Many small businesses and sole proprietorships are growing their businesses with Outsourcing more and more today. By outsourcing part of their work load they can free up time, keep costs down and take on more business for more income. When these one man operations or small businesses hire outside professionals to take on part of their work load this is referred to as outsourcing, since these people are not employees of the business that has the work to be done. By outsourcing the small company also appears to be much larger than they really are and they can make the profits of much larger companies this way.
Employees or perspective employees will be one of the biggest time savings as well as cost savings. No time will be spent setting up interviews or doing those interviews. This will allow you to spend more time with your customers, and any customer that deals directly with the owner will become loyal much quicker and will be a repeat customer longer.
Since you will not be hiring any employees there will be no tax forms to fill out, no scheduling to be done for them, and no need for training time. All of these things take your time and cost you money. Your business will also save by not having to buy employee health insurance, unemployment insurance, workers compensation insurance, and security systems to monitor these employees. This is in addition to saving on having no employee payroll, including your share of their income taxes, vacation pay, and holiday pay.
With the time that you save by not taking on employees, you can use that time for concentrating on your marketing and advertising campaigns, and the development of new products. Of course there are going to be costs associated with the outsourcing, however if you negotiate for a fair fee then your savings will outweigh these costs.
By outsourcing your company will grow in revenue but there will be no need for larger office space or work areas. Again your business will incur savings here also.
Without increasing your staff or work space there also will not be a need to buy and learn how to use more office equipment, production equipment, software, and other time consuming tasks related with larger space and new business tools.
Outsourcing will allow you to take on much larger orders that you could not take on by yourself. This will create the opportunity to branch out and expand your market area. Offer to take on the work that your competition can not handle.
The subcontracting companies that you do business with could become a source of new business as well since they will undoubtedly be talking to people about your business which brings them more business as well. In return you could act as a middleman for the subcontractors that you use by promoting their products in your business activities. For doing this for them you would charge them a finders fee which could be an added source of income for you or when you need to have them do work for you the money you receive from them could be used to offset their cost to you for the work they do for you.
Utilizing outsourcing will mean that your product will be turned out quicker therefore it will also be delivered quicker, which will boost customer satisfaction. The increase in customer satisfaction will multiply your profits quickly in the form of repeat business and referrals from those happy customers to their family, friends, and even strangers they may meet in their daily routine.
In conclusion any business can benefit from Outsourcing in these ways provided that they locate and negotiate with an outside business that is prepared to meet the needs and has the knowledge and staff to produce the product sufficiently and economically. This outsourcing allows the small business to compete on a more even level with much larger companies as well as providing revenue growth and profit growth without increasing all the costs associated with growth
For more details Please click here
Friday, December 29, 2006
Thursday, December 28, 2006
Offshore Outsourcing to India: Quick Decision without Second Thought
Globalization & Internet has taken hold of world leaving no distance between far-flung nations. At this time, Offshore Outsourcing entered the scene with a big boom & has become one of the most important management practices today. Many foreign corporations like American started outsourcing their blue collared jobs including information technology development and IT “back-office” projects to developing nations, like India, China, Philippines & many others. Providing low-cost services & high quality, these nations are developing with a great leap in economy through outsourcing. But, why India is preferred by American & other foreign corporations?
Offshore outsourcing takes account of a great deal of thought. Rapid cost reduction should not be the only drive to outsourcing. Quality solutions & services by Indian companies are credited for being the new attraction for offshore outsourcing to India. When processes are offshored to India, companies not only get the advantage of low cost but also experience value addition i.e. productivity and quality.
Source countries get approx. 40-50% savings from outsourcing to India. However, one should think twice before outsourcing because outsourcing would require a dedicated relationship and a proper understanding between the parties involved which simply means, point of saving money is firm at its stand, but one has to realize that lack of proper communication may cause relapse of the promise of cost reduction.
Other than savings & value addition, immense creativity, speed, scalability & talent of Indian mind also tend to startle the outsourcer once offshore outsourcing relationship starts. This is what we can analyze from this quote;
"Certainly cost reduction, but it's not as simple as that! Cost reduction was only part of the reason that companies were considering offshore outsourcing, there were benefits to be had in time-to-market and quality, leading to an adage that companies initially chose India to save costs but stayed for the speed and quality!"
Now, when we are discussing potential reasons, then India’s powerful workforce with largest pool of latest technical skills can’t be spared mentioning. Indian companies understand that cost alone can’t continue to keep India’s present dominant position in the offshore Outsourcing Industry.
In short, India is preferred to other countries because of;
•High-quality brain power
•State-of-the-art technology with world-class systems
•One of fastest growing economies
•Rich in resources
•Stable government
•Privatization of the infrastructure sector
Concluding with few words, I would say that rising Offshore Outsourcing is fueled by an amazing combination of efficiencies and profits required by producers of goods and services together with the consumer-driven passion for quality goods at affordable prices. Cost-effective production of quality goods and services becomes the elementary driver for the source country while development of a globalized service-based economy for the destination country. The improving economy is based on highly sought-after skills and delivering services using low-cost broadband communications as the primary mode of transport.
For more information Please click here
Offshore outsourcing takes account of a great deal of thought. Rapid cost reduction should not be the only drive to outsourcing. Quality solutions & services by Indian companies are credited for being the new attraction for offshore outsourcing to India. When processes are offshored to India, companies not only get the advantage of low cost but also experience value addition i.e. productivity and quality.
Source countries get approx. 40-50% savings from outsourcing to India. However, one should think twice before outsourcing because outsourcing would require a dedicated relationship and a proper understanding between the parties involved which simply means, point of saving money is firm at its stand, but one has to realize that lack of proper communication may cause relapse of the promise of cost reduction.
Other than savings & value addition, immense creativity, speed, scalability & talent of Indian mind also tend to startle the outsourcer once offshore outsourcing relationship starts. This is what we can analyze from this quote;
"Certainly cost reduction, but it's not as simple as that! Cost reduction was only part of the reason that companies were considering offshore outsourcing, there were benefits to be had in time-to-market and quality, leading to an adage that companies initially chose India to save costs but stayed for the speed and quality!"
Now, when we are discussing potential reasons, then India’s powerful workforce with largest pool of latest technical skills can’t be spared mentioning. Indian companies understand that cost alone can’t continue to keep India’s present dominant position in the offshore Outsourcing Industry.
In short, India is preferred to other countries because of;
•High-quality brain power
•State-of-the-art technology with world-class systems
•One of fastest growing economies
•Rich in resources
•Stable government
•Privatization of the infrastructure sector
Concluding with few words, I would say that rising Offshore Outsourcing is fueled by an amazing combination of efficiencies and profits required by producers of goods and services together with the consumer-driven passion for quality goods at affordable prices. Cost-effective production of quality goods and services becomes the elementary driver for the source country while development of a globalized service-based economy for the destination country. The improving economy is based on highly sought-after skills and delivering services using low-cost broadband communications as the primary mode of transport.
For more information Please click here
Tuesday, December 26, 2006
Tips for Outsourcing through Online Sources
The business mantra these days is ‘OUTSOURCING,’ whatever cannot be performed internally. The scope is huge and seems to be expanding enormously. The mammoth coverage of outsourcing has not spared any function or department. Anything form employees to raw materials, from managers to the entire activity can now be outsourced. The rational is simple, why take the pains to perform something, which you are not good at. Alternatively, let professionals handle. They know their job and are comparatively cheaper. Not to mention the saved overhead cost.
Outsourcing: Advantages: The increasing scope of Outsourcing as a function has led to creation of various intermediaries like management consultants who locate vendors for interested firms.
Moreover increasing span of Internet and other related online activities has prompted various professionals to apply for such outsourcing activities through web. The entire task is operated through a virtual interface, wherein the outsourcer and recipient or performers have not even met at times. This outsourcing pattern via online means not only reducing the down time but also acts as a common platform for both the interested parties to study various options and select accordingly.
However, the most crucial aspect in the entire bargain is to locate the most appropriate vendor. It is important to locate somebody who actually knows the work and has the capability to customize it as per the specific requirements. The pains instead of reducing could treble in an eventuality where an untrained so-called professional is managing it for you. Lack of knowledge could then easily fool you in a situation where the resources spent could easily go down the drain. In such probabilities, it is suggested to keep the extremely crucial functions in house and outsource the rather less strategic functions to external vendors.
Another concern while outsourcing through online means is the lack of physical interaction among concerned parties. Psychologically absence of a physical interface ends up creating an environment wherein the responsibility is not felt by the vendor. Therefore, it is essential to communicate effectively for best results.
Miss-use of information could also be a negative outcome of such virtual understandings. To safeguard your best interest be certain to enter into enforceable agreements with such parties. The agreement should not only cover the task related concerns but also serve as a tool in managing the information outflow.
