How To Outsource Effectively

Companies and outsourcing vendors have understood the process of outsourcing to the last detail, and have come to depend on outsourcing as a tried-and-tested way to lower operating costs and make the best use of the global talent pool.

Small and large businesses all over the world outsource a wide range of business processes. The extent and type of processes they outsource vary depending on budgets, strategic needs, and the state of the global economy.

The experience of the global financial meltdown and recovery has clearly shown that while the volume of activities that companies outsource may fall, most companies continue to outsource to remain competitive, and even to survive.

Here’s a step-wise check-list that business enterprises can use to outsource any business process or project.

1.      Stating the reasons to outsource

The company that wants to outsource should first investigate and discuss internally why it needs to outsource a particular business process. The decision to outsource should ideally not be based only on lower costs. Hiring skilled employees that can’t be hired in-house, increasing productivity, increase in work load, pressing deadlines, searching for innovative solutions, and quality enhancement are some of the common reasons why companies want to outsource.

Clients can outsource simple as well as the most complicated technical and non-technical projects. Taking customer calls, writing complex software programs, graphic design, data management, record keeping, market research, transcription, computer aided designing, content writing, technical support and game development, are some of the most popular activities that companies can outsource.

2.      Selecting the right outsourcing vendor

Along with what to outsource, whom to outsource, is equally important, if the outsourcing activity is to be successful. Many outsourcing models and combinations can be adopted depending on the requirements of the company. Businesses can opt for local outsourcing, nearshoring and offshoring as the three basic outsourcing models. Cost, duration of work completion, better manpower, and attractiveness of outsourcing locations are the deciding factors in this decision.

Each outsourcing country of an outsourcing vendor has its own merits and demerits, including factors such as government regulations and political stability, which are as important as low infrastructure costs as reasons to outsource. India is the leading outsourcing destination of the world from everything from software to animation.

3.      Signing the outsourcing agreement

Once reasons to outsource and the outsourcing vendor have been finalized, the user of outsourcing services can enter into a legal outsourcing agreement, which also includes what is commonly called as a Service Level Agreement (SLA). The SLA enumerates terms and conditions that are legally binding for the client as well as the outsourcing vendor that has been chosen by the client to outsource the particular business processes.

4.      Supervising the outsourcing project


While outsourcing and supervision may seem contradictory given that fact that to outsource is to delegate without added work and worries, putting in place a supervision mechanism is always a good idea. The client should appoint a single authority or a team to interact with the points-person of the outsourcing vendor to receive regular updates of work completed, and feedback related to corrective action.

5.      Monitoring performance of outsourcing vendor

All outsourcing relationships and agreements must be monitored to measure performance. The purpose behind this exercise is to find out if a company has benefitted by its decision to outsource, and to the extent it set out to. Evaluating performance against set parameters helps companies to outline the future of their outsourcing relationship, and take corrective action, both internally and with the outsourcing vendor.

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