functions by the 3rd party. The provider fully controls the operations offshore with the use of cheap labor only delivering the product or service to the client. A joint venture allows the combination of resources from two or more companies to produce a single business entity that is established to carry out a certain project within a given time frame. Usually, a joint venture is created by businesses in the same industry. For instance, a group of financial services providers may opt to establish a disaster recovery site that caters for their diverse needs as opposed to each firm setting up and maintaining its own disaster recovery site.

A captive offshore subsidiary is created by a parent company located in a different country. The subsidiary is owned solely by the parent company. When it comes to geographical location, a business can outsource to an offshore outsourcing company, an onsite outsourcing company or an in country offsite outsourcing company. Each of these models has its strengths and weaknesses. But let us first look at the meaning of each of these models. An onsite outsourcing company provides the services from within their client’s premises. The service provider brings their own workforce. This is ideal where product needs to be delivered to the client relatively fast and the client requires to have close supervision of the process.

In country offsite outsourcing is where the processes are moved to an outsource service provider based in a different location but within the same country. The service provider is responsible for obtaining premises to carry out the task. The third type is the offshore outsourcing company. In this case, the service provider is in an entirely different country. Offshore outsourcing is often the most complex but also stands to provide the most benefit for an institution in terms of cost, access to a highly skilled work force and growth in the international reach of its products.

Daven Michaels Author of the book Outsource This!

There are various factors you must think about when deciding whether to use an offshore outsourcing approach or the onshore outsourcing model. These factors vary from budget needs and accessibility to language and culture. Offshore outsourcing involves engaging a 3rd party organization that is situated in another country. Onshore outsourcing is also referred to domestic outsourcing which means the business hires a company within the country it operates in.

One of the many strengths of onshore outsourcing is that it is possible to have a face-to-face conversation with your outsourcing partner when the situation requires it. Language barriers and adaptation of new business culture is not an issue when using onshore outsourcing services. Outsourcing domestically therefore provides a familiar means of communication with your outsourcing partner. Unfortunately, outsourcing locally especially in developed countries such as the US is very expensive. Onshore outsourcing is not only more expensive than an offshore outsourcing partner but can also be more expensive than doing the process in house.

It is because of these drawbacks that countries in developing countries such as the Philippines and India have become ever more attractive as destinations of outsourcing services. The availability of the Internet has also enabled businesses to contract freelancers from all over the world. Such freelancers can complete the projects given to them at a much lower cost than an in-house salaried employee. This increases the capacity of small business’ to compete with larger corporations.

Workers in these countries can meet a business needs at a low cost. In fact, direct financial savings is the most powerful argument for the offshore outsourcing approach. As compared to domestic outsourcing in developed countries, labor is relatively cheaper due to the low minimum wages in these countries even for highly skilled personnel. Offshore outsourcing service providers in these developing countries have over the years grown and developed advanced infrastructure that enables them to provide world class services.

But offshore outsourcing has its downsides. There are costs to outsourcing offshore mainly around travel expenses and the language barrier. Language is especially an issue when outsourcing call centers and programming tasks that require some minimum level of competence in language. Also, offshore outsourcing is not always cheap across the board. Procuring the services of the best and most reputable offshore companies does cost and may in certain cases override any costs savings a business may have hoped to gain from the relationship.

Daven Michaels Author of the book Outsource This!

BPO is an acronym which stands for business process outsourcing. BPO services can be traced back to the 1800s when Americans used Scottish workers to build ships and wagons. Services bpo tools that are mainly used by large organizations to reduce costs and increase productivity. What does services bpo entail? It simply entails that a company chooses to outsource some of their services and concentrate on the core functions of the business. Such core services may include increase in the production capacity or expansion of the firms operations. The BPO industry is growing at a very high rate. The industry is expected to grow further over the next decade. That is why very many people are taking advantage of this industry by opening their very own BPO businesses. Below are a few tips that should help you in case you decide to open your own BPO business.

The first thing that you should do is conduct thorough market research. Research will help you in choosing the perfect business to open. It will also help you to avoid getting into a business that has no market. Other things to consider are the human resources. Another thing that you need to consider is the competition in the market. What are the implications of the competition, will your business be able to survive in the competition?

After that you should register your business with the relevant authorities. The requirements may differ from one place to another. The fees will also vary with the location of the BPO company. once you have registered the company, you should look for operating space. When looking for operating space, you should put in mind other requirements such as electricity needs. Finally you should apply for business from the companies that will need your services. This may take a little longer but patience pays. You should also come up with a portfolio that will act as a sign to your clients what you can do for them.

As you have seen it is very simple to open a services BPO company. With the industry ever growing, you should take advantage of opportunities that come with the growth of the industry. In the long run, you should maintain the quality of services you offer your clients. In so doing, you will attract more clients and maintain the existing clients.
 
Daven Michaels Author of the book Outsource This!