Although outsourcing is widely considered a cost-cutting measure, it is the ability of an outsourcing provider to work within the interests of their clients - and not just their own - that separates moderately successful partnerships from highly successful ones. It is for this reason that there is an increasing need for outsourcing to involve a framework within which the outsourcing partner must perform. This is what is called the “governance framework” and it is this that determines whether or not many outsourcing relationships succeed or fail.
Given the main goal of a governance process as one that ensures value-adding services and the preservation of the end-user experience, the governance structure should be built on the principles and guidelines behind the rules – and not just the rules themselves. The following are a few tactical aspects of good governance espoused by ERP management outsourcing firm, OneNeck:
Service Level Agreements (SLAs) – as this is the foundation of your services package, it should clearly define process, service levels, checks and balances, and the reporting mechanism for your outsourcing agreement.
Quality of Service reporting (QoS) – ideally you will be able to define your own metrics for QoS allowing you to establish the standards of which your agreement will be measured against. This will also involve time frames, the reporting process, and problem resolution structures.
Face-to-face meetings – as rapid as developments have been for online communication, it will never really be able to substitute frequent meetings in person. Paying a visit to the outsourcing partners offices and assessing the quality of the workplace and infrastructure can go a long way for fostering the trust and transparency that successful outsourcing relationships demand.
Flexibility – unforeseen changes and difficulties are often the downfall of outsourcing partnerships. The outsourcing vendor must therefore be flexible enough to keep up with the changing needs of customers, especially with regard to expansion of services. Flexibility is the main factor involved in the longevity of an outsourcing relationship.
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
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.
The rapid development of the outsourcing industry has given rise to multiple variations of service providers – offering end-to-end services within multiple disciplines delivered across varying parts of the globe. Selecting a service provider increasingly depends on the service delivery method or the sourcing model that is appropriate for the buyer's outsourcing needs. In an article regarding such, Infosys expressed that each model will offer a host of advantages that will be applicable only to specific situations. Let us have a closer look at one such situation in which service providers are given full responsibility for an outsourced project: Project Based Outsourcing
Project based outsourcing is an increasingly popular sourcing model among clients as more and more buyer organizations develop sourcing maturity – efficiently assessing needs, setting expectations, and applying outsourcing as a tool for strategic enterprise-wide improvement. Project based outsourcing dictates that the service provider manage all tasks involved in an outsourced project until the agreed upon outcome is achieved or a certain deliverable is received. Such will require that the service provider possesses the manpower with necessary skills to accomplish tasks involved. The service provider will also provide project management expertise in order to run the project. The client will thus not need to be involved in day-to-day operations but will rather focus on the final outcome of the project.
Vendor management mechanisms in this case are reliant on end-to-end project outcomes and ensuring quality levels in each task. The vendor/buyer relationship is the cornerstone of project based outsourcing. The buyer will only need to benchmark and monitor outcomes as the responsibility of the project rests solely on the vendor.
The client's loss of control over day-to-day operations can be both a pro and a con in project based outsourcing. This will require a better understanding of the offshore model on the part of the client and a assurance of operational management capabilities from the part of the vendor.
Overall, project outsourcing highly depends on clearly defining requirements and specifications of the project from the start. When successful, project outsourcing can provide a high level of productivity at lower costs. Documentation, programming, testing, quality assurance and detailed design are all entrusted to the vendor – requiring advanced skills and a high level of expertise in the relative field of the project being outsourced.
by: Karen Cayamanda
Wednesday, November 18, 2009 | Comments (0)
Category: Outsourcing Research / Trends
With the rising number of companies discovering the advantages of outsourcing, and as the current global recession compels affected companies to outsource in order to stay afloat, the number of countries that offer outsourcing services increases. In the Global Services-Tholons study entitled “Top 50 Emerging Global Outsourcing Cities”, there's India at the forefront, followed closely by the Philippines in the list of Top 5 offshore nations. Countries from different parts of the world are also emerging as great outsourcing destinations. This makes selection of the right service provider more difficult and time-consuming.
