Thursday, November 30, 2006

Offshore Outsourcing looks fairly good

Offshore Outsourcing really looks good in terms of many aspects, because it carries lots of advantages with it. This process with lots of flexibilities also reduces lots of work burdens from the side of the clients and opens many new scopes for them regarding his business searches. Well managed and fully furnished companies at present are available to serve for even the smallest business application with the best possible quality and at the lowest possible price rate. All these and many more points are there that makes the overall process of Offshore Outsourcing very interesting and frequent used ones.

Offshore Outsourcing has really changed the current working style of many of the companies. More and more companies are avoiding the old fashioned style and shifting the business process to this latest and modern way of the business process. Company’s priorities, policies and procedures to govern and manage the business operations have also been changed because of such Offshore Development help. Such decisions are more of the corporate objective based and they have also become more centralized. Previously the staffs were given lots of freedom regarding any business decisions and they were able to take decisions themselves. But by the adoption of such business process has really brought many changes in it. In present scenario in many companies now decision about audit comes first regarding the assessment of current and future business of the company from all the units. Such audit are conducted by some independent firms or by the own internal teams of the companies. This is considered to be one of the important stages of the Offshore Outsourcing.

Offshore Outsourcing
In Offshore Outsourcing the second most important stage is to build the perfect strategy for the business process. After clearing the focus about the limited resource, development of the overseas business strategy comes in to the picture. It starts with the specific priorities and funding decisions in accordance with the prepared audit details. It is also kept clear that what is to be sent overseas and what is to be kept inside. The roles of the overseas vendors are also than determined and the selection of the perfect vendors takes place. Still wholesale transfer of the deals of the companies should not be sent overseas as the chances of the failure increases. So it is better to first identify the needs of the companies for the purpose of Offshore Outsourcing.

In Offshore Outsourcing, well managed and mature services are also taken under consideration while taking any important business decision in some large companies to distribute the overall workload. Standardized platforms in terms of updating the hardware and software are also an important task in such overseas dealings. In short all these are some of the process that makes the overall process of Offshore Outsourcing very easy and smooth going.

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Why India is the most preferred Outsourcing Destination

India has the ability to cater for the demands of the market. Its vast supply of over 2 million graduates and 300,000 post graduates that pass out of colleges each year, along with its vast resource of English-speaking college-educated workforce and low-cost labor gives it an edge in the offshoring world.

Last year alone, outsourcing in India grew by over 25 %, and it continued its domination over other competing countries such as China, Ireland, Israel and the Philippines.

Its not always about the cost
There is always this notion that India is the most preferred outsourcing destination due to its low cost. It isn't only the cost factor that accounts for India's attractiveness as an Outsourcing destination. The quality of manpower combined with improvements in it's local infrastructure have put it ahead of other destinations. India with its millions of world-class engineering, business, and medical graduates are becoming engrossed in the global New Economy in ways most people are only beginning to perceive. The new generation India that grew up in post-economically liberalized India, are a new breed with zest in life, hungry, energetic, and demanding of their government.

Large Human Resource
Every year, nearly 19 million students are enrolled in high schools and about 10 million students in pre-graduate degree courses across India. About 2.1 million graduates and 0.3 million post-graduates pass out of India's non-engineering colleges. While 2.5-3 percent of them find jobs in other fields or pursue further studies abroad, the rest opt for employment in the IT industry. Even at current rates, there will be nearly 17 million people available to the IT industry by 2008. It’s hard to believe those 20 years ago, India had only 6,800 knowledgeable workers.

The Indian Education System
The Indian education system puts lot of emphasis on mathematics and science, which results in a large number of science and engineering graduates. Mastery over quantitative concepts coupled with English proficiency has resulted in a skill set that has enabled the country to take advantage of the current international demand for IT

Quality Manpower
The Indian programmers are known for their sound technical skills and their eagerness to accommodate clients. Certain clients Outsource work to get access to more specialized engineering talent, particularly in the area of telecommunications. India also has one of the largest pools of English-speaking professionals.

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Wednesday, November 29, 2006

Better Outsourcing

As the implications of globalization have come into IT business, the idea of what a company should be has changed. Not long ago they were institutions—buildings and factories with workers who drove to work in the morning and punched out at night.

Business models have become much more customer oriented since those days. It’s not about your company or your staff, or even your product—your business is about your customers and what they want. This shift in focus has led to many companies experimenting with different structures in order to discover how to meet their customer’s needs at the lowest cost and for the highest profit.

One of the most effective ways of doing so is Outsourcing. Companies define their core competencies and then look to outside contractors to meet their other needs. System development, coding, call centre, printing, human resources—for every business function, there are other businesses that specialize in providing it. Microsoft now employs between 4,000 and 5,750 temporary and contract workers.

Benefits of Outsourcing

Outsourcing allows businesses to focus on their distinctive core competencies, the specialties that the business is based on and that help it achieve competitive advantage.

Because they are working within their specialties, companies that provide outsourced services can often work on a project in a faster, more efficient and more sustained way than an in house team could.

Outsourcing allows businesses to better asses future costs because the company providing the outsourced services must clearly estimate and propose costs.

How to Outsource Effectively
Make sure that you have a contact person with your contractor that you can easily communicate with and who will be accountable to you.

Have the service or product you want outsourced as clearly defined as possible before you hand it over to contractors.

Make certain that you can draw from a pool of qualified contractors so that if you have problems with one you can find others to provide the services you need.

Tuesday, November 28, 2006

Your Very First Steps to Outsourcing

Even though the concept of Outsourcing has been around for years, its implementation often incorrect and misled.Outsourcing is NOT about having jobs done by other parties.

Outsourcing is about having the best talent and resource to do some tasks, so you can concentrate on more strategic ones.

The distinction is obvious. Your strategic tasks is the most important things you need them to be done to grow your business. You do not want to be distracted by other repetitive tasks you can outsource to third parties. However, if you select those parties carelessly, you may jeopardize your business entirely. On the other hand, if you put your outsourced tasks on the hand of the best expert you can find, you may even increase your productivity.

If you have no experience in outsourcing, you can follow these steps:

1. Determine which task is strategic and which one is not.
2. Outsource non strategic tasks.
3. Do your research to find third parties with the best talents and resources.
4. Don't be cheapy. You always get what you pay for.
5. Do some testing and observe the outsource results. If you find those third parties are not what they have told you, fire them.
6. Consider to use media to attract talents.
7. You may need to write 'help needed' ads to attract talents.
8. Outsource that copywriting task, too.
9. Do your strategic tasks to find the way to win your business
10. Once you find the way, find best talent and resources to do it.

With that process, sooner or later you will find the difference between Outsourcing and out tasking. The later is when you get your tasks done by other parties regardless of their capability and talent. They just do what they have to do. Sure, you get your tasks done. But the results do not give any contribution to your productivity.

One thing you should understand about strategic thinking. Thinking strategically is about finding any possible ways to win. So, your strategic tasks are activities in finding ways to win. Once you find the way, find the best talent and resources to do it and make it happen. That's outsourcing.

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Monday, November 27, 2006

10 Benefits Of Offshore Outsourcing For High Growth Companies

Top 10 Reasons Companies Outsource
1. Reduce and control operating costs 2. Improve company focus 3. Gain access to world-class capabilities 4. Free internal resources for other purposes 5. Resources are not available internally 6. Accelerate reengineering benefits 7. Function difficult to manage/out of control 8. Make capital funds available 9. Share risks 10. Cash infusion Source: Survey of Current and Potential Outsourcing End-Users the Outsourcing Institute Membership, 1998

Lets briefly examine each one of these benefits and highlight the unique benefits to middle market companies.