Coordination of work and managing it becomes another tedious task in online outsourcing. Minor confusions could waste ample time and resources. To avoid such eventualities it is best to have an effective two-way channel of communication where both the parties can mutually coordinate at any point of time.
Outsourcing is certainly an effective tool and the latest offerings in the field that enable easy outsource through online means certainly are an added advantage. However appropriate steps to ensure smooth functioning and best results are nevertheless a mandate.
For more information Please click here
Outsourcing: Advantages: The increasing scope of Outsourcing as a function has led to creation of various intermediaries like management consultants who locate vendors for interested firms.
Moreover increasing span of Internet and other related online activities has prompted various professionals to apply for such outsourcing activities through web. The entire task is operated through a virtual interface, wherein the outsourcer and recipient or performers have not even met at times. This outsourcing pattern via online means not only reducing the down time but also acts as a common platform for both the interested parties to study various options and select accordingly.
However, the most crucial aspect in the entire bargain is to locate the most appropriate vendor. It is important to locate somebody who actually knows the work and has the capability to customize it as per the specific requirements. The pains instead of reducing could treble in an eventuality where an untrained so-called professional is managing it for you. Lack of knowledge could then easily fool you in a situation where the resources spent could easily go down the drain. In such probabilities, it is suggested to keep the extremely crucial functions in house and outsource the rather less strategic functions to external vendors.
Another concern while outsourcing through online means is the lack of physical interaction among concerned parties. Psychologically absence of a physical interface ends up creating an environment wherein the responsibility is not felt by the vendor. Therefore, it is essential to communicate effectively for best results.
Miss-use of information could also be a negative outcome of such virtual understandings. To safeguard your best interest be certain to enter into enforceable agreements with such parties. The agreement should not only cover the task related concerns but also serve as a tool in managing the information outflow.
Coordination of work and managing it becomes another tedious task in online outsourcing. Minor confusions could waste ample time and resources. To avoid such eventualities it is best to have an effective two-way channel of communication where both the parties can mutually coordinate at any point of time.
Outsourcing is certainly an effective tool and the latest offerings in the field that enable easy outsource through online means certainly are an added advantage. However appropriate steps to ensure smooth functioning and best results are nevertheless a mandate.
For more information Please click here
Wednesday, December 20, 2006
Outsourcing for Profit
Is your business growing and expanding? Do you find that you are offering more products and services? Do you feel the need to hire other people to do certain tasks that you simply can't do yourself due to the lack of time and experience in that particular field? Well if you have answered yes to these questions, then Outsourcing may be the very thing that you need for your business.
You see, if you delegate some of the productivity to other people and other entities that specialize in certain products and services, you will quickly find that you can get a whole lot more done in a minimum amount of time. For example, let's suppose that you are running your own e-book business on the Internet, and you need some graphic work done for your web site. You could hire someone to do it, or you can find a particular company that specializes in web graphics, and hire them to create the graphics for your site. The reason for delegating out services to other people and to other companies is so that you can stick to the task of running and managing your business. You may not have the time, or the skills to do some of the things that are required of your business to perform, and that's where other people and other companies come into play.
What this does for you and your business is nothing short of phenomenal. By delegating services and projects to other people and other businesses, you can focus upon either writing the e-books themselves, or whatever else you need to do to insure that the business runs like it should. This also eases up time for things such as public speaking, making phone calls, and sending those all too important e-mail messages to potential JV partners, customers and subscribers. After all, you need to make your business grow, and with the other services and activities delegated out to other people and businesses, you can get more done for your business.
Outsourcing is a Godsend when it comes to managing your business because it shows that you aren't afraid to venture out and use the services of other people, and businesses. Not only that, but did you ever stop to think that by delegating out these services to other people and to other businesses may also be a great form of advertisement for the business?
Well it is and for good reason too. You see, once the other individual, or company gets involved in doing something for your business, they quickly become familiarized with what you do, and that is enough to spark off some word of mouth advertising from those other people, and businesses about your business. So what happens with outsourcing is this; your business begins to create a web of resources for itself that can be used time and time again, thus expanding the business to include other people and the services of other companies.
Now this doesn't mean that those other people and those other businesses stop being independent entities. They still remain as they are, but with a bit of a twist. They have become affiliated with you and your business to perform certain tasks that will help your business to sell its products and services, and thus also help the other individual, or business to do the same. So in a small way, outsourcing is much like a joint venture
The key to proper Outsourcing is to find the right people and companies that are well suited for the job that is needed to be done. That is where research comes in. You don't want to use the first person, or company that you find. Instead you want to find several people, and companies that you want to screen to find out which of these has the best skills suitable for the job that you want done. Remember, you want professional work done, not armature work. You want something that will truly reflect what your business is about to your customers and subscribers.
For more information Please click here
You see, if you delegate some of the productivity to other people and other entities that specialize in certain products and services, you will quickly find that you can get a whole lot more done in a minimum amount of time. For example, let's suppose that you are running your own e-book business on the Internet, and you need some graphic work done for your web site. You could hire someone to do it, or you can find a particular company that specializes in web graphics, and hire them to create the graphics for your site. The reason for delegating out services to other people and to other companies is so that you can stick to the task of running and managing your business. You may not have the time, or the skills to do some of the things that are required of your business to perform, and that's where other people and other companies come into play.
What this does for you and your business is nothing short of phenomenal. By delegating services and projects to other people and other businesses, you can focus upon either writing the e-books themselves, or whatever else you need to do to insure that the business runs like it should. This also eases up time for things such as public speaking, making phone calls, and sending those all too important e-mail messages to potential JV partners, customers and subscribers. After all, you need to make your business grow, and with the other services and activities delegated out to other people and businesses, you can get more done for your business.
Outsourcing is a Godsend when it comes to managing your business because it shows that you aren't afraid to venture out and use the services of other people, and businesses. Not only that, but did you ever stop to think that by delegating out these services to other people and to other businesses may also be a great form of advertisement for the business?
Well it is and for good reason too. You see, once the other individual, or company gets involved in doing something for your business, they quickly become familiarized with what you do, and that is enough to spark off some word of mouth advertising from those other people, and businesses about your business. So what happens with outsourcing is this; your business begins to create a web of resources for itself that can be used time and time again, thus expanding the business to include other people and the services of other companies.
Now this doesn't mean that those other people and those other businesses stop being independent entities. They still remain as they are, but with a bit of a twist. They have become affiliated with you and your business to perform certain tasks that will help your business to sell its products and services, and thus also help the other individual, or business to do the same. So in a small way, outsourcing is much like a joint venture
The key to proper Outsourcing is to find the right people and companies that are well suited for the job that is needed to be done. That is where research comes in. You don't want to use the first person, or company that you find. Instead you want to find several people, and companies that you want to screen to find out which of these has the best skills suitable for the job that you want done. Remember, you want professional work done, not armature work. You want something that will truly reflect what your business is about to your customers and subscribers.
For more information Please click here
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 them 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.
For more information Please visit here
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 them 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.
For more information Please visit here
Tuesday, December 19, 2006
Outsourcing Can Increase Your Productivity
Benefits of Outsourcing
Outsourcing is using outside firms to handle work normally performed in the company. This practice of hiring contractors can apply to just about any type of work. However, small businesses don’t take full advantage of multiple outsourcing opportunities like larger companies do. Outsourcing should be regarded as a strategy in business planning. The one thing small businesses tend to outsource without hesitation is payroll. They know they are not qualified to do that job and therefore see the wisdom and benefits of outsourcing it. That’s also why company outsource managers look outside their organizations for expertise.
In addition to that,
* They are cutting costs and freeing up finances to be used elsewhere.
* They are increasing efficiency by freeing the owner and key employees from jobs that are outside their scope of expertise. The staff can then focus on core-business functions.
*They are not taking time to train existing or new employees because they’ll get an independent contractor who is capable of starting right away and is equipped with the knowledge.
Accounting/Bookkeeping and HR functions are outsourced as often as IT, research, web design/development and more.
Placing your accounting and bookkeeping in the hands of professionals is an effective management decision. The responsibilities involved in maintaining your company’s bookkeeping functions grow as your business grows. You want to ensure that your monthly, quarterly, and annual bookkeeping are accurate and timely.
Why Outsource Human Resources?
HR functions must be handled correctly as close to 100 percent of the time as possible. Slip-ups can cause “big” problems for a business.
“Small companies often do not have the need or resources to employ a full-time human resources manager. Human resource generalists in medium-size companies usually do not have the depth or breadth of knowledge to fully support the organization”. “Without effective…human resources practices, programs, and policies, a business may not be compliant with state or federal laws. In addition, employee relations could suffer”, says Suzy Nisbet, President, Strategic HR Solutions, Cary, NC. Human Resource contractors bring order, simplicity and peace of mind to the complexities of HR.
