Offshore Outsourcing

Over the last several years outsourcing has become not only a large company and service provider resource but something that is also available to midsize, small and one-person businesses all over the globe.

We are seeing huge gains in all areas - the number and variety of outsourced tasks is increasing, the number of industries and geographic areas that are participaitng is on the rise, and the size of businesses that outsource is expanding. From the 1-person business to mega-corporations in North America, Europe and Asia offshoring is available to anyone willing to invest the time and energy. Outsourcing has arrived and is here to stay - but there are "cons" and issues to consider before outsourcing.

Global Outsourcing: What to consider

For companies of any size, the logistics and management of outsourcing process has become key. You need effective management of your outsourcing providers as well as strategy for effective and ongoing evaluation of results. You will need to review contracts and outcomes every 2-3 years, more frequently in the early stages.

Do not plan on simply outsourcing tasks and then forgetting about them.

Without a long-term strategy for managing your outsourcers and your intellectual property, you may find that outsourcing does not meet your expectations. Do you have someone on staff who is familiar with the process of managing offshore partners? Are you willing to keep someone on staff who has a deep enough knowledge of the outsourced tasks so that effective management and oversight can occur?

We will cover all of the above topics in greater detail, but for now, consider what your core business competencies are. How you can leverage those competencies with offshore outsourcing - while at the same time having clear managable objectives in tasks that you outsource?

And, as you may already know, outsourcing is not simply about jobs saved (or lost) but also the overall cost-benefit and the advantages for your company - perhaps even your entire industry. Try being an IT company without a defined relationship with a foreign outsourcer. These days, many of your clients will not take you seriously without one!

Outsourcing Functions and Processes

Outsourcing is currently falling into major groupings, including; call center outsourcing, business process outsourcing or BPO, IT outsourcing or information technology outsourcing, payroll outsourcing, HR or human resource outsourcing, receivables, accounting, finance outsourcing, and software/appplication development outsourcing.

Let's take each outsourcing topic in turn.

Call center outsourcing

Perhaps you've called your credit card company and noticed an accent that sounded different than your own? Was the call center in Utah, Idaho or Bangalore? Actually, it might be in all three areas - Utah and Idaho in the morning and routed to India in the evening.

Call center outsourcing is not just for big corportaions. Small, midsized businesses and even the 1-person business can outsource customer service, telemarketing and tech-support.

Call center (customer service, tech support, telemarketing) was one of the first major offshore areas, with roots in internal outsourcing (for instance - U.S. companies outsourcing to low-cost states in the U.S.). It bears looking into.

Business Process Outsourcing

Business process outsourcing (BPO) is contracting specific business tasks to a service provider. PBO includes "back office tasks" such as payroll, accounts receivable and increasingly "front office" task such as tech support and customer service or collections. BPO is a large area and requires much detail to understand. See: Review of Business Process Outsourcing (BPO).

Payroll Outsourcing

Payroll can be a major headache, especially for small businesses who often do not have the money for dedicated staff. In addition to handing out payroll checks you need to keep accurate records, calculate and pay payroll taxes, and stay abreast of labor law changes.

Many small and midsize businesses are finding that they can simplify the process by using an outsourced payroll provider to manage the cost-effectively.

Human Resources and Benefit Outsourcing

From 401(k) admin to employee assistance and temporary staffing and benefits admin: HR outsourcing has come of age (with some headaches) for both small, midsize and large companies.

HR data entry, data tracking, and data information needs can all be offshored. HR outsourcing can provide an integrated and cost effective approach to the management and administration of human resources. It's a complex subject. Take some time to understand HR and benefit outsourcing.

Recievables and Accounting Outsourcing

Bookkeeping, Accounts Receivables, Accounts Payables, Tax Returns, and Account reconciliations?

For many companies, outsourcing these functions can have a major impact on the bottom line. If you have an in-house department with high costs or that is missing certain key-competencies, you may want to bolster your company with an outsourcing company that can complete these tasks for you.

A great deal of time and energy can be saved. Offshore accounting teams include board certified accountants and CPA's with knowledge of international finance processes and procedures. Many offshore companies are qualified to help with GAAP, FASB, and GAS and many other specialties that you may need.

As I warned above though, it is critical to understand the function that you are outsourcing and have someone on-staff who can manage the process and ask the right questions.

Information Technology (IT) Outsourcing

Regardless of the potential benefits of IT outsourcing, it is an area offshoring that needs a great deal of thought and analysis before jumping into. To be blunt, many small and midsize companies mess it up the first time (which isn't to say that the fortune 500 haven't messed up from time to time, as well).

Before beginning IT outsourcing it is important to get an idea of best practices and to see what others in your industry have gotten right:
Outsourcing IT

Outsourcing Software Development

When outsourcing software and application development you need to have a clear understanding of the entire development process.

Software development has been outsourced for over a decade now, so there are plenty of best-practice tips on what to do and what to avoid.

For instance, one key mistake made by companies is outsourcing both testing and development to the same vendor. Each function should be sourced to a different company. Do you see why? More on outsourcing software development and best practices.

Cost, Benefits and Location

Outsourcing is all over the globe now. Do you care whether your offshore contractors are in China, India, Slovakia or Brazil?

You must assess outsourcing's practical and strategic benefits as well as possible disadvantages. Outsourcing Cost, Benefits and Location