Reduce and Control Operating Costs: Outsourcing in general and offshore outsourcing in particular, can be a powerful way to reduce administrative and production costs. By leveraging an outsourcing company's size, specialization and lower wage rates, small and mid-sized companies can drive down costs in their non-core business functions.

Improve Company Focus: By concentrating resources on core businesses, a company will become more efficient, drive costs further down, provide better service and expand its market share.

Gain Access to World-Class Capabilities: Outsourcing organizations take non-core administrative functions and make them their core businesses. They are experts in such business processes as Human Resources, Sales, Marketing, Finance, Accounting, Customer Service, Procurement, Business Administration and IT infrastructure, eCommerce, Data Processing, Network Management, Telecommunications, Data Security and Software Development. A well funded outsourcing company will invest heavily in people, technology and process engineering to provide state of the art services to their clients. This level of investment and commitment is beyond the abilities of most middle market companies.

Free Internal Resources for Other Purposes: Outsourcing frees key management from day to day routine and permits them to focus on priorities. Staff utilizes more of their skills; they have more interesting work and overall productivity increases. Boredom is the biggest enemy of productivity.

Resources Are Not Available Internally: In 2005, Bill Gates complained about Microsoft's difficulties in finding skilled programmers and opened Microsoft India. Finding qualified skilled workers is also a problem for small and mid-sized companies. Outsourcing permits a company to rapidly field an expert team and implement financial, marketing, manufacturing and distribution programs.

Accelerate Reengineering Benefits: Sometimes an executive needs to make a major change to save an organization and the staff does not have the skills or the interest to execute a plan in a timely manner. Outsourcing offers immediate access to qualified staff that may be more experienced and receptive to change.

Function Difficult to Manage/Out Of Control: Executives often seek to reduce excessive costs for IT, legal, marketing, customer service and HR. The costs can be measured in hard dollars and the time that these non-core businesses take to manage which can take focus away from the core business. Before a non core business becomes a bottleneck to growth, it may make sense to scale back and outsource.

Make Capital Funds Available: When properly implemented and executed, outsourcing improves cash flow in four ways: * Outsourcing, especially offshore outsourcing, is cheaper than running the operation internally. * By focusing more resources on the core business it becomes more efficient and profitable. * Capital expenditures and fixed costs are lowered and are transformed to variable costs driving up operating margins and lowering break even points. * Because Outsourcing increases the value of a business, the capital markets place a higher multiple on future earnings.

Share Risks: A well thought out outsourcing partnership will provide for the outsourcing company to adopt new technology, methods and productivity increases. Small and mid-sized companies can develop a partnership with a better founded provider who shares the risk of innovation.

Cash Infusion: Some outsourcing companies will purchase staff and infrastructure for cash in exchange for a long term outsourcing commitment ranging from 7 to 10 years.

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Saturday, November 25, 2006

What is outsourcing?

Outsourcing could be defined as the shifting or delegating a company's day to day operations or business process to an external service provider, done in anticipation of a better quality, lower rates and in a sense getting an edge over one's competitors. When a company's operations or business processes are outsourced to firms in foreign countries, often to take advantage of cheap skilled labor, it is referred to as offshore outsourcing or Offshoring.

Where functions previously performed by an organization are supplied under contract from a third party.

Buying goods or services instead of producing or providing them in-house.

While outsourcing is not exactly a new innovation, the shifts that have occurred recently in this space are worth noting. As the need for e-learning moves higher up on the IT and corporate training agendas, organizations are wont to take on the IT management burden of implementing a learning management system (LMS).

The concept of taking internal company functions and paying an outside firm to handle them. Outsourcing is done to save money, improve quality, or free company resources for other activities. Outsourcing was first done in the data-processing industry and has spread to areas, including telemessaging and call centers. Outsourcing is the wave of the future.

A long-term, results-oriented relationship with an external service provider for activities traditionally performed within the company. Outsourcing usually applies to a complete business process. It implies a degree of managerial control and risk on the part of the provider.

The transfer of components or large segments of an organization's internal IT infrastructure, staff, processes or applications to an external resource such as an Application Service Provider

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Friday, November 24, 2006

Offshore Outsourcing Tips

Offshore Outsourcing unless managed efficiently will not yield reliable results. The following are some tips for successful offshore outsourcing.

1. Government regulations - Foreign governments has their own rules for labor regulation, taxes and economic development. Failing to comply with these rules can result in stiff penalties and lengthy delays. Make sure your supplier understands the rules and will keep you in compliance, and make sure your service agreement spells out your suppliers responsibilities.

2. Time zone constraints - The time differences between locations in the U.S. and Europe, Africa and Asia can range from seven to 14 hours. Your offshore resources may be going home when your workday is starting. To avoid unnecessary delays, your service agreement must spell out times of availability, including contingencies for matters that require immediate attention.

3. Control - A perceived lack of control is the single largest detractor in Outsourcing decisions. Outsourcing often leads to improved control and performance because you can clearly spell out your expectations in the service agreement and include penalties if they are not met. Much of the anxiety around control issues can be addressed with well-defined business metrics, periodic performance inspections, clear escalation processes and sound communication practices.

4. Political stability - Political instability is one of the biggest unknowns in dealing with offshore suppliers. Civil insurrection or war can shut down your offshore operation indefinitely. An effective way to mitigate this risk is to work with a U.S.-based company with access to offshore operations in several countries. In times of crisis, it can be the supplier’s responsibility to minimize disruption by shifting the work to another location.

5. Industry knowledge - Offshore suppliers generally have good technical skills, but they often lack relevant business-related experience and may not understand the business practices of your specific region. Choose a supplier who can incorporate industry-specific business knowledge, effective business models and experience specific to the regions in which you operate.

6. Project management - When your company chooses to partner directly with an offshore supplier, choose someone who has already learned the lessons of working with offshore resources and can assign certified project management professionals to work with your firm. Most of the project management problems occur in the early stages, but these problems can throw an entire project behind schedule.

7. Business continuity - Business continuity planning and disaster recovery planning are fundamental to the well-being of any organization. Make sure your offshore supplier has a disaster recovery plan that will support your minimum service levels. The best approach is to plan carefully and make sure you have strong infrastructure support that can easily redistribute workloads to alternative locations, minimizing the chance of an interruption to your business.

8. Infrastructure - Your relationship with your offshore supplier is only as good as the communication and network infrastructure that separates your two countries. Your supplier’s local infrastructure may be too primitive or unreliable for you to count on 24x7 connectivity. Make sure to factor in the cost of setting up a separate infrastructure that meets your organizations needs, or at least make sure you build in redundancies to your network.

9. Cost savings - The primary reason for companies to outsource is their quest for lower cost. However, lower hourly labor rates do not necessarily translate into lower costs. Factors like suppliers transition processes, productivity rates, service delivery capabilities and quality commitment can impact the overall project cost and the value gained from the offshore engagement.

10. Publicity - Even if shifting work offshore makes good business sense, it can create public relations issues for your company. Your decision to outsource will be watched closely by the employees and the media. Negative publicity could alienate your customers. Choosing an Outsourcing supplier with both on-shore and offshore operations can minimize the potential for negative press.