Looking at the benefits of outsourcing it becomes obvious that a company gains a competitive advantage when using experts they don’t have to hire.
So what’s the bottom line on the benefits of outsourcing? It helps small businesses survive and compete with the big guys who outsource many jobs. That’s why company outsource managers say Outsourcing is a cost effective way to increase your resources
For more information please click here
Outsourcing is using outside firms to handle work normally performed in the company. This practice of hiring contractors can apply to just about any type of work. However, small businesses don’t take full advantage of multiple outsourcing opportunities like larger companies do. Outsourcing should be regarded as a strategy in business planning. The one thing small businesses tend to outsource without hesitation is payroll. They know they are not qualified to do that job and therefore see the wisdom and benefits of outsourcing it. That’s also why company outsource managers look outside their organizations for expertise.
In addition to that,
* They are cutting costs and freeing up finances to be used elsewhere.
* They are increasing efficiency by freeing the owner and key employees from jobs that are outside their scope of expertise. The staff can then focus on core-business functions.
*They are not taking time to train existing or new employees because they’ll get an independent contractor who is capable of starting right away and is equipped with the knowledge.
Accounting/Bookkeeping and HR functions are outsourced as often as IT, research, web design/development and more.
Placing your accounting and bookkeeping in the hands of professionals is an effective management decision. The responsibilities involved in maintaining your company’s bookkeeping functions grow as your business grows. You want to ensure that your monthly, quarterly, and annual bookkeeping are accurate and timely.
Why Outsource Human Resources?
HR functions must be handled correctly as close to 100 percent of the time as possible. Slip-ups can cause “big” problems for a business.
“Small companies often do not have the need or resources to employ a full-time human resources manager. Human resource generalists in medium-size companies usually do not have the depth or breadth of knowledge to fully support the organization”. “Without effective…human resources practices, programs, and policies, a business may not be compliant with state or federal laws. In addition, employee relations could suffer”, says Suzy Nisbet, President, Strategic HR Solutions, Cary, NC. Human Resource contractors bring order, simplicity and peace of mind to the complexities of HR.
Looking at the benefits of outsourcing it becomes obvious that a company gains a competitive advantage when using experts they don’t have to hire.
So what’s the bottom line on the benefits of outsourcing? It helps small businesses survive and compete with the big guys who outsource many jobs. That’s why company outsource managers say Outsourcing is a cost effective way to increase your resources
For more information please click here
Monday, December 18, 2006
What is Outsourcing?
Outsourcing is basically a method of carrying out a definite task without completely relying on the original companies resources. It can be a development of a product or can also be acquiring knowledge and technology.
In plain English, outsourcing is the process by which a parent company hires services / technology from firms or individuals outside itself to carry out a particular task. The parent company will not disturb its internal schedules and resources, but utilize the expertise, knowledge and resources of outside bodies to carry out the job. The important point to note is that, the production or development job is only transferred to the foreign body, and the responsibility of the job is with the parent company itself.
Why would anyone outsource?
There can be numerous reasons behind the decision to outsource a job to foreign bodies.
One of the main reasons why a company decides to outsource a particular work is because of inadequate resources within it. Sometimes situation arises when manpower cannot be diverted to an urgent work. One of the solutions to this situation is to increase manpower or to hire manpower for a short period of time. The risk factor is involved, as the company does not clearly know the performance record of hired manpower. But if we have a publicly accepted performance record of a specialist company who is wiling to take up the job, taking the responsibilities of newly hired manpower and shedding additional revenue on them seems a bad idea. This situation normally results in outsourcing, to avoid bottlenecks in the parent company's performance.
Inadequate knowledge and technology can be another reason why a company decides to outsource a work to some specialist firms, who can provide it. As it is clear, someone more skilled and someone who does the job on a day-to-day basis can complete a job in less time and money than someone new to the field.
Reduced budgets and increased expenses in operational costs can result in a decision to outsource. There can be situations when carrying out a project results in a loss. This occurs when expensive tools have to be purchased or when new knowledge or technology has to be purchased to carry out a job. The easy solution to this problem will also be outsourcing the work to skilled small-scaled businesses, which can complete the job in lesser cost and time, eliminating the expenses of purchase of new tools or technology. The huge reduction in pay rates while outsourcing to countries like India and Russia where loads of technically sound resources are available for a reduced pay rate, is one of the best reasons to outsource
Merits of Outsourcing
One of the good things about Outsourcing is that the parent company gets to concentrate on strategic issues rather than take up the hassle of specialized jobs. Another important aspect is the availability of top-notch resources, which are used by the parent company only when they need them. The reduction in operational costs is yet another huge positive aspect of outsourcing.
Points to Keep in Mind after the Decision of Outsourcing and Before Selecting Your Partner
Successful outsourcing is a result of good management.
▪ Make sure you have these points cleared before you outsource your work to foreign companies.
▪ Always study your future partner prior to fixing the deal. Talk to their past and present clients, study their history and present infrastructure before taking the leap.
▪ Once you fix the deal, the vendor is part of your company. Never treat him as an alien body.
▪ Clearly define the tasks and give a concrete idea about the deliverables. This will reduce the confusion and will make sure that the vendor knows what he needs to deliver.
For more information Please visit here
In plain English, outsourcing is the process by which a parent company hires services / technology from firms or individuals outside itself to carry out a particular task. The parent company will not disturb its internal schedules and resources, but utilize the expertise, knowledge and resources of outside bodies to carry out the job. The important point to note is that, the production or development job is only transferred to the foreign body, and the responsibility of the job is with the parent company itself.
Why would anyone outsource?
There can be numerous reasons behind the decision to outsource a job to foreign bodies.
One of the main reasons why a company decides to outsource a particular work is because of inadequate resources within it. Sometimes situation arises when manpower cannot be diverted to an urgent work. One of the solutions to this situation is to increase manpower or to hire manpower for a short period of time. The risk factor is involved, as the company does not clearly know the performance record of hired manpower. But if we have a publicly accepted performance record of a specialist company who is wiling to take up the job, taking the responsibilities of newly hired manpower and shedding additional revenue on them seems a bad idea. This situation normally results in outsourcing, to avoid bottlenecks in the parent company's performance.
Inadequate knowledge and technology can be another reason why a company decides to outsource a work to some specialist firms, who can provide it. As it is clear, someone more skilled and someone who does the job on a day-to-day basis can complete a job in less time and money than someone new to the field.
Reduced budgets and increased expenses in operational costs can result in a decision to outsource. There can be situations when carrying out a project results in a loss. This occurs when expensive tools have to be purchased or when new knowledge or technology has to be purchased to carry out a job. The easy solution to this problem will also be outsourcing the work to skilled small-scaled businesses, which can complete the job in lesser cost and time, eliminating the expenses of purchase of new tools or technology. The huge reduction in pay rates while outsourcing to countries like India and Russia where loads of technically sound resources are available for a reduced pay rate, is one of the best reasons to outsource
Merits of Outsourcing
One of the good things about Outsourcing is that the parent company gets to concentrate on strategic issues rather than take up the hassle of specialized jobs. Another important aspect is the availability of top-notch resources, which are used by the parent company only when they need them. The reduction in operational costs is yet another huge positive aspect of outsourcing.
Points to Keep in Mind after the Decision of Outsourcing and Before Selecting Your Partner
Successful outsourcing is a result of good management.
▪ Make sure you have these points cleared before you outsource your work to foreign companies.
▪ Always study your future partner prior to fixing the deal. Talk to their past and present clients, study their history and present infrastructure before taking the leap.
▪ Once you fix the deal, the vendor is part of your company. Never treat him as an alien body.
▪ Clearly define the tasks and give a concrete idea about the deliverables. This will reduce the confusion and will make sure that the vendor knows what he needs to deliver.
For more information Please visit here
Saturday, December 16, 2006
How to Use Outsourcing To Beat Your Competition
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. You could outsource accounting, secretarial tasks, factory help, computer training, web design etc. Below are ways to use outsourcing to beat your competition.
By Outsourcing part of your workload you can save time and spend more time concentrating on beating your competition.
-you won't have to take time training new employees
-you won't have to do time consuming tasks like adding on new equipment
-you won't have to learn a new software program or other equipment
-you won't have to interview employee candidates
-you won't have to fill out all the complicated employee paper work like tax forms, scheduling, retirement plans etc.
By outsourcing part of your workload you can save money and spend more money on marketing or advertising to beat your competition.
-you won't have to buy extra office and other equipment
-you won't have to buy extra office or work space
-you won't have spend money on employee costs like; taxes, medical, vacation time, holidays, workers comp., unemployment costs etc. (these may vary by which country you do business)
There are many other ways Outsourcing can help you beat your competition. Here are a few more:
-the extra help can help you complete and deliver orders faster
-you could expand your market share by becoming the middleman and offering your subcontractors services or products
-you could end up getting orders from your subcontractors
-it will allow your business to take on extra or large orders
For more information Please click here
By Outsourcing part of your workload you can save time and spend more time concentrating on beating your competition.
