Advantages Disadvantages of Outsourcing | How to select a Outsourcing Company | How to get Best Outsourcing Services in India

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FAQ

1.What is Outsourcing?
2.What are the benefits of outsourcing?
3.How do I deal with potentially negative perceptions of offshore outsourcing?
4.What kinds of processes can my business outsource?
5.Where can I Outsource?
6.I am looking for a supplier/vendor/provider
7.I need to know how outsourcing transactions are priced.
8.Our company wants to outsource a particular process.What are the first steps?
9.If the relationship is not working well for either or both parties, can the outsourcing contract be renegotiated; and, if so, when?
10.Are there privacy or compliance problems with outsourcing?
11.Should my company start slowly by outsourcing one process at a time, or go for a full outsource relationship that covers multiple projects?
12.Will my business have to give up too much control?
13.What is the best length for an outsourcing contract?
14.How can we build flexibility into our outsourcing agreement?
15.What is a SLA?
16.Why is outsourcing sometimes not successful?

1.What is Outsourcing?
Ans:
- Outsourcing can be simply termed as a passing over of services or production to another internal or external party.
- Outsourcing is subcontracting a process.
- Outsourcing also refers to a company that contract with another company which is located at different location to provide services that otherwise might have been performed by in-house employees.
- Outsourcing of work means freedom from resource and labor intensive functions and secondly which are available by trained personnel at much lower costs.
- Outsourcing takes place when an organization transfers the ownership of a business process to a supplier.
- Outsourcing is a task involving a two way exchange of information, trust and business co-ordination between the outsourcer and its client.
- Outsourcing is the second name for convenience and at the same time for risk also without proper guidance.

2. What are the benefits of outsourcing?
Ans: The benefits of outsourcing are wide and varied and at the same time they are specific to individual needs. They are...

    * The capability of concentrating on the businesses own core functions increases
    * Make faster deliveries to your customers
    * Save money in every aspects of your businesses and increase profit
    * New projects can be taken on hand easily and quicker.
    * The labor costs will be reduced to minimum
    * Your Executive team will be free from day-to-day process problems
    * Man-Power and Training costs will be saved
    * The ongoing internal infrastructure investment will be reduced
    * The overall management burden will be reduced and the control over the project will be retained
    * The quality of services provided will be increased
    * The resources could be free for another purposes and tasks
    * Dependency upon internal resources will be reduced
    * New Market could be accessed easily through the supplier’s network
    * The Efficiency of your business will be increased
    * Customers Satisfaction will be Increased
    * Your Business will get a competitive edge

After having all this benefits by outsourcing your business one could say that

“The Benefits of Outsourcing Go Beyond Pricing.”

3. How do I deal with potentially negative perceptions of offshore outsourcing?
Ans: “Every coin has two sides” Same is with Outsourcing, when outsourcing process offshore, your colleagues and stakeholders may challenge your plans because of legitimate concerns and misperceptions about outsourcing. You must make them understand the following points:

    * Make them sure you are moving offshore for a well and reliable business reason.
    * Make a “Why to outsource offshore ?” presentation early in the offshore implementation process and highlight the business reasons for offshore outsourcing.
    * You must prepare a realistic mechanism for them to participate in the offshore process. Listen carefully to what your colleagues and stakeholders have to say.
    * On a regular basis, report your progress, update your business case and highlight both the successes and challenges you have experienced while outsourcing.

4. What kinds of processes can my business outsource?
Ans: This is just the starting of the list…
•Web Development Solutions
•Web Application Development
•Custom Software Development
•Website design and Development
•Website security
•Website maintenance
•E-learning Solutions
•Real Estate Software Development
•Software Development & maintenance
•BPO
•KPO
•CMS
•Call Center Services
•Human Resource Solutions
•Ecommerce & Oscommerce Solutions
•Transcription Services
•Sales & Marketing Software Solutions
•SEO for website
And Many More Processes Can Be Outsourced…..

5. Where can I Outsource?
Ans: Try Out India… Same as Microsoft, Intel, IBM, Cisco, Yahoo, Amazon, Google, GE, Reuters, HP, Dell and Oracle did !

6.I am looking for a supplier/vendor/provider.
Ans: When you are searching for a right provider, you may want to consider a provider’s amount of experience and expertise, track record serving other companies and the service-level agreements in the contracts. But If you are new in outsourcing business and are not aware of selecting a right provider according to your needs, its best to get assistance from a consulting firm as you will not be aware of the local market also and the consultants will negotiate with the local providers for you and will be there at every point in the lifetime of the project.