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Thursday, November 23, 2006

Top 10 tips on Outsourcing

Do an internal viability investigation

A viability test is important if you are looking to outsource for the first time. Through a thorough analysis a company could identify areas where they are extremely good at and areas that companies need to take expertise support on. Differentiating each department and evaluating strengths and weaknesses of specified departments can be a wise scheme before deciding what department or project is to be outsourced.

Identify your core business

It is important for companies to know what kind of business they are engaged in and then clearly identify the core business area. Companies should definitely allocate more resources for the core business and look for a specialized company to undertake areas which they are not so good at or have better potential in terms of gaining enhanced cost advantage.

Identify a service provider that fits your requirements best

It is of prime importance that the company concentrates on evaluating the best potential service provider for their support services or services they need to cut down costs on. This evaluation process will consume a lot of time and sometimes money too yet it is all worth it. It is extremely important that you choose the best alternative and have few options ready incase the best service provider does not match with your requirements.

Choose a well established service provider

When Outsourcing your support activities to a service provider it is important that you choose a company that is well established in the industry. The company reputation matters to a great extent when the competitiveness increases.

Look for a service provider that best match your culture and company background

Cultural understanding is a key feature that brings out a close relationship with companies. A company with a mixed culture or a culture close to your company background has a great potential to be more flexible in terms of communicating important business matters.

Be ready with a detailed description of the requirements

The service provider should have a clear understanding about your requirements. Communicating the key features to the service provider can be a crucial aspect if you are not prepared with the necessary facts. Have a basic documentation ready to be provided and a strong communication base should be established especially if you are planning to outsource to an offshore service provider.

Be sure Methodology and process is aligned with your company
The methodology and the process used by the service provider should compliance with the company. A key feature for this is to have a good communication network built in order to precisely converse the requirements.

Look in to Resource flexibility

It is of prime importance that the companies choose a service provider that will match their inbuilt requirements. The service provider should be able to allocate or do changes to the resource requirements if the company is not happy with certain resources that is been provided to complete a specific task. The service provider should also be able to outsource resources if the company requires additional skills. Look for a service provider who is flexible so that you could pick the best resources that will fit your stipulations. A service provider who has backup resources will diminish the risk involvement; therefore support services that are of importance should be looked at from a broader perspective.

Evaluate the Cost advantage and quality of work

Cost is another significant factor that a company should broadly focus on when evaluating different service providers. Cost should be in par with the quality aspect and this could be a critical evaluation when obtaining the best service provider. If you are already engaged in the same field and need to outsource certain additional work, cost and quality is a main concern that should be looked in to.

Keep your options open

When Outsourcing start off with a relatively small project and be sure that you keep your options open. It is important how you allocate resources for outsourcing. Having alternatives will definitely reduce the risk involvement. Also make sure you have a backup plan incase things do not work your way and plans need to be changed.

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Tuesday, November 21, 2006

Offshoring IT Services

Offshoring can be defined as relocation of business processes to another country, especially a country overseas. This includes any business process such as production, manufacturing, or services.

Offshoring is defined as the movement of a business process done at a local company to a foreign country, regardless of whether the work done in the foreign country is still performed by the local company or a third-party. Typically, work is moved due to a lower cost of operations in the foreign location. Offshoring is sometimes contrasted with outsourcing or offshore outsourcing. Outsourcing is the movement of internal business processes to an external company. Offshoring is similar to Outsourcing when companies hire overseas subcontractors, but differs when companies transfer work to the same company in another country.

Frameworks to Manage Offshored Projects
Offshoring, offshore outsourcing, of IT Services continues to be the focus of attention in business and technology management circles. While business leaders and IT executives debate on the merits and strategic implications of offshoring, technologists and Project Managers continue to focus on trends and technologies to address the changing needs of businesses, and ensure that the systems are maintained to satisfy user needs. Offshoring of Application Development and Maintenance [ADM] involves extending the best practices of Software Development Life Cycle [SDLC] and Project Management to address the challenges of time and space, and coordination of onsite and offshore teams.
The book "Offshoring IT Services : A Framework for Managing Outsourced Projects", attempts to examine at some of the management imperatives of offshoring with a specific emphasis on managing and executing projects and initiatives using an Offshoring Management Framework [OMF]. The Framework, while taking a vendor neutral stance, borrows extensively from publicly available sources including articles, whitepapers and corporate websites. The framework is focused on four key areas: Governance, Management, Execution and Communication.

Outsourcing and Your Business

Outsourcing is an established way of doing business today, allowing companies to maximize their budgets and resources — and generate better products.

Also referred to as subcontracting, outsourcing simply means acquiring a product or service rather than producing it in-house. Outsourcing is suitable for just about any industry. In the administrative field, for instance, a variety of activities can easily be farmed out to a subcontractor, including word processing, data entry, transcribing, research, contact management and event planning.

Outsourcing is extremely common practice within human resource (HR) departments. In fact, two-thirds of HR departments outsource at least one activity, according to research by the Bureau of National Affairs, Inc. and the Society for Human Resource Management. The top five outsourced HR activities are employee assistance/counseling, flexible spending account administration, pre-retirement counseling, outplacement services and pension/retirement plan administration.

Benefits of Outsourcing
Many companies that choose to outsource do so because they don’t have or can’t attract the people skills they need. Subcontracting gives them access to a much greater pool of resources. It also enables companies to cut cost by 10 to 30 percent, depending on the industry. They can purchase services on an as-needed basis, instead of maintaining a full-time employee. This allows them to avoid paying employee-related expenses such as salaries, unemployment taxes, paid vacation and sick leave, insurance — which results in a lower overhead.

In another aspect, Outsourcing can help a company focus on its core business, creating a competitive advantage within its industry. Subcontracting also affords the business the chance to get the best job possible from the people it hires. By using a third party supplier, a company has more room to be critical of the kind of services provided. If the work is done in-house, company ties may interfere with the final product.

Outsourcing also offers a wide variety of other benefits, including:
• Faster setup of the function or service
• Acquire innovative ideas
• Increase commitment and energy in non-core areas
• Improve credibility and image by associating with superior providers
• Greater flexibility and ability to define the requisite service more readily
• Less dependency upon internal resources
• Greater control of budget
• Greater ability to control delivery dates
• Increase flexibility to meet changing business conditions
• Purchase of industry best practice
• Generate cash by transferring assets to the provider
• Gain market access and business opportunities through the supplier’s network
• Turn fixed costs into variable costs

For details read here

Monday, November 20, 2006

India Offshore Outsourcing

American and English have always turned to India as a primary Outsourcing country. India is a developing nation, but it surpasses all countries but America when it comes to the number of scientifically minded English-speaking individuals. Since India has yet to be labeled developed, the immense talent it holds is available for outsourcing at very cheap rates -- about 50% of what an employee in the US or UK would demand.

Since the 1960s, India has been under the consideration of European and American companies. Previously, the prime reason for choosing Indian companies for sub-contracting was that Indian manpower was available for at much lower rates than its indigenous counterparts. This brought the overhead expenses down dramatically for the parent company.

Indian companies recruit special coaches and trainers to make their employees adept in western modes of life to become more palatable to their clientele. There are quality supervisions and time-bound projects to make their employees more proficient.
BPOs in India work in two shifts – day and night. The night shift makes better business sense to the Americans and Europeans, as they become prime time workers in their own countries. However, they are paid half the amount of what an American or European employee would be paid.