-you won't have to take time training new employees
-you won't have to do time consuming tasks like adding on new equipment
-you won't have to learn a new software program or other equipment
-you won't have to interview employee candidates
-you won't have to fill out all the complicated employee paper work like tax forms, scheduling, retirement plans etc.
By outsourcing part of your workload you can save money and spend more money on marketing or advertising to beat your competition.
-you won't have to buy extra office and other equipment
-you won't have to buy extra office or work space
-you won't have spend money on employee costs like; taxes, medical, vacation time, holidays, workers comp., unemployment costs etc. (these may vary by which country you do business)
There are many other ways Outsourcing can help you beat your competition. Here are a few more:
-the extra help can help you complete and deliver orders faster
-you could expand your market share by becoming the middleman and offering your subcontractors services or products
-you could end up getting orders from your subcontractors
-it will allow your business to take on extra or large orders
For more information Please click here
Friday, December 15, 2006
Oracle Says India Better Than China
Source: http://www.business-standard.com/
The word is out and by none other than the world’s largest software firm, Oracle, the American Goliath with 50,000-employees worldwide, finds India a more attractive business opportunity than China for the telecom applications business, and for more than one reason.
Not only is India the fastest growing mobile telephony market, recently, it has also surpassed China. The sub-continent’s diverse telecom sector profile with GSM, CDMA, wireless and conventional modes make a grand concert, unlike in China, where the choice is limited, and accordingly offer little business opportunities to software application providers like Oracle.
“The adaptability of telecom software solutions in India is also far greater compared to China due to reasons like the English language base, and the whole country acting as a single unit when it comes to telecom services. In China, each province acts differently making it difficult for any service provider to come up with an integrated product at the national level,” confirms Bhaskar Gorti, Senior Vice President and General Manager of Oracle’s Communications Global Business Unit.
According to him, besides the 5-million-plus connections being added every month, other areas such as broadband and IPTV are set to see enormous growth in India, in the days to come. “As far as Oracle’s application suite is concerned, it provides the platform for all these businesses. Even the Worldspace radio works on it,” says Bhaskar.
India on top of China, the seductive lilt of the Snake Charmer’s flute over the fire-spitting Chinese Dragon, anyone with a modicum of sense would have known that! But, when did the West have any sense. Would they have invaded Iraq, if grey cells had been employed, rather than the hunger for oil rule the day. Would the British have dismembered India to create Pakistan and Bangla Desh, if only they had thought it out, instead of putting their policy of ‘divide and rule’ a step further. Careful thought would have shown the creation of an Islamic nation, would one day become the school and playground of the world’s Islamic terrorist organisations. Would they have created Israel out of Palestine, if foresight had shown it would be a sore festering, without an end in sight? Would they have carved the Nation of Israel out of Palestine, if they had practiced foresight, to see perhaps, one day it would be the tinder to a fully loaded matchbox, exploding the world into its Fourth World War! If only, they had employed the foresight of India’s ancient past, seen the bigger picture, rather than the smaller one of petty jealous rivalry and revenge. If, only they had, they would not have left fires smouldering, burning all over, wherever the flag of the British Empire had been planted.
If, the world is in a mess today, spiritually, environmentally, politically, psychologically, bodily i.e. health wise, who have we to thank for this sorry mess! You got it! The West! They derided the wisdom of the East (India), in order to rule the sub-continent. Today, it is the self-same sub-continent that can play saviour to the world. India’s ancient wisdom is no Old Wives Tale; it is the ‘ras’ (essence) of its primeval past.
Let India hypnotise and seduce the world, forget the hissing song of China’s (Jungle Book) KAA:
“Trussst in me,
Jussst in Me!
Ssshut your Eyesss,
And trussst in me!
Ssslip in to sssilent ssslumber,
Sssail on a sssilver missst!
Ssslowly and sssurely your sssensssesss,
Will csseassse to resssissst!”
Listening to the high-pitched, cunning Chinese KAA can only end in tears! For the discerning, it is mesmerising India’s Snake Charmer of the East to the Western creation i.e. a tangled heap of slithery (snake like) global problems, that will bring order out of chaos, will replace western materialism with Eastern spirituality, teach there is joy and happiness to be found in joint instead of nuclear families, and peace is better than war. It is only India that can teach you its ancient wisdom of working in tandem with nature and its creatures, only India that can teach one the quality of tolerance, so necessary to heal a scarred, ravaged earth, as the psyche of its inhabitants, including an environment shot to pieces by the destructive wantonness of western excesses!
Let India show you how to replace avid consumerism with Eastern asceticism! Only then, will there be peace and harmony in the world! Listen to India’s ancient heartbeat and tame the nature of the Western Beast! Think like the Indians, who believe the earth to be their Mother, learn from them how to be tolerant of all its creatures, human and otherwise!
No wonder, Oracle prefers India over China! Always, India on Top!
Thursday, December 14, 2006
Outsourcing Benefits
The US Chamber of Commerce ("USCC") has apparently come out strongly in favour of Outsourcing as it considers it good for the US economy because it made good economic sense and it has reportedly decided to fight legislative moves against Outsourcing of jobs to India and other low-cost nations. The USCC ascribed the anti-outsourcing backlash on political factors and lack of information. The USCC reportedly feels that Outsourcing would strengthen US companies' bottom lines, boost earnings and lift stock prices and would benefit more than 50 per cent of US households that own stocks. It has also warned that the US will end up paying a heavy price if it enacted laws to halt the movement of jobs to cheaper destinations.
Cost Savings
India's National Association of Software and Service Companies ("NASSCOM") has reported that US businesses have witnessed significant cost savings by offshoring to India. For example, the US banking, financial services and insurance ("BFSI") sector's costs have lowered by 7-10% than that of its European counterparts. Also, US BFSI companies have saved USD 6 Billion in the last four years by Offshoring to India.
Jobs Creation
NASSCOM reported that nearly 170 Indian IT companies have offices in the US and that they employed nearly 60,000 people in the US in 2001, contributing to nearly USD 810 Million in taxes in 2001. Employees of Indian IT firms bought goods and services worth USD 1.2 Billion in the US and paid nearly $300 million towards social security in 2001.
Value Addition
NASSCOM has also reported that BFSI offshoring has resulted in quality and productivity gains of 15-20% and customer satisfaction of almost 85%. It also cites the example of the success of the US automobile industry due to Outsourcing. Presently, the automobile industry is the largest in the world and two of the world's biggest automobile companies are from the US. Over a surveyed period, the automobile industry reportedly grew 20% in sales and services with a constant workforce. Outsourcing apparently provided this industry a competitive edge and opened up opportunities in terms of investing in new equipment and re-engineering processes.
For more information please visit here
Cost Savings
India's National Association of Software and Service Companies ("NASSCOM") has reported that US businesses have witnessed significant cost savings by offshoring to India. For example, the US banking, financial services and insurance ("BFSI") sector's costs have lowered by 7-10% than that of its European counterparts. Also, US BFSI companies have saved USD 6 Billion in the last four years by Offshoring to India.
Jobs Creation
NASSCOM reported that nearly 170 Indian IT companies have offices in the US and that they employed nearly 60,000 people in the US in 2001, contributing to nearly USD 810 Million in taxes in 2001. Employees of Indian IT firms bought goods and services worth USD 1.2 Billion in the US and paid nearly $300 million towards social security in 2001.
Value Addition
NASSCOM has also reported that BFSI offshoring has resulted in quality and productivity gains of 15-20% and customer satisfaction of almost 85%. It also cites the example of the success of the US automobile industry due to Outsourcing. Presently, the automobile industry is the largest in the world and two of the world's biggest automobile companies are from the US. Over a surveyed period, the automobile industry reportedly grew 20% in sales and services with a constant workforce. Outsourcing apparently provided this industry a competitive edge and opened up opportunities in terms of investing in new equipment and re-engineering processes.
For more information please visit here
Wednesday, December 13, 2006
Seven tips for successful Outsourcing relationship
In long-term relationships, the key component for success of the relationship is best laid during negotiations, which lead up to the signing of the Service Level Agreement. Some of the common practices employed for a successful management of outsourcing relationship have been listed below. IT companies from countries like India, are supporting such methods to improve their client relationship management.
1. Keeping relationship between key management personnel:
If there is a good understanding and strong working relationship between the key management personnel of both teams, then such relationships often tends to last long. Research on outsourcing success has indicated that peer friendships and working methods with one's counterpart in the other company has been an important factor in long term relationships.
Also maintaining one point of contact will avoid confusions. Companies can keep one project manager per project or per client.
