Posts Tagged ‘outsourcing’

Choosing the right outsourcing service provider

Friday, November 20th, 2009

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.

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Does insourcing spell death for outsourcing?

Friday, November 20th, 2009

What is insourcing? A definition for this term is rather hard to find, but a close approximation can be made, such as, “an internal division of the company, but one that is run strictly along the commercial lines, handling tasks that would otherwise have to be outsourced”. This insourcing department is a division of the company, but is treated as if it were an outsourcing service provider. For instance, a manufacturing company may “insource” its brochure designing to an insourcing department. It is a new way of cutting costs and boosting profits that a number of US-based companies are opting for.

Insourcing a service is not without its share of drawbacks though. In fact, insourcing a process can at times have more problems than simply outsourcing it. Some of the noteworthy conditions that need to be satisfied in order to make insourcing a process successful are as follows:

  1. IT Director must be knowledgeable enough – This one should go without saying. When you are insourcing a process, your IT Director will be in charge of it. Naturally, the Director must be knowledgeable enough to co-ordinate between teams, keep the upper level management informed about the progress of work, and be able to assist in hiring proper candidates, if necessary. Also, it is the IT Director’s task to calculate the funding required for handling the project and communicate it to the upper level management at the beginning, so that he/ she would have a sufficient budget at hand to get the job done.
  2. The process must be clear to upper level management – It is very important to keep the upper level of management in the loop about the process. They should be well informed not just about the status of the project, but also the little details, such as the man hours being spent for it, and most importantly, the cost requirement for completing the job successfully. That way, it is easier to get additional funding for the project, should it be necessary at some stage.
  3. Arrangement for additional training must be there – It is important to note that all staff members in the insourcing department may not have the same level of technical expertise. There must be arrangements in place to make sure that they can be trained to upgrade their skills, if necessary. This would mean allocating additional money at the starting of the project, in case additional training sessions are required later.
  4. Treating the insourcing team as an outsourcing service provider – It is important to always treat the insourcing team like an outsourcing service provider. The management of the department should not be handled by the management that looks over the rest of the company. It is better to have the department managed by a separate IT Director, who will keep the company management in the loop about the status of the projects, maintain communication between the teams involved with the project and request for additional funding if required to finish the project on time.

Thus we can see that insourcing processes does not necessarily mean that outsourcing will be obsolete. The steep requirements that need to be met in order to insource a process successfully may make outsourcing more profitable for companies after all.

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Can outsourcing save your budget?

Sunday, October 18th, 2009

One of the things that can cause a company difficulty is determining just how much money they can afford to spend on training. In fact, for some companies the question is how much they can afford to not spend on training. This is because having skilled staff who knows what they are doing is integral to any developing workforce and having intelligent staff who knows exactly what is required of them is hugely important. Of course, firms have to weigh up the fact that their highly trained staff may decide to leave in the pursuit of bigger wages elsewhere, which can be very damaging to a firm. This means all of that training expenditure has been wasted and the firm needs to start again. This can start a cyclical process where a firm trains up an employee, they become competent and then leave, creating a huge deficiency in the skill set of the firm, creating a larger demand for training and the whole process begins again. Needless to say, many firms are now hesitant or reluctant to spend so much money on training staff up only for other companies to reap the benefits but this obviously causes a problem. How can firms get access to great employees, at the top of their game but not leave them open to the risk of being left bereft of staff who knows what they are doing?

Outsourcing is the most obvious solution to this problem as it will enable firms to have access to skilled staff only when they need them. The costs involved in hiring an outsourcing firm to undertake work or take on a few employees may be higher in the initial process but compared to the endless cycle of training, replacing and training staff, utilizing the benefits of outsourcing can save a company a lot of money in the long-term. Given the economic crisis that is engulfing the world, it is obvious why many businesses have to focus on the short term nature of their financial ins and outs but those that have the capabilities to focus longer term understand the benefits of outsourcing.

Using outsourcing should grant a firm access to a skilled workforce who already has experience in the field that is being worked in. This is in addition to the lower cost of labor that is available from many firms, both internally and from offshore outsourcing. With potential savings with regards to staff with no discernable change in quality or output, the decision to pursue outsourcing comes as an increasingly simple one. Many people may be put off with the initial work having to be done to set up the new business partnership with external agents but there is a lot of information and assistance available on the internet. This means that even if a company has to look internationally for support, there should be no difficulty in obtaining offshore outsourcing solutions to ensure a firm is able to operate as efficiently and as effectively as possible.

Outsourcing is the most obvious solution to this problem as it will enable firms to have access to skilled staff only when they need them. The costs involved in hiring an outsourcing firm to undertake work or take on a few employees may be higher in the initial process but compared to the endless cycle of training, replacing and training staff, utilizing the benefits of outsourcing can save a company a lot of money in the long-term. Given the economic crisis that is engulfing the world, it is obvious why many businesses have to focus on the short term nature of their financial ins and outs but those that have the capabilities to focus longer term understand the benefits of outsourcing.

Using outsourcing should grant a firm access to a skilled workforce who already has experience in the field that is being worked in. This is in addition to the lower cost of labor that is available from many firms, both internally and from offshore outsourcing. With potential savings with regards to staff with no discernable change in quality or output, the decision to pursue outsourcing comes as an increasingly simple one. Many people may be put off with the initial work having to be done to set up the new business partnership with external agents but there is a lot of information and assistance available on the internet. This means that even if a company has to look internationally for support, there should be no difficulty in obtaining offshore outsourcing solutions to ensure a firm is able to operate as efficiently and as effectively as possible.

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