Of late, offshore companies have mushroomed in all the metropolises of India including Chandigarh, Mumbai, Delhi, Chennai, Kolkata and Bangalore. Call centers are considered to be a highly reputable profession for urban youth, who consider this job a channel to western advanced countries. In fact, the salaries from Outsourcing companies form a major chunk of the income earned by the youth in Indian cities.

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Friday, November 17, 2006

Tips To Make an Outsourcing Project Successful

The origin of Outsourcing
The concept of outsourcing originated with Ross Perot when he established Electronic Data Systems in the year1962. EDS convey the following message to their potential clients,
“You are familiar with designing, manufacturing and selling furniture, but we're familiar with managing information technology. We can sell you the information technology you need, and you pay us monthly for the service with a minimum commitment of two to ten years.”

Basic Elements of BPO
Outsourcing in the present times is termed as a “strategic management option” instead of a way just used to cut costs. It enables an organization or company to attain its business objectives through applying factors such as operational excellence and an edge in the market place. Today, there not a single company exists which does have one or more of its services outsourced so that it can pay more attention to its core competencies. The power of outsourcing as a significant business tool of unique versatility and flexibility is undoubted. The main reason why most of the companies employ the strategy of outsourcing is that their resources need to be more focused on core business functions and consequently the non-core functions need to be outsourced. Outsourcing is the fundamental process that provides a company with the right combination of people, processes and technology to operate effectively in the Global market place without burdening its time and budget. This is the most crucial reason for the increase in the number of companies who are interested in outsourcing their activities to various offshore locations. There are two key factors that should be observed while looking for a reliable outsourcing provider, they are:

Tips to Make an Outsourcing Project Successful

The results of outsourcing if seen as a whole have both been positive and negative for organizations. There results depend on the important factors such as:
-How the contract between the outsourcer and vendor is structured
-The efficient management of the customer and vendor relationship
-The measurement of the end results
If all the above points are kept in view while deciding to outsource, outsourcing can prove to be fruitful for both the outsourcers their potential customers. Industrialists and business men are always in search for methods to accomplish their business objectives by investing less amount of money. For such people, a best solution is to outsource their work to skilled but cost-effective third party service providers. To make outsourcing projects successful the following tips should be followed:

-Conduct a thorough research to find the best Vendor for the project
The easiest way to find outsourcing companies is to try search engines or relative online directories. But there lies a possibility that cheaters would also be there. Hours should be spent while conducting extensive research to find the best vendor.

-The scope and the schedule for the project should be clearly defined
The scope and schedule for the project should be clearly identified in order to avoid any misconceptions regarding the deadline and limits of the project which would have a negative impact on the successful and timely completion of the project. The requirements of the project should be defined without any ambiguities by the outsourcer. The service providers require accurate, complete information to present the outsourcer with realistic proposals and to quote a reasonable price. The outsourcer must be precise regarding the deliverables the outsourcer expects the vendor to provide. The vendors must be provided complete information about what exactly the outsourcer wants to be delivered with and the method in which the outsourcer requires to be followed while doing the work. The outsourcer should clearly state the schedule of the project as it could have a great influence on the project cost.

-Search for specific experience
In normal situations the service provider selected by the outsourcer will posses specific expertise similar to the type of the project the outsourcer is undertaking. For instance, if an outsourcer requires a business plan for opening a retail store, the best results can be obtained if the vendor hired would have certified experience in the same sector.

-The Selection of the Vendor must be not be based only on the factor of price
Low price seems to tempt to select a certain vendor but this method should not be adopted for selection. The buyers who have gone through the experience of Outsourcing many projects and evaluating hundreds of proposals almost always support that the highest-priced and lowest-priced bid consideration for selecting a vendor should be not be given importance at all.

-Begin with a Small project
When working with a new vendor for the first time the outsourcer should begin with a relatively small project. This would be beneficial in terms of providing the outsourcer with a view of the vendor’s capabilities.
-Converse about the ownership of the end work or result
The outsourcer and vendor should negotiate clearly over the ownership of the end result, work or product and its components.

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Wednesday, November 15, 2006

India a Global Platform for Knowledge Outsourcing

Outsourcing is not new for the country like India. It was started dates back during 1960s. Business Process Outsourcing (BPO) is the long-term contracting out of non-core business processes to an outside provider to help achieve increased shareholder value. BPO saves precious management time and resources and allows focus while building upon core competencies. After BPO, India has now set its sights on becoming a global hub for knowledge process outsourcing (KPO). Knowledge Process Outsourcing (KPO), a new terminology is evolved for the business related to the patents and intellectual property.

As India has the second largest English speaking scientific manpower pool in the world after the U.S. most of the Global competitors are looking forward to India to outsource their IPR needs related to patent searching, prior art search, infringement and validity search etc,. In a survey it was found that Indian graduates cost 50%+ lower than the U.S. and initial setup cost are half those in U.S. According to the Rick Wills, CEO, of Tektronix Inc.

"In India, free-market reforms are creating the world's largest back office, transforming the country into a major force in IT, Outsourcing, and critical service application delivery."

Confederation of Indian Industry (CII) study saying that KPO would grow at 46 per cent to become $17 billion sector by 2010. The BPO industry, only 26%. Global KPO pie in 2010 will be around $17 billion of which $12 billion (70%) will be outsourced to India.” Thus KPO is going to be global hub for the country like India. Areas with significant potential for KPO include pharmaceuticals, biotechnology, and ICT, besides legal support, intellectual property research and design and development for automotive and aerospace industries, CII stated.
KPO involves high-end processes like valuation research, investment research, patent filing, legal and insurance claims processing, patents and prior-art search, etc. India with its knowledge base and lower costs will be leading the pack in the race for KPO businesses.

The economy of an industry is fueled by its innovation and thus there is a need to protect your innovations in order to make money from them. The firm protection of intellectual property requires a planned investment of both time and money. There are many ways by which you can protect your invention to avoid others making money from your efforts. When a company starts of thinking of a new project or going to file a patent for a newly developed product, it is suggested to conduct a state-of-art search or prior art search. This service is provided by many KPO firms in India at reasonable cost and better quality.

Thus it is assumed that KPO will be a global hub among the student in Indian in near future, with more demand for the people expert in this area.

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Tuesday, November 14, 2006

Outsourcing Relationship

Outsourcing is the delegation of tasks or jobs from internal production to an external and separate business partner, very much like a subcontractor. By present standards and definition, it became the equivalent of elimination of local staff in favor of staff overseas to countries where salaries are considerably lower. Countries such as India, Bulgaria, Venezuela and Brazil, among others have become forerunners as outsourcing venues.

It was first seen in the data-processing industry and has steadily spread to include telemessaging and call centers. Recognized as an effective means to save money and improve quality, outsourcing has also made it possible for a company to free its resources for other undertakings. Functions that have been previously performed by a company are supplied under contract from a third party. Goods or services are bought instead of producing them internally.

The process may require the transfer of components or large segments of the internal IT infrastructure of the company to an external source as well as staff and other applications. Since it usually applies to a complete business process, there is a degree of managerial control and risk on the part of the provider. A long-term and results-oriented relationship is expected to be achieved for tasks that each one cannot effectively accomplish on its own.