2. Well-defined criteria and Quantifiable objectives:
The objectives to be achieved by Outsourcing must quantifiable and must be established as criteria right at the start of the contract. If the customer can compare the performance with the pre-established objective, then the benefits of outsourcing would be clear. The vendor would know where they stand in meeting customer expectations.
Well-defined performance criteria have quantifiable objectives, service quantities, quality, and customer satisfaction and are measurable against other providers.
3. Developing special board of members:
Successful outsourcing relationships involve setting up of special executive committees or boards that draw out the best strategies for smooth & effective handling of outsourcing relationship. Identification, resolution and rapid escalation of issues are a key responsibility of this team.
By developing a team of people, companies can always do strategic meetings on any plans, issues or to resolve conflicts.
4. Incentives and Penalties:
The provider is encouraged to meet or exceed customer expectations by establishing performance based pricing. When performance exceeds the criteria, the incentives apply and when they fall short, the penalties are imposed.
This will increase the understandings in payment, work commitments and help both sides in long run to understand the work code better.
5. Periodical review meetings:
For a successful Outsourcing relationship, it is better to have frequent formal review meetings. These meetings can discuss what both teams are working towards and a high level view of the future goals and objectives. Product reviews and deliverables can be discussed at such meetings.
Staying away from the client, without updating will lead to much frustration at the client side. Also if there is no periodical updates, chances are more to understand the client requirements which leads to deviation from the requirement and can be solved later only in a troublesome phase in both sides.
6. Training vendor personnel:
The vendor personnel need to have ongoing training so that they align their business goals to the business objectives of the customer. The issues driving the clients needs have to be understood and the vendors' service has to relate to them.
The training could be in management, technology or anything which can improve the client relationship.
7. Understanding the cultural differences:
This is one area where countries like India need to concentrate. As both parties to the outsourcing relationship will have their own culture, these differences have to be recognized and bridged. Organizing social events, education on company background, participation in others' quality programs, etc., are some of the ways to improve the cultural understandings and bridging this gap.
For more information Please click here
1. Keeping relationship between key management personnel:
If there is a good understanding and strong working relationship between the key management personnel of both teams, then such relationships often tends to last long. Research on outsourcing success has indicated that peer friendships and working methods with one's counterpart in the other company has been an important factor in long term relationships.
Also maintaining one point of contact will avoid confusions. Companies can keep one project manager per project or per client.
2. Well-defined criteria and Quantifiable objectives:
The objectives to be achieved by Outsourcing must quantifiable and must be established as criteria right at the start of the contract. If the customer can compare the performance with the pre-established objective, then the benefits of outsourcing would be clear. The vendor would know where they stand in meeting customer expectations.
Well-defined performance criteria have quantifiable objectives, service quantities, quality, and customer satisfaction and are measurable against other providers.
3. Developing special board of members:
Successful outsourcing relationships involve setting up of special executive committees or boards that draw out the best strategies for smooth & effective handling of outsourcing relationship. Identification, resolution and rapid escalation of issues are a key responsibility of this team.
By developing a team of people, companies can always do strategic meetings on any plans, issues or to resolve conflicts.
4. Incentives and Penalties:
The provider is encouraged to meet or exceed customer expectations by establishing performance based pricing. When performance exceeds the criteria, the incentives apply and when they fall short, the penalties are imposed.
This will increase the understandings in payment, work commitments and help both sides in long run to understand the work code better.
5. Periodical review meetings:
For a successful Outsourcing relationship, it is better to have frequent formal review meetings. These meetings can discuss what both teams are working towards and a high level view of the future goals and objectives. Product reviews and deliverables can be discussed at such meetings.
Staying away from the client, without updating will lead to much frustration at the client side. Also if there is no periodical updates, chances are more to understand the client requirements which leads to deviation from the requirement and can be solved later only in a troublesome phase in both sides.
6. Training vendor personnel:
The vendor personnel need to have ongoing training so that they align their business goals to the business objectives of the customer. The issues driving the clients needs have to be understood and the vendors' service has to relate to them.
The training could be in management, technology or anything which can improve the client relationship.
7. Understanding the cultural differences:
This is one area where countries like India need to concentrate. As both parties to the outsourcing relationship will have their own culture, these differences have to be recognized and bridged. Organizing social events, education on company background, participation in others' quality programs, etc., are some of the ways to improve the cultural understandings and bridging this gap.
For more information Please click here
Tuesday, December 12, 2006
Cost Effectiveness of IT Outsourcing
Outsourcing your IT can save your company money due to less down time, increase your companies performance due to more reliable and robust IT solutions, and give you superior overall service because they compete for your business.
Small businesses have been contracting computer consultants to fix their computers for many years. Usually this is because they have a small number of computers and hiring someone full time to maintain these small networks is not economical or efficient.
This article will focus on the three main benefits that companies experience when they choose to outsource their computer services through a third party. They may even employ or have employed their own IT staff in the past.
#1 Save Money & Time. Computer consultants are very cost effective, efficient and time saving, especially if you contract them on a retainer basis. A retainer is a prepaid service fee, usually paid monthly. This retainer service contract puts the consulting firm ??on call?? and no matter when, what, or how long it takes the firm to solve the problem they are legally and ethically bound to fix it so long as the services rendered are in the boundaries of the service contract. The more time the consultant spends the less per hour they make, intrinsically motivating them to be efficient. If your network is down and you are losing money by the minute, you will feel comforted to see this computer consultant firm onsite fixing the problem.
#2 Increased Company Performance. When hiring a computer consulting firm you are getting the combined experience of the whole firm plus all of their partners and resources. Even if your company has a full time IT person or two they may not have all the expertise needed to create the dependable robust IT solution needed to solve your problems. A consulting firm will complete the project with a more reliable and robust solution because their combined ability is greater. A more robust and reliable IT solution will boost your performance as a company.
#3 Professional Courtesy. A computer consulting firm is a different company than yours. Like you they are motivated to keep their clientele and expand their market share. Their reputation is the most important advertising tool they have. They compete against other IT firms, usually generating referrals to gain market share, a better reputation is worth its weight in gold. Thus they are naturally motivated to provide superior overall service to you.
In conclusion, Outsourcing your IT can save your company money due to less down time, increase your company’s performance due to more reliable and robust IT solutions, and give you superior overall service because they compete for your business.
For more information Please visit here
Small businesses have been contracting computer consultants to fix their computers for many years. Usually this is because they have a small number of computers and hiring someone full time to maintain these small networks is not economical or efficient.
This article will focus on the three main benefits that companies experience when they choose to outsource their computer services through a third party. They may even employ or have employed their own IT staff in the past.
#1 Save Money & Time. Computer consultants are very cost effective, efficient and time saving, especially if you contract them on a retainer basis. A retainer is a prepaid service fee, usually paid monthly. This retainer service contract puts the consulting firm ??on call?? and no matter when, what, or how long it takes the firm to solve the problem they are legally and ethically bound to fix it so long as the services rendered are in the boundaries of the service contract. The more time the consultant spends the less per hour they make, intrinsically motivating them to be efficient. If your network is down and you are losing money by the minute, you will feel comforted to see this computer consultant firm onsite fixing the problem.
#2 Increased Company Performance. When hiring a computer consulting firm you are getting the combined experience of the whole firm plus all of their partners and resources. Even if your company has a full time IT person or two they may not have all the expertise needed to create the dependable robust IT solution needed to solve your problems. A consulting firm will complete the project with a more reliable and robust solution because their combined ability is greater. A more robust and reliable IT solution will boost your performance as a company.
#3 Professional Courtesy. A computer consulting firm is a different company than yours. Like you they are motivated to keep their clientele and expand their market share. Their reputation is the most important advertising tool they have. They compete against other IT firms, usually generating referrals to gain market share, a better reputation is worth its weight in gold. Thus they are naturally motivated to provide superior overall service to you.
In conclusion, Outsourcing your IT can save your company money due to less down time, increase your company’s performance due to more reliable and robust IT solutions, and give you superior overall service because they compete for your business.
For more information Please visit here
Monday, December 11, 2006
TOP 10 REASONS TO OUTSOURCE
1. Accelerate Reengineering Benefits
Reengineering aims for dramatic improvements in critical measures of performance such as cost, quality, service and speed. But the need to increase efficiency can come into direct conflict with the need to invest in core business. As non-core internal functions are continually put on the back burner, systems become less efficient and less productive. By outsourcing a non-core function to a world class provider, the organization can begin to see the benefits of reengineering.
2. Access to World Class Capabilities
World class providers make extensive investments in technology, methodologies, and people. They gain expertise by working with many clients facing similar challenges. This combination of specialization and expertise gives customers a competitive advantage and helps them avoid the cost of chasing technology and training. In addition, there are better career opportunities for personnel who transition to the outsourcing provider.
