How is outsourcing going to benefit my company?
In today's rapidly expanding, and increasingly complex, world of business a new trend has emerged in order to combat the growing demands which are placed on a company's resources. Now more than ever, many business, both small and large, are turning to outsourcing as a means of creating a more streamlined and efficient work place. In a recent industry study it was estimated that approximately 75 per cent of organizations expect to consider, or employ, outsourcing within the next three to five years.But, one might ask, what is outsourcing?
Outsourcing, put in its simplest terms, is using another company or consultant (one who sells their services or knowledge for a fee) with specific expertise to run a particular business function. More broadly put, outsourcing can be viewed as the provision of services, through an outside agreement with a specific range of scope. Organizations can benefit by cost reductions and the leverage of expertise with the scalability to adjust when necessary.
This can allow for, internally, reduced costs by redistributing cumbersome or resource (be they human or financial) draining services. In addition to faster access to current technology and resources not available internally or which are difficult to manage in-house, there can be an improved customer service level, and a greater flexibility of operations. Regardless of whether outsourcing is employed in the short or long term, it is becoming an acceptable part of business practice as a management tool and as an infusion of impartiality.
Traditionally, outsourcing was reserved for information technology services. However, due to its effectiveness, outsourcing has become a valuable commodity in a broad range of activities including centralized call centers, finance, logistics and almost any activity provided by suppliers in this competitive marketplace. It has even found application in human resource administration and customer care. Despite the diversification of outsourcing, not all activities are suitable candidates for such a service. For example, an activity that is unique to a company is not, typically, a viable option for outsourcing. As a result, there are several important considerations when determining what services could make the best use of being outsourced:
1. If the service is routine, even if it is highly critical or technical.
2. If the service can be easily separated from the organization's existing structure and process.
3. If the service is measurable and manageable at arm's length.
4. If the service is readily provided by consultants in a competitive marketplace in order to ensure that other options are available should the original supplier fail to meet required specifications.
When deciding upon a consultant to perform the outsourcing task at hand it is important to determine the best consultant for your specific needs. This can be done by word of mouth and by hiring a known consultant who has performed similar tasks in the past, by advertising, or by direct contact with the firms that provide the services needed. Given the need for a consultant, it is useful to consider that there are, essentially, two general approaches which consultants take. The first is a knowledge approach where the consultant would work for you, but not with you. This approach is most suitable for straightforward, technical, jobs, and where the task is to be performed as quickly as possible. The second approach is a people approach where the consultant works with you as well as for you. This second approach is best for a task where the company, and its employees, have something to learn, and can be trained to do the work once the appropriate research has occurred. Once a consultant has been found that best meets your company's needs, in order to ensure a successful outsourcing relationship, it is important that each party should understand their respective responsibilities, obligations, and the service level to be provided. It is also wise to implement a monitoring process so to ensure that a quality service is provided to both you and your customers which are to be affected by the outsourcing. In this way it is possible to reduce potential misunderstandings and ensure that the potential gains from outsourcing are maximized.
In considering outsourcing as an option, remember that it can be an invaluable tool for any business, small or large, which wishes to secure specialized and expert service in certain areas of resource management which can provide an organization an enormous competitive advantage in today's marketplace.