An initial outsourcing contract would include the actual cost of outsourcing and the cost of relations management. Items such as pricing, reporting methods, definition of service level and delivery are the most visible portion of the cost. However, there are other things such as understanding each other’s objectives, building trust and respect and developing open and honest communication that comes into play. When any of these items is out of sync, costs automatically increases, negating whatever savings is expected from the outsourcing contract. The more items related to relationships between the company and the provider that is not in complete harmony, the more expensive the outsourcing contract becomes.

To minimize encountering these types of problems, the user company should find a suitable service provider in the process. The culture, especially on communication styles should be similar. Providers’ suggestions on process improvements should be heard as they are considered the experts in their line of work. The company should be able to define and develop communication methods as well as problem escalation procedures to guide the provider.

Service providers on the other hand, should learn to recognize the customers that are right for their business. They should also ensure that communication styles are compatible with the user company. They should also have adequate empowerment to swiftly resolve minor issues.

A healthy Outsourcing relationship results from the right attitudes of both parties. By being open and honest, costly surprises are avoided on both sides. Responsibilities for both success and failures are shared by analyzing jointly individual contributions to the problem so as to avoid the same mistakes.

Many Outsourcing contracts have gone sour since their inception. Some ought to be examined very carefully if it is worth continuing at all. A bad relationship hurts both the service provider and the outsourcing company, affecting performance and productivity to the detriment of both.

Major world players in the outsourcing business continue to change the face of the marketplace. India continues to hold its leading position and user companies are more inclined towards enlisting Indian partners to revamp business processes.

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Monday, November 13, 2006

Managing an outsourcing process

Outsourcing requires well planned management. Managing your outsourcing venture is critical to the success of your project, but is an area that has not been given its due importance.
It is not difficult to deal with the costs involved in managing the outsourcing process. Plan out your management strategies and adapt them to outsourcing. To enjoy the benefits of outsourcing irrespective of the size of your company, a methodical management framework is important.
Certain areas of your outsourcing business need constant attention. Focusing on these areas will help you in controlling the course of your outsourced project.
Managing cost:
The biggest advantage Outsourcing provides is cost benefit. There is no point in taking up a project if you are going to end up spending more on the project delivery to their client, right? To prevent this, scrutinize the scope and the pricing of the project right at the beginning before you take up a project.
Managing communication
Communication plays a vital role in bagging projects. How you communicate with your clients decide your future relationship with your client. To ensure better communication management, ensure you have the following in place-
• Good communication systems
• Regularly contact
• Clear instructions and feedback
• Clarify all possible doubts that can arise
Performance Management

The main issue in performance management is providing quality work in the decided time zone. Strike a balance between the actual performance levels and the ideal performance standards of your outsourcing project. Make sure that the project does not take too much time. To avoid this, review and analyze the project progress on a regular basis and specify the targets before beginning of the project.

Risk Management

A concern in any business venture. To be able to manage they assess your risk factors when you take up a project and have a back up plan ready, so in case anything goes wrong you will be prepared.

Crisis Management
Be prepared for any crisis that you might encounter. Make sure your management is financially and professionally equipped to deal with contingencies

Knowledge Transfer Management
While transferring knowledge about the proposed project, give complete information and knowledge to your outsourcing partner. The entire process should be closely and regularly watched. Knowledge transfer is directly proportional to productivity.
Relationship Management
You need to work out a good amicable relationship with your outsourcing partner. You can do a few things to make sure everything works out alright.
• Constant monitoring
• Mutual understanding
• Transparency
• Scope for discussion
• Flexible contracts
• Openness to intermediate scope and price review
Apart from managing the business process with your Outsourcing partner it is also necessary for you to mange your in house processes.
• Estimate your company's capabilities.
• In-house and offshore workload distribution.
• Appointing a project manager to supervise the entire process
• Employee training on how to manage and organize an outsourcing business
Your final goal is to manage your company such that you benefit from your Outsourcing venture. So choose a management system that suits your company and go ahead.

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Saturday, November 11, 2006

Outsourcing means fast efficient turnover and a competitive edge

An invaluable tool to business growth is outsourcing. It can be used strategically to influence corporate growth and financial stability.

The key is to outsource work which is non-essential or areas where the company lacks expertise. This frees valuable resources which can focus on areas of competitive advantage.

Growth can be enumerated in many ways not just in costs saved.

When you outsource a specific project you save on time and resources spent on training required to complete the project successfully. You can harness the talent, technology, and expertise of niche providers. By outsourcing, you can appoint a consultant or company who has core competencies in the field and can complete the project within the given time. The company saves on hiring permanent employees, training, benefit payments, hidden costs, absenteeism, requirements of workspace, and equipment.

The company focuses on core aspects and transfers the nitty-gritty of non core aspects to outsourced companies. This just means fast and efficient turnover as well as a competitive edge.

Outsourcing is a way to maximize workforce flexibility without the added burdens of permanent financial commitments. One uses highly qualified consultants who can complete a particular project in no time at all.

Time is money and by outsourcing a company saves valuable time which can be channeled productively, leading to growth.

Capital is used efficiently without unnecessary wastage in overheads, office space, technology, and training. Outsourcing spurs growth by providing skilled manpower and increased productivity at lower costs. If the outsourcing is selected intelligently, it leads to tax breaks saving the company thousands of dollars.

Further, business risk is shared by the outsourcing company which will know how to minimize or avoid risk in their area of expertise.

The business world is moving at a fast pace and companies need to provide quick service and low rates. Outsourcing allows a firm to do just this, provides the most advanced technology, efficient service, and low rates.

A company can, by outsourcing certain sectors provide in house support which will not be otherwise possible without expansion. So, one can gain economies of scale, efficiency as well as expanded expertise.

To summarize, growth of a company when outsourcing is adopted can be evinced in:
• Cash flow.
• Emphasis on core competencies and long term value creation.
• Minimization of risks by reliance on experts.
• Using external talent and technologies when essential and keeping overheads small and manageable.
• Infrastructure of large firms without associated burdens of large offices, greater number of permanent employees, and hidden costs of maintenance.
• Improved process and project deliveries.
• Service improvements.
• Technology infusion.
• Little or no capital investments.
• Better project costing.
• Asset conversion.
In the modern world outsourcing is an intelligent way of handling a growing business poised for success in every field.

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Friday, November 10, 2006

Outsourcing – Long Term Benefits

Outsourcing -- the practice of using outside firms to handle work normally performed within a company -- is a familiar concept to many entrepreneurs. Small companies routinely outsource their payroll processing, accounting, distribution and many other important functions -- often because they have no other choice. Many large companies turn to outsourcing to cut costs. In response, entire industries have evolved to serve companies´ outsourcing needs.

Outsourcing can provide a number of long-term benefits:-

Control capital costs:
Outsourcing converts fixed costs into variable costs, releases capital for investment elsewhere in your business, and allows you to avoid large expenditures in the early stages of your business.

Increase efficiency:
Companies that do everything themselves have much higher research, development, marketing and distribution expenses, all of which must be passed on to customers. An outside provider's cost structure and economy of scale can give your firm an important competitive advantage.

Reduce labor costs:
Hiring and training staff for short-term or peripheral projects can be very expensive, and temporary employees don't always live up to your expectations. Outsourcing lets you focus your human resources where you need them most.