7. I need to know how outsourcing transactions are priced.
Ans: Outsourcing transactions are priced according to the requirements of the project to be outsourced. It can be categorized as follows:
(1)    Cost Plus:
Advantage for supplier:
It pays the supplier for its actual costs, plus a predetermined profit percentage.
Advantage for buyer:
This will allow a little flexibility when business objectives and technology change during the life of the contract, nor does it gives any incentive for the supplier to perform more effectively.
(2)    Unit pricing:
Advantage for Supplier
Unit pricing is a fixed rate determined by the supplier for a particular level of services.
Advantage for Buyer
In the Unit Pricing the client pays based on its usage only.
(3)    Fixed Price:
Advantage for Supplier
In this approach a fixed amount of money is paid for supplier’s services but if the buyer has not adequately defined what all services he wants then the supplier will charge additional sum of money for that extra services which supplier demands in future.
Advantage for Buyer
This is found to be the best option for buyers who exactly know what they want from their suppliers and can exactly determine what will be their supplier’s price in future.
(4)    Variable Pricing:
Advantage for Supplier:
This involves a fixed price at the low end of the supplier’s service but has variances based on higher service levels.
Advantage for Buyer:
Buyer can gain benefit by this if he adequately defines scope of the process perfectly.
So accordingly the buyer will be selecting the pricing model that best fits the business objectives the buyer is trying to accomplish by outsourcing.

8. Our company wants to outsource a particular process. What are the first steps?
Ans: The first step towards outsourcing will be gain basic knowledge about outsourcing and how you could use it to work successfully and effectively.
We strongly advise outsourcing customers not to ask for any kind of presentations from suppliers as they might misguide you and your needs. It’s best to first discuss everything with a consulting firm to help you define and understand what you are really wanting from the suppliers. The consultants would be aware of the local prices of the work so they could negotiate effectively with the suppliers for you and hence will reduce the overall cost. The consultants would also cut down the amount of time you would require in the procurement process.

9.If the relationship is not working well for either or both parties, can the outsourcing contract be renegotiated; and, if so, when?
Ans:Yes it can be renegotiated. To renegotiate the contract it is the best time during the procurement phase.

10. Are there privacy or compliance problems with outsourcing?
Ans: Whenever you give your personal or sensitive information to the providers, another security risk is added. To avoid any kind of risk of leakage of personal or sensitive data you should follow the safety measures, as follows:
•Does your provider have sufficient network and data security devices, software and policies in place?
•Is the provider involved in a data-compromise situation, and if yes, does he placed new process to ensure it doesn’t happen again?
•How many of the providers staff will have access to your data and what security levels are kept by the provider to ensure no misuse or leakage of data is done by the staff?
•Does your provider have a sufficient backup system in place?
•The companies who have used the provider’s services are satisfied?

11. Should my company start slowly by outsourcing one process at a time, or go for a full outsource relationship that covers multiple projects?
Ans: Yes you can start outsourcing all your process at a time by selecting a proper provider which can serve all your needs at a time and can offer you many benefits. The provider will thoroughly understand all your needs and will act accordingly to give you the best results. Having one provider on a large account also allows both companies to collaborate and coordinate more efficiently. You will also notice a great cost savings.

12. Will my business have to give up too much control?
Ans: For this concern you must be having a strong relationship with the provider, so that you can explain all your needs to him thoroughly. You must keep good communication with the provider so if something is not done according to your wish you can immediately let him know about it. All of your company’s stakeholders should be involved to some extent in this communication process so that everyone’s needs are met and everything goes according to your wish only.

13. What is the best length for an outsourcing contract?
Ans: The Outsourcing industry is talking about the rising necessity of making outsourcing deals more flexible. Every one doing or wishing to outsource considers that flexibility in the contract of outsourcing should be achieved in such a way that it does not affect the security levels. Because of the security concerns of all different types of parties involved in outsourcing there ways of concern are different.

14. How can we build flexibility into our outsourcing agreement?
Ans: Currently growing and changing business environment, flexibility has become a basic necessity in the outsourcing agreements. The reason for the failure of an outsourcing deal is the lack of flexibility in the outsourcing agreement, because it is obvious that the buyer’s business needs and the technology can be changed during the lifetime of the project outsourced. So flexibility should be achieved fairly in such a way that neither of the parties should suffer due to any change in the needs during the lifetime of the processes outsourced.

15. What is a SLA?
Ans: The service levels of the supplier’s performance are written in a contract called Service Level Agreement (SLA) and it is used to measure and monitor a supplier’s performance.

16.Why is outsourcing sometimes not successful?
Ans: Outsourcing is same as we do a deal with the local suppliers but the care need to be taken in the relationship is that both the parties must properly discuss all the needs regarding the services, technology required, level of flexibility in the contracts, level of data security provided, time required to finish the project, total amount of money required, other clients review about that supplier; prior to the signing of the project. Other basic thing which must be clear from the suppliers point of view is the requirement of the buyer and what exactly he wants him to do and how. Both the parties must be in a good communication with each other frequently, as it will be helping them to understand each other’s priorities regarding the project but if they are not then it will lead to some or the other kind of misunderstandings regarding the needs and will lead to failure of the deal.

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