3. Cash Infusion
Outsourcing often involves the transfer of assets from the customer to the provider. Equipment, facilities, vehicles and licenses used in the current operations have value and are sold to the vendor. The vendor then uses these assets to provide services back to the client. Depending on the value of the assets involved, this sale may result in a significant cash payment to the customer. When these assets are sold to the vendor, they are typically sold at book value. The book value can be higher than the market value. In these cases, the difference between the two actually represents a loan from the vendor to the client which is repaid in the price of the services over the life of the contract.
4. Free Resources for Other Purposes
Every organization has limits on the resources available to it. Outsourcing permits an organization to redirect its resources, most often people resources, from non core activities toward activities which serve the customer. The organization can redirect these people or at least the staff slots they represent onto greater value adding activities. People whose energies are currently focused internally can now be focused externally -- on the customer.
5. Function Difficult to Manage or Out of ControlOutsourcing is certainly one option for addressing this problem. It is critical to remember that outsourcing doesn't mean abdication of management responsibility nor does it work well as a knee jerk reaction by a company in trouble. When a function is viewed as difficult to manage or out of control, the organization needs to examine the underlying causes. If the requirements expectations or needed resources are not clearly understood, then outsourcing won't improve the situation; it may in fact exacerbate it. If the organization doesn't understand its own requirements, it won't be able to communicate them to an outside provider.
6. Improve Company FocusOutsourcing lets a company focus on its core business by having operational functions assumed by an outside expert. Freed from devoting energy to areas that are not in its expertise, the company can focus its resources on meeting its customers' needs.
7. Make Capital Funds Available
There is tremendous competition within most organizations for capital funds. Deciding where to invest these funds is one of the most important decisions that senior management makes. It is often hard to justify non-core capital investments when areas more directly related to producing a product or providing a service compete for the same money. Outsourcing can reduce the need to invest capital funds in non-core business functions. Instead of acquiring the resources through capital expenditures, they are contracted for on an "as used" operational expense basis. Outsourcing can also improve certain financial measurements of the firm by eliminating the need to show return on equity from capital investments in non core areas.
8. Reduce Operating Costs
Companies that try to do everything themselves may incur vastly higher research, development, marketing and deployment expenses, all of which are passed on to the customer. An outside provider's lower cost structure, which may be the result of a greater economy of scale or other advantage based on specialization, reduces a company's operating costs and increases its competitive advantage.
9. Reduce Risk
Tremendous risks are associated with the investments an organization makes. Markets, competition, government regulations, financial conditions and technologies all change extremely quickly. Keeping up with these changes, especially those in which the next generation requires a significant investment, is very risky. Outsourcing providers make investments on behalf of many clients, not just one. Shared investment spreads risk, and significantly reduces the risk born by a single company.
10. Resources not Available Internally
Companies outsource because they do not have access to the required resources within the company. Outsourcing is a viable alternative to building the needed capability from the ground. New organizations, spin-offs, or companies expanding into new geography or new technology should consider the benefits of outsourcing from the very start.
For details read here
Reengineering aims for dramatic improvements in critical measures of performance such as cost, quality, service and speed. But the need to increase efficiency can come into direct conflict with the need to invest in core business. As non-core internal functions are continually put on the back burner, systems become less efficient and less productive. By outsourcing a non-core function to a world class provider, the organization can begin to see the benefits of reengineering.
2. Access to World Class Capabilities
World class providers make extensive investments in technology, methodologies, and people. They gain expertise by working with many clients facing similar challenges. This combination of specialization and expertise gives customers a competitive advantage and helps them avoid the cost of chasing technology and training. In addition, there are better career opportunities for personnel who transition to the outsourcing provider.
3. Cash Infusion
Outsourcing often involves the transfer of assets from the customer to the provider. Equipment, facilities, vehicles and licenses used in the current operations have value and are sold to the vendor. The vendor then uses these assets to provide services back to the client. Depending on the value of the assets involved, this sale may result in a significant cash payment to the customer. When these assets are sold to the vendor, they are typically sold at book value. The book value can be higher than the market value. In these cases, the difference between the two actually represents a loan from the vendor to the client which is repaid in the price of the services over the life of the contract.
4. Free Resources for Other Purposes
Every organization has limits on the resources available to it. Outsourcing permits an organization to redirect its resources, most often people resources, from non core activities toward activities which serve the customer. The organization can redirect these people or at least the staff slots they represent onto greater value adding activities. People whose energies are currently focused internally can now be focused externally -- on the customer.
5. Function Difficult to Manage or Out of ControlOutsourcing is certainly one option for addressing this problem. It is critical to remember that outsourcing doesn't mean abdication of management responsibility nor does it work well as a knee jerk reaction by a company in trouble. When a function is viewed as difficult to manage or out of control, the organization needs to examine the underlying causes. If the requirements expectations or needed resources are not clearly understood, then outsourcing won't improve the situation; it may in fact exacerbate it. If the organization doesn't understand its own requirements, it won't be able to communicate them to an outside provider.
6. Improve Company FocusOutsourcing lets a company focus on its core business by having operational functions assumed by an outside expert. Freed from devoting energy to areas that are not in its expertise, the company can focus its resources on meeting its customers' needs.
7. Make Capital Funds Available
There is tremendous competition within most organizations for capital funds. Deciding where to invest these funds is one of the most important decisions that senior management makes. It is often hard to justify non-core capital investments when areas more directly related to producing a product or providing a service compete for the same money. Outsourcing can reduce the need to invest capital funds in non-core business functions. Instead of acquiring the resources through capital expenditures, they are contracted for on an "as used" operational expense basis. Outsourcing can also improve certain financial measurements of the firm by eliminating the need to show return on equity from capital investments in non core areas.
8. Reduce Operating Costs
Companies that try to do everything themselves may incur vastly higher research, development, marketing and deployment expenses, all of which are passed on to the customer. An outside provider's lower cost structure, which may be the result of a greater economy of scale or other advantage based on specialization, reduces a company's operating costs and increases its competitive advantage.
9. Reduce Risk
Tremendous risks are associated with the investments an organization makes. Markets, competition, government regulations, financial conditions and technologies all change extremely quickly. Keeping up with these changes, especially those in which the next generation requires a significant investment, is very risky. Outsourcing providers make investments on behalf of many clients, not just one. Shared investment spreads risk, and significantly reduces the risk born by a single company.
10. Resources not Available Internally
Companies outsource because they do not have access to the required resources within the company. Outsourcing is a viable alternative to building the needed capability from the ground. New organizations, spin-offs, or companies expanding into new geography or new technology should consider the benefits of outsourcing from the very start.
For details read here
Saturday, December 09, 2006
Requirements Management in Outsourcing Projects
Incomplete, vague or inaccurate requirements are often the cause of failed software projects. Outsourcing can compound this problem if the project scope isn't carefully managed. However, the right tools and processes can dramatically improve your chances of success.
Requirements form the basis of any project, whether in the form of specifications, use cases, statements of need, or just "wish lists" from the marketing department. The requirements define the problem to be solved and the solution to be provided. If the initial problem isn't analyzed carefully so that it can be described unambiguously, then you may find that the delivered solution doesn't actually perform the required task.
User Requirements
So, the first phase of requirements analysis -- that of the user (or stakeholder) requirements -- is almost invariably performed in-house. This phase defines the goals that the system must achieve. For example, "The customer shall be able to determine their account balance within two minutes of initiating contact with the online banking system." The "user" in user requirements isn't necessarily a person; it may be another system, whether software or hardware.
The second phase of requirements analysis -- that of system requirements or system specification -- involves analysis of the user requirements and proposal of a solution. In other words, the system requirements specify, from the user's point of view, how the user requirements will be satisfied. This need not require a detailed design, but should describe how the user of the system can achieve their goal. For example, "The first page displayed to the customer after login shall include all account balances."
Producing system requirements from user requirements often involves a process of clarification of the user requirements together with modeling of prospective solutions. For a project that is to be outsourced, this process could be part of the negotiations with the service provider, but will still require a great deal of input and review by your in-house team. Misunderstandings due to the Outsourcing partner's lack of experience in the problem domain are common at this stage.
A better solution would be to have the in-house team develop the system specification. If the requirements are well-written, then the scope for misunderstanding can be reduced, though it's inevitable that queries will arise throughout the project. You'll need to have someone with technical knowledge available to field these questions, preferably someone who was involved in the analysis that led to the system requirements. For a fairly small-scale software project lasting six months and employing an offshore team of about 10 people, we found dealing with technical queries required about 20% of an in-house senior engineer's time.
The requirements for an outsourced project should also include any implicit requirements, such as conformance to company standard user interface standards. Such standards may be informal when development is performed by a single team; they must be made explicit for an external partner.