Start new projects quickly:
A good outsourcing firm has the resources to start a project right away. Handling the same project in house might involve taking weeks or months to hire the right people, train them and provide the support they need. And if a project requires major capital investments (such as building a series of distribution centers), the startup process can be even more difficult.

Focus on your core business:
Every business has limited resources, and every manager has limited time and attention. Outsourcing can help your business to shift its focus from peripheral activities toward work that serves the customer, and it can help managers set their priorities more clearly.

Level the playing field:
Most small firms simply can't afford to match the in-house support services that larger companies maintain. Outsourcing can help small firms act "big" by giving them access to the same economies of scale, efficiency and expertise that large companies enjoy.

Reduce risk:
Every business investment carries a certain amount of risk. Markets, competition, government regulations, financial conditions and technologies all change very quickly. Outsourcing providers assume and manage this risk for you, and they generally are much better at deciding how to avoid risk in their areas of expertise.

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Thursday, November 09, 2006

Process of Outsourcing

Outsourcing is a business decision that is often under taken to reduce cost or focus on competencies of a company. It is shifting a significant amount of management control and decision-making to the outside vendor which always involves a considerable amount of information exchange, co-ordination, and trust. The process of outsourcing starts from client’s need recognition and ends with the end of contract.

Identifying Opportunities
The primary goal of outsourcing is to gain business benefit by handing over a part of a business responsibility to someone who is expert at handling it. It needs lot of before hand planning and anticipation of problems. While taking a decision to outsource a particular responsibility the major thing to be taken care of is that the organization should profit from this outsourcing and the current resources could be redeployed to some other work. Also all the possible options for outsourcing should be found and then a best option according to the company’s requirement should be selected.

Request for Proposals
Once it’s clear about what is required from the outsourced company; search for the service providers begins. A request for proposal document is drafted which contains all the requirements briefly specified along with the important criteria’s to be taken into consideration for the proposal. The more specific the document will be the better will be the chances to get the right service provider.

Evaluate the Proposals
Once the (RFP) is sent to all the providers, there will be a whole lot of proposals pouring in. Before selecting any proposal each and every proposal has to be studied in detail and their pros and cons have to be identified according to the requirement. There are many things which can be taken into consideration while choosing the vendor, their technology competence, their position in the market, their resources etc. It changes from company to company and from project to project. It is very important to take an unbiased decision while selecting the provider.

When a technical process is outsourced, the provider typically will have great technical skill but not always understand the business model or the dynamics of the marketplace. So it must also be taken care that the provider is well aware about your business too. Security, Confidentiality and Ethics of the service provider can be one of the considerations, while choosing the best proposal.

Negotiating and finalizing the contract
Negotiations are a part of each and every contract. Both the parties must consider the process in minute detail and specify exactly who will do what and when. Some of this will involve technology, file formats and security provisions. It will also involve identifying tasks within the process and how they will be performed by people under the outsourcing agreement. The contract needs to be very specific but also flexible enough so that both parties can live with it through circumstances neither anticipated. All the legal formalities have to be completed before signing the contract and the contract should also be made under the supervision of some legal entity.

Measuring performance
Once the contract is signed its time for its implementation. While implementing the contract performance has be to measured at specific intervals and compared with the benchmark standards. Necessary changes in the process or equipments can be made on the right time to avoid delays and perform according to the standards. Constant check on the provider’s activities will maintain consistency in the output.

Completion and Renewal of the Contract
On successful completion of the project, the contract comes to an end. All the financial issues are settled. The manpower and other resources are handed over to the parties as agreed in the contract. The project can be renewed if required, on the discretion of both the parties.

New challenges are bound to come up with each and every new contract but a systematic approach of outsourcers in deciding their Outsourcing partner will reduce their overall risks.

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Wednesday, November 08, 2006

The Four Basics of Successful Outsourcing

There are four basic steps in designing and implementing an Outsourcing strategy. These help the management of small and medium enterprises to derive the benefits of outsourcing while avoiding the pitfalls and legal wrangles that can undo the advantages of outsourcing.

The key to any success is ability to seek and get help from the experts. As a beginner you might not be experienced in the intricacies of outsourcing. All you need to do is to hire an experienced consultant to lead you through the process. There are many accounting firms and outsourcing service providers who can give dependable support. However, if you do choose to manage the outsourcing decision process on your own, there are four stages of project management that you can rely on.

a.) Needs Analysis
b.) Evaluation of alternatives
c.) Implementation
d.) Reviews of results - change of tactics

Once you have identified the areas where you can outsource your activities, follow these steps to decide if outsourcing is the real solution to the challenges faced by your organization.

Needs Analysis: The purpose of this exercise is to crystallize your company's core business and to short list high cost - low performance secondary, support functions that can be outsourced.

Identify the absolutely critical products and services that are the main stay of your company and must be managed by your own people. Then list out the supporting functions to analyze which of these are not core business, are mainly high cost centers and currently not delivering results. These functions are the first off functions to be outsourced. You must quantify the cost of "time" in fire fighting or damage control of a particular function if the same is to be carried out in-house. It is good to remember that even the smallest of problems takes the time of your staff and that time equals money.

Evaluate the options: At this stage you will match the needs of the short listed functions with the services provided by the outsourcing agencies.

Initially, you must logically sort out the key functions of a department into major component structural parts and major functions. A chart showing the department name function, the work product and resources required can be made. This chart can be made for "as is" status and also "how it should be" requirement. This is the written summary of the objectives of the department or function.

At this stage, you must identify Outsourcing agencies either local or offshore and get a Non Disclosure Agreement (NDA) signed by them. You can send them your base document outlining the needs. The outsourcing provider is bound to ask many questions and you need to respond with simple answers and guidelines. You will also send out a RFQ - request for quote or a Request for Proposal that contains your needs analysis requesting the provider to quote for a solution. You can also ask for a draft copy of the contract from the outsourcing provider so that you can review the same.

Next, you will do a comparative analysis of the providers who have responded to your RFQ. Also carry out an NPV (net present value) analysis to see if the project makes any economic sense. It is important not to get carried away by numbers. You must make a balanced decision after weighing both the quantifiable as well as the qualitative aspects of the outsourcing service providers.

Implementing the plan: This is crucial because it involves transfer of data and knowledge to the outsourcing provider, gathering inputs from them on best practices. Then you commence operations using the new practices.

The key to successful implementation is defining the step-by-step project plan with clearly identified actions, deliverables, time lines. Ensure that a weekly review process is in place that identifies and resolves problems as they occur. At this stage, there is no scope for dilly dallying on decisions or waiting for a post mortem analysis when things go wrong. Ensure that the outsourcing partner provides with a clearly traceable project plan with key milestones, mentions penalties if the milestones are not met. If your plan involves relocating of staff, you need to prepare them for this as well as any staff reductions. Depending on the structure of your company the new outsourcing program can be just accessing the outsourcing company's system and entering data or it could stretch to committing an entire division of your company to the complex task.

Review of progress and results: A good leader always reviews the progress at regular interviews. You must set up an ongoing system that tracks the progress and performance of both your own staff as well as your outsourcing partner. Only then you will be able to assess the impact of the outsourcing decision.

There is a saying - "What gets measured, gets done". You must make this as the mantra for your team if you want good results from the outsourcing effort. Set up specific service level agreements (SLAs) that define the time bound targets. If you adopt the policy of pay for results you can expect big improvements in the quality of the services provided by your outsourcing partners.

