Outsourcing - BPO
Offshore Outsourcing Best Practices Increase Your Profit Margin
Outsourcing is the delegation of a business process to an external
service provider. The service provider will then be responsible
for the day-to-day running and maintenance of the delegated process.
Before outsourcing an IT function, look at your firm's own goals
and culture. Price might be a key consideration, but a valuable
outsourcing firm is more a business partner than a service provider.
Such a partner should lend a level of expertise to your small
business that builds upon internal know-how. Only then can you
rest assured that you have achieved an optimum blend of in-house
and outsourced IT functions.
Step 1
Do you really need to outsource?
Before outsourcing an IT function, look at your firm's own goals
and culture. What business objectives are you trying to accomplish
by outsourcing this particular function? How will sending this
function to an outside party impact the workflow within the company?
Clear answers to these questions can help guide a business owner
toward the most appropriate vendor.
Consider the advantages and disadvantages of outsourcing before
you make your decision.
Advantages
Allows a business to focus on core activities
Streamlines a business' operations
Gives you access to professional capabilities
Shares the risk · Piece of mind that the process is in
good hands (reliability)
Do not have to worry about continually introducing new technologies
Improves service quality
Frees up human resources
Frees up cash flow
Increases the control of your business
Makes the business more flexible to change (i.e. demand)
Disadvantages
The fear of the service provider ceasing to trade (bankruptcy,
etc)
You may lose control of the process
Creates potential redundancies
Other companies may also be using the service provider. Therefore
in some cases, the best interests of the service provider may
be diluted with other users You may lose focus of the customer
and concentrate on the product (the outsourced process) The loss
of talent generated internally Employees may react badly to outsourcing
and consequently their quality of work may suffer.
Step 2
Buy the expertise:
A valuable outsource partner will do more than lighten the load.
Such a partner will lend expertise to ensure an optimum blend
of in-house and outsourced functions. In the case of network management,
for instance, an outsourcer should "provide a small business
with an operational, tactical and strategic view of their network
environment,
This allows for quality recommendations to ensure network availability,
reduction of total cost of ownership, optimization of network
assets for meeting business needs, and support of future growth.
Step 3
Know who you are outsourcing to.
The two most important factors in a successful outsourcing relationship
are trust and security - without these the relationship is destined
for failure. It is therefore important that you take the time
and effort required to find the perfect partner.
Make sure your service provider is keeping current. "IT
is very dynamic, so it can be difficult to intelligently know
what's happening in IT," said Jeremy F. Shapiro, professor
emeritus of operations research and management at MIT. The best
vendors can provide not just services, but also "state-of-the-art
knowledge about IT needs and developments."
Does this vendor value its employees? What is the average length
of employment of the staff? A company that retains its employees
must treat them well and value them.
Meet the team: Before signing anything, meet the people who will
actually service your account. Good outsourcers will have a dedicated
team servicing the customer, led by the controller who acts as
the 'go to' person. Chain of command: Along these same lines,
know who is talking to whom. The last thing that you can afford
to have are layers of contacts, especially when time means money.
Finding a provider or consultant that provides one point of contact
and even better, one person, is any business' best bet. The language
barrier: Finally, it's important to remember that even an outsourced
IT function does not go away entirely. In most instances the small-business
owner still will have to maintain some involvement. Look for an
expert who can clearly explain answers in non-technical terms
and can make tech-talk clear to even novice questioners.
Step 4
Know what you are buying
As you get closer to making a decision, it is important to agree
upon a set of service level expectations or objectives,"
said Hoyer. "Measurement objectives can include streamlined
operations, cost savings, and reporting with all activities pointing
to an improved bottom line," he added. What matters most
is to agree in advance on the service to be delivered and especially
on the measures that will be used to determine satisfactory performance.
Many of the disadvantages of outsourcing can be avoided if you
research the service provider and you do not regard outsourcing
simply as a money saving scheme - this is not always the case.
Consequently, you should be certain that you have a valid reason
for outsourcing and that you intend to liaise regularly with the
service provider to avoid loosing all control of the process.
Learn more at http://www.my1stbusiness.com Ben Botes MSc. MBA,
is an Entrepreneur, Speaker, Writer, Coach and academic. He is
the founder of My1stBusiness.com, a web portal dedicated to 1st
time business leaders and entrepreneurs. He is also the Co-founder
of South African Business Hubs, Business support Hubs and incubators
for the new breed of South African Entrepreneurs. Visit the sites
for contacts, networking, a MarketPlace, hundreds of free Micro
Modules, Tele-classes, Resources and Coaching designed for you
to succeed with your business. Join the My1stbusiness.com Reseller
Program and earn 40% referral commission http://www.my1stbusiness.com/affiliate
Read Ben's Blog at http://www.my1stbusiness.com/weblog
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