What is Outsourcing?
A Look at IT Outsourcing
by: Karen Cayamanda
Wednesday, November 04, 2009 | Comments (0)
Category: Outsourcing News
Outsourcing has become a solution for many Western companies affected by global recession in order to keep the business going. Aside from reducing costs, outsourcing enables companies to focus on core competencies. Non-core functions are then transferred to developing countries that offer services at lower costs. In Paul Ingevaldson's article entitled “IT is Not the Mailroom”, IT is considered as a support department, and does not directly contribute in reaching the company's goals. Therefore, it is a “perfect candidate for outsourcing”.
Almost all business processes go through IT systems, and the company will not be able to meet its goals without IT. This may be the case, but for some companies, they opt to outsource IT processes in order to cut costs. Bear in mind that IT entails technically-skilled workers. If IT processes are outsourced, there is no need for IT people in-house. As a result, the company will have a hard time figuring out how the system works if something goes wrong.
According to Ingevaldson, companies which chose IT outsourcing to deal with the impact of global recession will be underperformers when the global economy bounces back.
It goes without saying that to outsource or not to outsource IT is a major business decision. While it does not have a direct contribution in meeting business objectives, the company will not be able to function effectively without it.
If the company chooses to outsource IT, be aware of communication problems that may arise especially due to the huge time difference. Also, make sure that IT is outsourced to a reputable service provider. This is the most important thing to consider. Take note that many providers tend to promise more than what they can actually accomplish, and the end result will not be in the buyer's favor. The vendor must be able to provide IT security credentials before signing the outsourcing contract. Compromising security just for the purpose of reducing operational costs will not do any good to the business.
Outsourcing may have biggest year ever in 2010
by: Carlo Abadilla
Tuesday, December 08, 2009 | Comments (0)
Category: Outsourcing News
As a result of the global economic slowdown, the outsourcing sector’s growth was not as brisk compared to the previous years. Earlier in the year, the CICT pegged industry growth at a cautious 35% this year, conservative considering that the local outsourcing industry was averaging an annual growth clip of well above 40% in the past.
And with customers and locators feeling the pinch of decreased customer demand, the economic pinch put a damper on growth in 2009. However, industry expert and the author of award winning outsourcing blog Phil Fersht of www.fersht.typepad.com says the industry is poised for a huge comeback in 2010. This is because appetite for BPO services will undoubtedly rise and will rise strongly through the recession.
In a blog entry titled 2010 Predictions for the Outsourcing Industry, Fersht outlined some of the outsourcing areas that may see a marked improvement next year.
“BPO will have its strongest year ever. As our soon-to-be released new survey is revealing, transactional finance and accounting BPO will have a resurgence in 2010, with additional interest in management reporting, and we'll also see a fresh wave or HR outsourcing, which has been quiet for a couple of years now, with new uptake in payroll, benefits admin and recruiting outsourcing. Procure-to-pay outsourcing is poised to accelerate, together with renewed focus in the analytics space across several verticals and horizontal areas,” he said.
As an emerging and preferred outsourcing hub, Philippine based BPOs may yet see a resurgence of demand for their services, and may also see opportunities within the new growth areas within the realm of outsourcing.
Fersht counsels companies to take a first mover stance and come out of the gates blazing to take advantage of opportunities in 2010.
“It’s time to roll-out the new corporate agenda: quickly and aggressively. 2010 will not be a year for the timid, and we'll have a lot of frantic people trying to grapple with outsourcing - we'll see more political pressure, more negativity, more case-studies, more value propositions, more momentum and more energy than we've seen yet in this crazy industry,” he said.
This prediction from a well respected resource within the outsourcing industry bodes well for BPOs, and will be much felt in the
Benefits of Having a Sourcing Advisor
by: Karen Cayamanda
Wednesday, November 25, 2009 | Comments (0)
Category: Outsourcing News
Outsourcing is constantly changing and evolving. As more companies discover its potential and what it can do for their businesses, the entire concept of what outsourcing is sometimes becomes a tangled web of information. For companies which are just testing the waters, information overload on what to do and what to avoid can be confusing. They may even end up shying away from it.
So what can companies do to ensure they are on the right track? They can do their own research or hire a competent outsourcing or sourcing advisor, a consultant/guide who helps companies in developing the right outsourcing deal. In an industry that involves an increasingly complex landscape of service providers, someone who has adequate knowledge and experience in the industry will prod you in the right direction.