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Tuesday, November 07, 2006

Outsourcing: No Pain only Gain

A write-up at The inquirer says that "Outsourcing does not save money" but

Even if you look up the meaning of the term, ‘Outsourcing’ in any dictionary it reads something as follows-

“Getting work done by outside suppliers in order to cut-costs”

Outsourcing is everywhere represented as a cost-cutting strategy implemented primarily for monetary gains. Though there is much more to the concept of outsourcing, one thing is for sure. Outsourcing saves money! Simply put, rather than employing their own full- time plumber, or an accountant for that matter, a company can procure the services of an independent professional, whenever the need arises, benefiting from the experience and reducing the long-standing costs of hiring, employee benefits, office space and retirement.

Through Outsourcing, global corporations tap into a young, well-trained, usually English-speaking workforce that earns about 20 or 30 percent of the wages garnered by a comparable U.S. worker. The money saved is a big boost to the U.S. economy. Furthermore, sending jobs overseas increases the productivity, profitability and the competitiveness of U.S. companies. Thomas Friedman, the ‘New York Times’ columnist, in his work titled, ‘The World is Flat’, sees Outsourcing driving U.S. economy to a new level. The profit is cut out in cheaper goods, global development, international security enhanced by linked economies and capital that is freed to do more sophisticated work.

The question arises-

Should the international trade in services be restricted?

The anxiety of Job-loss with in the U.S. to offshore locations is understandable though misguided. The aim is not, and has never been to leave the U.S. workforce unemployed. On the contrary, the constant endeavor has been to free them of work that can be done efficiently at a much lower cost, thereby increasing productivity. The strategic motivation behind outsourcing is to focus on core competencies or freeing internal staff for other initiatives. On a state level, it has been seen repeatedly that attempts to contain and save jobs by passing anti-outsourcing bills has only led to additional costs to the state exchequer. Such a ban would drive up the cost of services and take money away from other programs in the budget. What is often overlooked in this debate is that the consumers are, after all, being provided with the services they demand at a much lower cost and more importantly, when more money is saved by U.S. through outsourcing, there is more for education, job-training and tax-relief.

Outsourcing, in contrary to posing a threat to employment with in the U.S., can actually help preserve existing jobs and create new ones. A new analysis commissioned by the California Legislature confirms the same. The study claims shipping jobs overseas is not only good for the economy, but for workers as well. Offshoring is bound to increase productivity. Thus the overall, long-run effect may be to increase living standards in U.S.

That's not a mere theoretical ranting. There are numbers to prove this view. The available data suggests that the number of jobs being offshored is small relative both to the overall labor market and to the number of people working in the relevant at risk-occupations.

Therefore, Outsourcing is not only a cost-cutting measure but a work solution. It’s not an adversary ready to pounce at your job, but a friend in disguise. There may be misunderstandings, but like a good friend Outsourcing will bring you no pain, only lots of gain!

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Sunday, November 05, 2006

Making Money by Outsourcing

So you are thinking to yourself "how can I expand my operation, do more business and make more money?” If you are thinking this right now and are in the web design or web hosting fields then Outsourcing might be for you. Now this is not to say that other companies or businesses can't do outsourcing work. The reasons I give web design and web hosting as examples is they are sort of related. You can't have a site up without hosting in return you really don't need hosting unless you have a site up.

Now you may be thinking what steps you need to get started on expanding via outsourcing. Well the very first thing for you to do is to see if you have a good client’s base where you are:

-Unable to keep up with the work.
-Unable to do the work yourself (in the case you run a website that gets a lot of request but have no knowledge in website design).
-Can do website and graphic works but you have no clue about programming.

Anyone of these situations can leave you looking to outsource your business. Especially when you design websites but can not code them in anything but html (which your clients might need it coded in php and mysql). Not being able to offer your clients a complete solution may cause them to go another developer. Which in turn can cause you to lose projects in the $X, XXX range.

Now that you have decided to turn to Outsourcing, you need to find a reliable team of developers. Whether they are website designers, programmers or both. You will need to know that they can do the work, are reliable and trustworthy. Make sure when you do this search that you follow these simple rules and check on some things. Such as:

-Make sure you can contact them multiple ways and that they will contact you back in a reasonable amount of time.
-Get samples of their work.
-Ask for references.
-Get their rates.
-Find out their years of experience.
-Make sure they are willing to sign a contract.
-Find out how much work they can handle, what languages they program in, as well as their team size.
-It is all right to give them a deposit but limit it to 25-50% and don't pay anymore until the project is complete. If you want to break it down into milestones you can, but do it in either 10% or 20% increments. Make sure the milestones are set out in the contract.

These things will protect you.

The next thing you are going to want to do before taking on any projects is start with a test project. This will allow you to try out your new team as well as see what type of markup on projects you will get. This will definitely show you what problems if any you might face with the new team. It will also show you if there is a significant enough markup for you to make it worth your time to outsource.

The final step you are going to need to do is to put in place a fluent system to monitor clients, emails and your team. This will definitely help when updates are needed to be done. A project management system will allow your clients and your team to talk to each other without revealing any personnel contact information. Which will save you from having your clients stolen from you? Also make sure you monitor all contact so that you can be sure you can trust who you are doing business with.

For more information please visit here

Saturday, November 04, 2006

10 Ways Outsourcing Can Help Grow Your Business

Outsourcing is when you hire outside professionals or services to take on part of your business workload. You may want to outsource part of your work because you don't have the room, you need an expert, you have periodic busy periods, or you need more production to get orders out on time, etc. The following are ten ways Outsourcing can save your business time and money.

1. You won't have to take the time to train employees. This will allow you to spend more time working on your marketing and advertising campaign.

2. You won't have to do time consuming tasks like adding on new equipment or learning new software to complete certain tasks. This will allow you to spend more time testing your advertisements.

3. You won't have to interview employee candidates. This will allow you to spend more time improving your customer service; in return you will get more repeat purchases.

4. You won't have to fill out all the employee paper work like tax forms, scheduling, retirement plans, etc. This will allow you to spend more time developing new products.

5. You won't have to buy extra office or work space to complete certain tasks. You can use all the money you save on other business expenses.

6. You won't have spend money on employee costs like taxes, medical, vacation time, holidays, workers comp., unemployment costs, etc. (These may vary depending on which country you do business in.)

7. You can speed up you order and delivery system with the extra help. Your customers will appreciate the fast service and you'll have a higher chance that they will buy from you again.

8. You could expand your market share by becoming a middleman and offering your subcontractors products or services. This will increase your business profits and
give you multiple income streams.

9. You can take on extra or large orders your business couldn’t handle before. This will expand your market share and you could also offer to take the work your competition can't handle.

10. You could get end up receiving orders from your subcontractors. Your subcontractors may also tell other people about your business.

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Friday, November 03, 2006

Offshore Outsourcing Best Practices Increase Your Profit Margin

When your company is forming long-term Offshore Outsourcing relationships with another company, the foundation of the success of this venture should be laid during the negotiation period itself. The centerpiece of this negotiation period is the Service Level Agreement.

The aim of outsourcing is to gain value for the host organization. There are several contrasting views however regarding how to maximize value and minimize risk by outsourcing. The following best practices can serve as a guide when structuring your SLA, and then implementing and maintaining a relationship with the chosen provider.