Managing System Requirements
The development of the system specification is crucial. Fortunately, a few simple rules can help ensure that the system requirements are complete and correct.
First, each system requirement should be associated with some user requirement. Often any uncertainty about the meaning of a system requirement can be clarified by referring to the original problem the system requirement was intended to solve. You may discover that you need some clarification of the user requirements at this stage.
Second, each requirement should be testable. Naturally, you should require your service provider to perform testing, but you should also develop your own acceptance tests. Your tests should be linked to the system requirements they verify, so that you can ensure the testing covers all requirements. Development of these tests should begin as soon as the system requirements have been approved, although details may have to wait until the design stage. The tests you develop can be a valuable tool for clarifying your intentions about the use of the system.
Finally, each requirement should be feasible. Development of the system requirements will generally include modeling of potential solutions, whether in a formal UML tool or on a whiteboard in the engineers' lab. If possible, these models should be shared with your Outsourcing partner, even if they don't turn out to be the basis for the eventual design. They will provide a common framework for the discussion of the system's behavior.
The final system requirements should be reviewed by as many people as possible in your marketing, engineering and test departments. Reviewers should check that the requirements are clear, testable and feasible; that they satisfy the user requirements; and that they're coherent when taken as a whole.
Plan for Change
No matter how much effort you put into the user and system requirements, it's almost inevitable that changes will be necessary after development has begun. The process of design development may reveal subtle inconsistencies in the user or system requirements, or there may be good technical reasons why a system requirement can't be satisfied. On the other side, acceptance test development may reveal an omission in the specification, or marketing requirements may change because of external factors, such as the release of a new product or platform.
However, if you're prepared for such changes, they can be managed to cause the minimum disruption to your schedule. The key to this preparation is ensuring you can trace the impact of any given change.
Before development begins, you should baseline the user and system requirements so that you can easily identify any introduced changes. You should also have completed the process of creating links between the system and user requirements; as acceptance test development proceeds, these should be linked to the system requirements as well.
You can even take this one step further. If you include design documents in your deliverables, you can link elements of the design to the system requirements they're intended to implement. This is particularly valuable for GUI design, as you should be able to check easily which system requirements aren't covered.
When changes do occur, you can judge the impact of the change by following the links. For example, if a user requirement changes, you can check to see what changes are necessary to the associated system requirements, tests and design. Similarly, if the design changes, you can verify that the new design still satisfies the original requirement or determine if the system requirement also needs to be modified.
With careful system specification, regular feedback of design information and ongoing management of changes, you can ensure that the results of your Outsourcing project will meet your needs.
Requirements form the basis of any project, whether in the form of specifications, use cases, statements of need, or just "wish lists" from the marketing department. The requirements define the problem to be solved and the solution to be provided. If the initial problem isn't analyzed carefully so that it can be described unambiguously, then you may find that the delivered solution doesn't actually perform the required task.
User Requirements
So, the first phase of requirements analysis -- that of the user (or stakeholder) requirements -- is almost invariably performed in-house. This phase defines the goals that the system must achieve. For example, "The customer shall be able to determine their account balance within two minutes of initiating contact with the online banking system." The "user" in user requirements isn't necessarily a person; it may be another system, whether software or hardware.
The second phase of requirements analysis -- that of system requirements or system specification -- involves analysis of the user requirements and proposal of a solution. In other words, the system requirements specify, from the user's point of view, how the user requirements will be satisfied. This need not require a detailed design, but should describe how the user of the system can achieve their goal. For example, "The first page displayed to the customer after login shall include all account balances."
Producing system requirements from user requirements often involves a process of clarification of the user requirements together with modeling of prospective solutions. For a project that is to be outsourced, this process could be part of the negotiations with the service provider, but will still require a great deal of input and review by your in-house team. Misunderstandings due to the Outsourcing partner's lack of experience in the problem domain are common at this stage.
A better solution would be to have the in-house team develop the system specification. If the requirements are well-written, then the scope for misunderstanding can be reduced, though it's inevitable that queries will arise throughout the project. You'll need to have someone with technical knowledge available to field these questions, preferably someone who was involved in the analysis that led to the system requirements. For a fairly small-scale software project lasting six months and employing an offshore team of about 10 people, we found dealing with technical queries required about 20% of an in-house senior engineer's time.
The requirements for an outsourced project should also include any implicit requirements, such as conformance to company standard user interface standards. Such standards may be informal when development is performed by a single team; they must be made explicit for an external partner.
Managing System Requirements
The development of the system specification is crucial. Fortunately, a few simple rules can help ensure that the system requirements are complete and correct.
First, each system requirement should be associated with some user requirement. Often any uncertainty about the meaning of a system requirement can be clarified by referring to the original problem the system requirement was intended to solve. You may discover that you need some clarification of the user requirements at this stage.
Second, each requirement should be testable. Naturally, you should require your service provider to perform testing, but you should also develop your own acceptance tests. Your tests should be linked to the system requirements they verify, so that you can ensure the testing covers all requirements. Development of these tests should begin as soon as the system requirements have been approved, although details may have to wait until the design stage. The tests you develop can be a valuable tool for clarifying your intentions about the use of the system.
Finally, each requirement should be feasible. Development of the system requirements will generally include modeling of potential solutions, whether in a formal UML tool or on a whiteboard in the engineers' lab. If possible, these models should be shared with your Outsourcing partner, even if they don't turn out to be the basis for the eventual design. They will provide a common framework for the discussion of the system's behavior.
The final system requirements should be reviewed by as many people as possible in your marketing, engineering and test departments. Reviewers should check that the requirements are clear, testable and feasible; that they satisfy the user requirements; and that they're coherent when taken as a whole.
Plan for Change
No matter how much effort you put into the user and system requirements, it's almost inevitable that changes will be necessary after development has begun. The process of design development may reveal subtle inconsistencies in the user or system requirements, or there may be good technical reasons why a system requirement can't be satisfied. On the other side, acceptance test development may reveal an omission in the specification, or marketing requirements may change because of external factors, such as the release of a new product or platform.
However, if you're prepared for such changes, they can be managed to cause the minimum disruption to your schedule. The key to this preparation is ensuring you can trace the impact of any given change.
Before development begins, you should baseline the user and system requirements so that you can easily identify any introduced changes. You should also have completed the process of creating links between the system and user requirements; as acceptance test development proceeds, these should be linked to the system requirements as well.
You can even take this one step further. If you include design documents in your deliverables, you can link elements of the design to the system requirements they're intended to implement. This is particularly valuable for GUI design, as you should be able to check easily which system requirements aren't covered.
When changes do occur, you can judge the impact of the change by following the links. For example, if a user requirement changes, you can check to see what changes are necessary to the associated system requirements, tests and design. Similarly, if the design changes, you can verify that the new design still satisfies the original requirement or determine if the system requirement also needs to be modified.
With careful system specification, regular feedback of design information and ongoing management of changes, you can ensure that the results of your Outsourcing project will meet your needs.
Friday, December 08, 2006
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 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.
For more information Please click here
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 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.
For more information Please click here
Wednesday, December 06, 2006
Is It Worth to Outsource?
Recent trends in software development market show that it is no longer the most efficient way to work onshore. Competition is too high and in some particular cases, US or European IT people even go farming rather than admit the situation and adapt them. This article is mainly for those who are going to stay straight in the industry whatever surprises it keeps bringing.
International division of labor has done its work. So nowadays, if you ask anybody about the regions he associates with IT-industry, you’ll get quite a short list: India, China, Russia, and Eastern Europe. No wonder, historically these regions had the most efficient technically oriented education. In addition to lower cost of labor in the East, that is their main selling point, which determines their competitive strength.
As a logical sequence, almost each leading company engaged in IT sphere, whether publicly or secretly, outsources a part of its current work to third parties, often offshore. No wonder that Indian and other offshore software development companies prosper.
So what are the key factors that make companies outsource?
•Cost of labor is often several times less than onshore.
•There is no need to maintain the whole technical infrastructure
•Company can concentrate mainly on marketing tasks
Although that sounds good and promises several times bigger profits, incautious Outsourcing can be a trap for any company. Don’t forget that you entrust your reputation to a company that is thousands miles away. Hence, if you have made a decision to outsource a part or the whole project to some company, you should take into consideration five simple tips.
Make proper research
The simplest way to find offshore software development companies is to try search engine or relative online directories. However, there is no guarantee that under inspirational promises any website has, you won’t find cheaters. Spend several hours and try to find the most info about the companies you have selected. Search engines should be your best friend in these efforts.
Consult alliances and associations
Almost each country where IT industry is well developed has national alliances of software development companies. These pools of developers can become your first step in search for an outsourcing company.