Sourcing advisors play an integral part of your outsourcing endeavors. They can provide insights and present market analyses that will help you in making decisions. Sourcing advisors will be there in every step of the way. Whether you are a service buyer or provider, a sourcing advisor has the right capabilities that will help you establish a good outsourcing relationship.
In an article entitled “7 Ways an Outsourcing Advisor Can Save You Money” by Stephanie Overby, she said that while joining the outsourcing bandwagon without external help will already enable you to reduce costs, having a sourcing advisor may save you money in any or all steps of the outsourcing process. She enumerates the seven ways a sourcing advisor can do for you that will let you cut costs:
1. Rigorous and relevant Requests for Proposal (RFPs)
2. Pricing intelligence
3. Access to innovation
4. Vendor knowledge
5. Focus
6. Presence of an upper hand in negotiations
7. Preparedness in transition and governance
It is a good thing to work with someone who is knowledgeable on the industry that you want to venture into. With the help of a good sourcing advisor, not only can you reduce costs - you will also be able to create the right outsourcing deal for your company.
Tips for Selecting an Outsourcing Advisor
by: Karen Cayamanda
Wednesday, January 13, 2010 | Comments (0)
Category: Outsourcing News
The outsourcing industry is huge, complex, and constantly evolving, so the steps to take in order to have a successful outsourcing operation usually entail a lot of research, time, and effort. Bear in mind that companies are more cautious now more than ever when it comes to entering outsourcing contracts. In times like this, having a legitimate third party that will prod you in the right outsourcing direction is very crucial when establishing and maintaining a relationship with other BPO players.
There are a lot of outsourcing advisors nowadays, claiming that they will guide you in every step of the way, but what do you need to look for in an outsourcing advisor? In the article “Outsourcing Advisors: 6 Tips for Selecting Right One”, Stephanie Overby enumerates six tips to keep in mind when choosing an outsourcing advisor or consultant:
1. Identify what you want to achieve. “Select an advisor that will help you achieve that goal. Some advisors excel at holding vendors' feet to the fire on prices, while others specialize in other areas,” said Richard Matlus, research advisor for Gartner IT Services and Sourcing.
2. Bigger is not always better. Hiring a large and popular advisory firm may come with a hefty price, and it does not necessarily mean that it will be able to get the job done. Do not choose an advisor based mainly on how large or well-known the firm is.
3. Get personal. Establish a good relationship with your outsourcing advisor.
4. Take a good look at the references. Knowing what clients say about the outsourcing advisor you’re considering will give you some insights on the kind of service/advice the firm can give.
5. Test the tools / methods used. The outsourcing advisor must be able to apply their tried-and-tested approaches to what your business needs. These must also be flexible enough to accommodate specific requirements.
6. Determine where their interests lie. You and the outsourcing advisor must be on the same page in every step of the process. According to Phil Fersht, former AMR analyst, "[outsourcing advisors] must be focused on your best interests, not theirs".
Outsourcing and the Publishing Industry
by: Karen Cayamanda
Saturday, January 16, 2010 | Comments (0)
Category: Outsourcing News
Outsourcing is not a new phase in the publishing industry, but many publishing companies are still not open to the idea of transferring some of their operations to external providers. After all, outsourcing is a risky business. It can be the ideal solution for companies that want to stay competitive and cut costs. However, for many publishers, there is usually a need to check the quality of outsourced processes in-house. Also, in an industry that follows tight schedules, rework and/or delay in meeting the requirements will have an impact on the overall process of the company. These are some of the reasons why outsourcing is not always favored by the industry.
To know more about the situation and the challenges being faced by the industry, ValueNotes, a leading provider of business intelligence and research, conducted the Publishing Survey 2009-2010 among buyers and vendors in the publishing industry. Specifically, the survey aims to determine the publishers’ perception of outsourcing, publishing operations that they outsource, and their satisfaction levels.
Key findings include:
• Cost pressures and lack of in-house capabilities are drivers for outsourcing.
• Sixty-four percent (64%) of respondents said they still have faith in their service providers and they will continue outsourcing.
• Content and production are the publishing operations that are usually outsourced/in demand.
• Sixty-six percent (66%) of buyers choose India as the outsourcing location.
• When it comes to cost savings, buyers achieve/are aiming to get 15-25 percent, while providers perceive 25-40 percent.
• More than 75 percent of buyers think considerable improvement is required in outsourcing, while 16 percent do not approve of outsourcing.
Shifting work to a service provider results to reduced costs and allows publishers to focus on core competencies and experiment with new products and offerings, but like what the survey findings indicate, the entire outsourcing process must first be improved before it can be considered a crucial strategy for the industry.