Five Golden Rules for Offshore Outsourcing
1.Develop enduring relationships between key management personnel.
The usefulness of the relationship between the key management personnel of both teams depends on good understanding and strong working ties between them. Studies on outsourcing success stories have demonstrated that working chemistry in management and peer friendships among employees have proved to be important determinants in forming long-term relationships that yield real value.

2. Present a Quantifiable Objective.
A useful performance criterion includes quantifiable objectives and clarifies expectations of the quality of service. If you can get a hold of SLAs for comparable projects, they will serve as reasonable starting points but remember, these are negotiable. In any event, ensure that exact objectives and expectations are included in the SLA and are understood by both organizations prior to implementation.

3. Pre-determine the Incentives and Penalties Schemes.
The provider should be driven to meet the established customer expectations or even exceed it by adopting the performance based pricing criteria. If performance of the service provider exceeds expectations, then incentives should be given; conversely, appropriate penalties should be imposed if objectives are consistently missed.

4. Review Periodically to Maintain Successful Relationships.
Organize formal review meetings often. During the meetings, both sides can discuss the performance of both teams and determine the future objectives or goals of the company accordingly. They can also discuss product reviews and deliverables during these meetings. Keep in mind that performance objectives may need to be continually revised according to changing market conditions and the opportunity costs of both firms.

5. Communicate Well & Often to Bridge Cultural Differences.
The parties involved in an Offshore outsourcing relationship belong to distinct cultures, these differences have to be accepted and bridged. The cultural understanding between the two organizations can be enhanced by organizing social events, educating about company background, participating in each others quality programs, etc. Communication really is the key to a healthy relationship. It may be helpful to send a loyal employee to the BPO site for a few months to facilitate understanding in the implementation phase.

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Thursday, November 02, 2006

Offshore Dedicated Center – Cost-Effective Model for Web Development Outsourcing

Current business situation shows that to outsource means to benefit, i.e. to make profit from international trade in products and services. Witnessing high quality companies that have helped to improve the global perception of the "brand", lots of producers have stuck to the idea of partnership with Offshore Development teams. Participating in such business does not necessarily take away from them market share, but it is a 100% key factor in maintaining customers and acquiring new business i.e. providing a quality product or Service.

To run business above and beyond the limitations of production methods is essential nowadays. No doubt, this task is not an easy one taking into consideration that companies try to keep inventories low, overhead costs and capital expenditures to a minimum.Being not able to keep up with the upgrade of technological advances, nor the expense of keeping employees up with these improvements, most companies start to use outsourcing as on of the essential ways to upraise any product or service one has to offer.According to statistics, more than 85% of companies participating in IT development business and Outsourcing abroad, usually do it in CIS countries: half of that number takes risks to establish ODC (Offshore Dedicated Center) that allows to benefit from the expertise of another company, without accumulating the expenses of new equipment and training.

An ODC is a dedicated, customized, and secure development center established for a customer that needs to outsource application and maintenance work for a long period of time. ODC model gives the customer better control over the process of product Offshore Development, and helps to have higher resource efficiency (cost saving up to 70%).

Being a branch of offshore business, Dedicated Center does not require any up-front investments or long-term commitments: the company chosen handles incorporation issues, establishing IT infrastructure, legal fees, payroll, legal compliance and office leases. Being not obliged to pay office expenses, internet, electricity, infrastructure and many more, the employer can be sure that each dedicated member of this team works 180 hours per month making profit.

With companies all over the world everyone can gain access to talented engineers, experienced developers and trendy designers. Leveraging the dedicated team means that customers who risk can handle their own IT projects quickly and efficiently, utilizing cost-effective equivalent in-house resources.

At the same time, management team that is a must in every modern IT company is always at client’s service to provide a level of convenience and security that one would never get by working within some local development departments.

With roots in all continents and countries, IT development companies are utilizing close relations with local universities, the development community and educational centers to quickly fill the need for qualified engineers. Local business connections also work for Outsourcing companies’ benefit.


1. Focus on Core IT Competencies - Save on Cost of Applications Development
2. Avoid Long-term Investments
3. Lower Business Risks
4. Best Practices from Leading Web Development Company
5. Quick Return on Investment
6. Full Operational Control
7. Established IT Infrastructure
8. Access to the Best Talents
9. Improved Product Release Time

For more information please visit here

Wednesday, November 01, 2006


Companies large and small, public and private, and across a wide variety of industries have embraced the practice of outsourcing within virtually all disciplines, including information technology - the sector which leads the trend. In fact, within the past five to eight years, outsourcing has evolved from a purely tactical option - often of last resort - to an ongoing, standard business practice and strategic management tool. But what explains this dramatic evolution in such a relatively short period of time?

Weighing the Pros and Cons
For many, the decision to Software Outsource begins with exercise of weighing the time and expense of doing it yourself against your desired outcome. For example, if you decide to add a patio to your home, you have two basic options. You can either take on the entire job yourself - designing the space, securing the permits, purchasing the materials, and building it yourself. Or you could hire an experienced contractor to handle everything for you.Your investment for the first option is largely in materials and a significant amount of your time, particularly if you are squeezing the patio project into a busy schedule that already includes work and family responsibilities. But how long will it take you to complete the job? What quality assurances will you have, especially if you've never tackled anything like this before? What might the short- and long-term consequences of the do-it-yourself approach be?

On the other hand, what could a professional contractor bring to the table? While the financial investment might be slightly higher to cover labor costs with an experienced builder, the completion time is likely to be much shorter and you can hold the project to agreed-upon quality guarantees.

Focus on Core Competencies
An oversimplified example? Not really. Like many business outsourcing decisions, it comes down to this: What's your core capability or service? Where your time is most highly leveraged? And what's the opportunity cost of adding another area of responsibility or of being distracted from your core capability? Reducing and controlling operational costs remain key goals, and savvy managers increasingly look to outsourcing to improve business focus and strengthen core capabilities. A successful outsourcing relationship can help achieve this by enabling companies to focus their people and resources - which are sometimes scarce - on the areas that are mission critical to their operations. It also gives these companies access to the top talent in an outsourced discipline - talent that the client company doesn't have to recruit, train, pay benefits to or struggle to retain, thereby freeing up personnel dollars and time. In addition, companies can expect service levels in their outsourced functions to rise because, as part of forming the outsourcing agreement, they can determine specific quality standards for the provider. The agreement then serves as a quality control system that may not have existed otherwise had the company not decided to outsource.

IT - The Most Popular Outsourced Function
IT was one of the first sectors to experience significant levels of outsourcing, and continues to be the functional area where most Software Outsourcing dollars are spent. As the largest independent provider of MultiFinder technology support services in North America, Decision One can attest to the popularity of this trend - particularly in the following five market sectors. OEMs - hardware, software and consumer electronics Channel - resellers, retailers and warranty administrators Communications - RBOC, ILEC, CLEC, cable, satellite Service Aggregators - outsourcers, system integrators, application service providers Commercial and Government Users - Fortune 1000 corporations, midsize companies and government agencies While providers like Decision One tailor precise solutions to answer their users' exact IT and business objectives, the reasons these companies explore outsourcing in the first place are often strikingly similar. In fact, what these five sectors generally have in common when seeking outsourcing are: A need for direct technology support for employees or customers, and/or A desire to expand their service portfolio through an outsourcing partnership that enables them to offer additional technology services to their customers.

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