Communicate carefully
When you have decided to contact several, as you think, most reliable companies, you shouldn’t provide them with complete info regarding your project at once. Keep a little intrigue and give the info partially. That will make you aware about professionalism of companies’ project managers as well as about their communication policy. Communication is what you will appreciate during the whole project’s development. Therefore, it is better to find out whether they are communicative enough before you sign the contract.
Ask for references/samples
Although offshore developers cannot disclosure their recent contracts, anyway, they have several clients that can provide you with references whether they are bad or good. If there are no references at all, ask for some software the company has developed. See and try each example of their work you can. That will make you aware about the quality of their services.
Phone or visit them
The best way to test the company, which you would like to outsource to, is contact them directly. Emails are good, but you can find out more info about the possible partners if you phone them. At least you will know about their command of English (don’t forget, you are going to outsource abroad) and their real interest. Additionally, you can make them relax a little, so they will be less defended against your research of true situation. If you visit them personally you’ll see exactly who and where will work for you. At least, if the company doesn’t mind you visit them, that can mean that they are open enough for collaboration and they have provided you with more or less true info.
If you can do at least three of these five steps, there will be little chances for you to be cheated by an unreliable company thousands miles away. You’ll be able to experience that kind of wise outsourcing that can give you required competitive ability. Each time you are going to give some project for offshore development, take into account that you should be an initiator and wise decisions maker. Research, consult, and communicate. That’s the motto of any company that is successful in Outsourcing. It’s not too complicated, is it?
For more information Please visit here
International division of labor has done its work. So nowadays, if you ask anybody about the regions he associates with IT-industry, you’ll get quite a short list: India, China, Russia, and Eastern Europe. No wonder, historically these regions had the most efficient technically oriented education. In addition to lower cost of labor in the East, that is their main selling point, which determines their competitive strength.
As a logical sequence, almost each leading company engaged in IT sphere, whether publicly or secretly, outsources a part of its current work to third parties, often offshore. No wonder that Indian and other offshore software development companies prosper.
So what are the key factors that make companies outsource?
•Cost of labor is often several times less than onshore.
•There is no need to maintain the whole technical infrastructure
•Company can concentrate mainly on marketing tasks
Although that sounds good and promises several times bigger profits, incautious Outsourcing can be a trap for any company. Don’t forget that you entrust your reputation to a company that is thousands miles away. Hence, if you have made a decision to outsource a part or the whole project to some company, you should take into consideration five simple tips.
Make proper research
The simplest way to find offshore software development companies is to try search engine or relative online directories. However, there is no guarantee that under inspirational promises any website has, you won’t find cheaters. Spend several hours and try to find the most info about the companies you have selected. Search engines should be your best friend in these efforts.
Consult alliances and associations
Almost each country where IT industry is well developed has national alliances of software development companies. These pools of developers can become your first step in search for an outsourcing company.
Communicate carefully
When you have decided to contact several, as you think, most reliable companies, you shouldn’t provide them with complete info regarding your project at once. Keep a little intrigue and give the info partially. That will make you aware about professionalism of companies’ project managers as well as about their communication policy. Communication is what you will appreciate during the whole project’s development. Therefore, it is better to find out whether they are communicative enough before you sign the contract.
Ask for references/samples
Although offshore developers cannot disclosure their recent contracts, anyway, they have several clients that can provide you with references whether they are bad or good. If there are no references at all, ask for some software the company has developed. See and try each example of their work you can. That will make you aware about the quality of their services.
Phone or visit them
The best way to test the company, which you would like to outsource to, is contact them directly. Emails are good, but you can find out more info about the possible partners if you phone them. At least you will know about their command of English (don’t forget, you are going to outsource abroad) and their real interest. Additionally, you can make them relax a little, so they will be less defended against your research of true situation. If you visit them personally you’ll see exactly who and where will work for you. At least, if the company doesn’t mind you visit them, that can mean that they are open enough for collaboration and they have provided you with more or less true info.
If you can do at least three of these five steps, there will be little chances for you to be cheated by an unreliable company thousands miles away. You’ll be able to experience that kind of wise outsourcing that can give you required competitive ability. Each time you are going to give some project for offshore development, take into account that you should be an initiator and wise decisions maker. Research, consult, and communicate. That’s the motto of any company that is successful in Outsourcing. It’s not too complicated, is it?
For more information Please visit here
Tuesday, December 05, 2006
Advantages of Outsourcing
This article points out some advantages of outsourcing, not just in a context of IT but in general context as well. Economist Simon Domberger published a study in 1998 called "The Contracting Organization" in which he published the results of his study of various organizations.
According to this study, the following are the benefits of Outsourcing:
Specialization
If an organization focuses its attention on the activities at which it is very good and efficient, the value that it can add is maximized and it benefits from the economies of scale as well.
This can be seen in organizations like Nike or Nokia or iPod which focuses just on product design and outsourcers all its manufacturing activities elsewhere.
Market Discipline
When an organization contracts out the delivery, support or maintenance of its product of service, the focus shifts to right place i.e. Customers, Competitors and Markets. Thus it becomes better at spotting trends and responds to changing market conditions.
With outsourcing, the company starts to focus on outputs and not inputs and that leads to process innovations and reengineering to deliver maximum customer value.
Flexibility
As an organization works with a network of vendors it will find it easier to add or change vendor organization in response to market demand. This leads to huge financial benefits.
It is always more difficult jettisoning an in-house department than stop working with a vendor organization, when the demand for goods and services are no longer there. Similarly, in a short-run an organization cannot build up a department immediately for a new product or services.
Cost Savings
Of course, outsourcing delivers significant cost savings in comparison to delivering the product or service in-house. This is because of two main factors
1) Specialization in vendor's organization:
A specialized vendor passed on its benefits of engineering processes and economies to scale to your organization which results in cost savings
2) Low Cost labor:
An organization can benefits from access to low cost labors in other countries such as India.
More and more customer wants a single point to manage all their IT requirements and saying a "no" means loosing an account forever. In such a scenario outsourcing what you cannot do yourself is matter of survival.
Here is a summarized list of reasons why you might consider outsourcing as a strategy for your business:
1. You can get access to product or services that you cannot produce internally
2. You can get access to more skills / expertise
3. You use your in-house staff in more profitable ways
4. You can match any increase or decrease in demand more effectively
5. You can concentrate on your core, most crucial businesses
6. Allow and encourage more efficient work practices
7. Penalize non performance at contract level agreements
8. Reduce cost of operations
9. Improve cash flow in your organization
10. Improve the flexibility of your business
Thus, there is more to Outsourcing then just saving money. When you start looking at the bigger picture, you realize that outsourcing as a strategy is crucial to compete effectively in the future.
For more information please visit here
According to this study, the following are the benefits of Outsourcing:
Specialization
If an organization focuses its attention on the activities at which it is very good and efficient, the value that it can add is maximized and it benefits from the economies of scale as well.
This can be seen in organizations like Nike or Nokia or iPod which focuses just on product design and outsourcers all its manufacturing activities elsewhere.
Market Discipline
When an organization contracts out the delivery, support or maintenance of its product of service, the focus shifts to right place i.e. Customers, Competitors and Markets. Thus it becomes better at spotting trends and responds to changing market conditions.
With outsourcing, the company starts to focus on outputs and not inputs and that leads to process innovations and reengineering to deliver maximum customer value.
Flexibility
As an organization works with a network of vendors it will find it easier to add or change vendor organization in response to market demand. This leads to huge financial benefits.
It is always more difficult jettisoning an in-house department than stop working with a vendor organization, when the demand for goods and services are no longer there. Similarly, in a short-run an organization cannot build up a department immediately for a new product or services.
Cost Savings
Of course, outsourcing delivers significant cost savings in comparison to delivering the product or service in-house. This is because of two main factors
1) Specialization in vendor's organization:
A specialized vendor passed on its benefits of engineering processes and economies to scale to your organization which results in cost savings
2) Low Cost labor:
An organization can benefits from access to low cost labors in other countries such as India.
More and more customer wants a single point to manage all their IT requirements and saying a "no" means loosing an account forever. In such a scenario outsourcing what you cannot do yourself is matter of survival.
Here is a summarized list of reasons why you might consider outsourcing as a strategy for your business:
1. You can get access to product or services that you cannot produce internally
2. You can get access to more skills / expertise
3. You use your in-house staff in more profitable ways
4. You can match any increase or decrease in demand more effectively
5. You can concentrate on your core, most crucial businesses
6. Allow and encourage more efficient work practices
7. Penalize non performance at contract level agreements
8. Reduce cost of operations
9. Improve cash flow in your organization
10. Improve the flexibility of your business
Thus, there is more to Outsourcing then just saving money. When you start looking at the bigger picture, you realize that outsourcing as a strategy is crucial to compete effectively in the future.
For more information please visit here
Monday, December 04, 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.) Review 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.
For more information please visit here
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.) Review 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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