There is nothing wrong with outsourcing some of the company processes to save money. Most companies do that at some point of time or another. But before outsourcing any process, you need to know whether the service provider (or vendor) can satisfy your requirements properly. There are lots of providers out there who will take the order for the job and the payment made in advance. However, when there are tight deadlines to be met, you get little more than some ingeniously crafted excuses from them. It’s surprising how good the excuses can be at times, ranging from network problems on a global scale, to a sudden employee turnover rate in the provider’s organization.

I have a friend who’s a manager in an MNC. His department takes care of software development, where around 40% of the work is done in-house and the rest is outsourced. The first vendor, whom they had hired to get the job done, missed three deadlines in a row for a project that was basically the bread earner for the entire company. When confronted over the phone, the person representing the provider mumbled something about employee unrest in the company. My friend, who was already under considerable pressure from the upper level management, just snapped. He threatened to sue the provider, got most of the advance payment back, and hired a smaller, but more efficient provider to take care of the job. His company got saved from almost certain demise, and he got the credit for that. But the moral of the story goes, “if you want something to be done right, get the right person to do it for you.”

All the hassles that my friend went through could have been avoided, if the top level management was a little more careful while choosing the service provider. A lot of companies outsource tasks to inefficient service providers who end up botching the job at the worst moment. However, these problems can be avoided by being a little careful. If you are trying to find an outsourcing service provider, there are some points that you have to consider first. These include:

Treat all providers with equal suspicion at first – Just because a provider sends over a charming sales team does not mean that their teams would be just an efficient. Grade your providers only after a thorough scrutiny.

Choose the right-sized, proper vendor – Make sure that your vendor has sufficient manpower to get your job done. Many a times, providers can provide an inflated estimate of their workforce statistics. Say that you will make a visit to their office, and make good of that promise. While you are there, check the number of employees and compare it with the figures they provided beforehand. Notice whether the employees look happy. Do they look enthusiastic about working? The morale of a workforce says a lot about its efficiency.

Run pilot projects before the actual ones – This might stretch your budget a little bit, but do it anyway. A pilot project will help you evaluate the actual efficiency of the workforce at the provider’s office.

Lastly, when in doubt, don’t hesitate to seek help of professional organizations that help in screening service providers. Have the background of the provider checked thoroughly. It might cost you some portion of your budget, but this can surely save you from hours of headache later on.

With 2009 winding to the 3rd quarter, the question that haunts the whole world—is the worst in global economy over? Hopefully, a number of reports from various quarters seem to suggest that. The Indian offshore industry is in an upbeat mood following strong global cues of recovery. The 3rd quarter recorded an improved performance over the 2nd quarter and this growth in the businesses of Indian outsourcing firms is attributed to improving business sentiments across the globe.

The publication of “Market Vista: Q3 2009”— Everest Group’s quarterly study on global outsourcing gave the Indian BPO and outsourcing sector some real reasons to smile. It has been concluded by the global consulting and research firm that the new captive set ups increased to an 18-month high in third quarter in 2009 compared to the second quarter.

According to “Market Vista: Q3 2009”: “The Indian offshore industry is growing on the back of improving demand and continued advantages of India as an offshore destination. India-centric suppliers are investing in delivery capabilities and setting up new centers,”

To put it simply: in the third quarter of the current year, there has been more business for Indian offshore industry.

The study states that though marginal (10%) there was a decline in the reported global transaction volumes. Of this IT off-shoring activities declined by 8%, whereas volume of BPO transactions decreased by 14%. But despite this, the study says, there were signs of improvement in key geographies and verticals. There has been an overall increase in the numbers of off shoring destinations worldwide and it was an 18-month high in the third quarter of 2009. While during the 2nd quarter 30 new supplier delivery centers were established, in the 3rd quarter, this number was shot up to 36. Additionally, world got her 28 new captives also in 3rd quarter.

The suppliers with strong focus in Indian off shoring witnessed higher transaction activities in 3rd quarter compared to 2nd quarter.

Of 28 new captive centers, 11 new centers were set up in India during the quarter. This happens to be the highest for a single economy. These included companies as big as Standard Chartered, Ingersoll Rand, and Kontron. In addition to this one-fourth of new supplier delivery centers were set up in India.

According to the research firm, all these were possible because Indian cities started to enjoy the cost arbitrage benefits as a result of depreciation of the currency and reduction in operating costs. If India can hold to the current momentum, the arbitrage can be sustained for 20 more years in both ITO and BPO sectors.

In an interview with The Economic Times, Everest Group Vice President-Global Sourcing Amneet Singh said that India will continue to have good growth momentum through the rest of 2009 and also in 2010. “The increase in the number of captive set ups reflect signs of recovery in the overall market. We expect the industry in India to continue this momentum in the last quarter of 2009 as well as in 2010,” said Mr. Singh.