Do not fall into the trap of many outsourcing vendors promising way more than what they can actually do. In an article “How to Choose an Outsourcing Provider”, Randy Vetter, Director from Alsbridge, Inc., discusses the factors buyers can bear in mind when it comes to finding the right service provider for them:
Buyers which are looking for outsourcing partners may also want to consider these factors:
Establishing a good outsourcing relationship and maintaining it will always be a challenge. The first step would be to find a service provider that understands the buyer's business goals and has the capability to meet them. Finding the most suitable provider may be difficult, but once the buyer has created an effective working relationship with its outsourcing partner, the set goals will soon be met and the advantages of outsourcing will be realized.
by: Karen Cayamanda
Friday, November 13, 2009 | Comments (0)
Category: Outsourcing Research / Trends
In a nutshell, crowd sourcing is a type of outsourcing that involves transferring a certain business task or process to a group of people (crowd). What makes it different from the usual form of outsourcing is the fact that the company makes use of the service/s of an unknown group of people, or even an individual. A typical crowd sourcing process goes something like this: a company informs the public online about a problem, people will submit their solutions, the company will choose the best and most suitable proposition, then gives incentive to whoever had formulated the chosen solution.
According to Alexandra Cain in her article”Outsourcing on Steriods”, crowd sourcing is “revolutionizing the economics of doing business”. What used to be done in-house can be outsourced to a company or someone else from any part of the world. Obviously, this form of outsourcing has become popular because it allows companies to cut costs and focus on their core competencies, but there's more to crowd sourcing than cost reduction and having more time to take on core functions. Since the company presents what it needs online for everyone to see, it can have access to a vast group of people with varying talents and capabilities. Also, crowd sourcing enables companies to gain feedback and suggestions straight from the public. In this way, companies will have insights on which products/services would appeal to consumers.
Of course, crowd sourcing has its own share of drawbacks. For one, it is not applicable for every company. This is usually a great solution for those looking for ideas on creative projects - a website design, logo, slogan, name of a new product or service, etc. Another pitfall of crowd sourcing is difficulty in coordinating with supplier/s throughout the entire process. Language barriers and time difference are some of the factors that can affect the smooth flow of the project.
As crowd sourcing becomes a useful process for an increasing number of companies, it is poised to emerge as a major business trend in the future. The key is to weigh the pros and cons before venturing into crowd sourcing. It is also crucial to bear in mind that cost reduction is and should not be the sole factor on deciding whether to crowd source or not.
Outsourcing any range of services to offshore service providers is a risky process for a number of reasons. It is always important that a prospective outsourcing buyer consider the best methodologies and make decisions that consider their in-house context, the net cost savings, and whether or not a certain process can indeed be outsourced. According to outsourcing consultation firm, TPI, a 15 to 25 percent in net cost savings is enough for an organization to agree to outsource offshore. To maximize that window, however, will require careful planning and risk mitigation. Here are five tips to consider applying in order to ensure your outsourcing operation is a success.
1. Start small – This is especially true if this is your first time. Starting small will limit risks and allow for easier quality control. Be sure to start with services that are easily manageable, well-known, and not critical to the business' well-being.
2. Clearly define your goals and reasons - There are many service providers online that will tout that outsourcing will allow you to save 30 to 40 percent and will allow you to focus on 'core competencies'. By knowing exactly why outsourcing is necessary, and by having a specific set of goals, buyers are able to assess how well service providers can help realize those goals.
3. Monitor the results – In order to do this, it is important to establish objective metrics and measure results against goals. These will determine performance results upon project completion.
4. Build an offshore team – services like MicroSourcing's offshore teams staff leasing model allow you to build an offshore team with the specific set of skills to automate one or more processes within your firm. This will involve training your offshore outsourcing staff and maybe even coordinating offshore visits.
5. Establish a clear engagement model – It is essential that a buyer knows exactly how both parties will work together and define the different roles and responsibilities to get the results needed. This will involve defining escalation paths, detailing a communication model, and establishing executive level relationships.
by: Karen Cayamanda
Monday, November 9, 2009 | Comments (0)
Category: Outsourcing Research / Trends
At this age when almost everything goes digital, more and more people prefer making transactions online instead of the conventional method of pen and paper, and as it shows no signs of stopping, even the publishing industry is now compelled to go with this digital flow. However, the transition to digitized content proves to be very challenging for an industry that depends for the longest time on print.
As the publishing industry forays into the digital world, publishers need to provide better content and offer something unique that will help them establish their brand online and eventually get steady revenues from the Web. The impact of the global economic crisis also adds up to the challenges being faced by the publishers. According to the paper entitled “Publishing: Driven by digital trends” from ValueNotes Outsourcing Weekly, the publishers have tried the trial and error method to overcome these challenges, and the way things are going, it is not clear if the industry can adapt to the transition.
To resolve existing problems, publishers can outsource in order to cut costs and/or increase revenues. The author of the paper explains that there is a difference in outsourcing as a cost-cutting measure and choosing to outsource due to inability of the publisher to sustain. This means good news for service providers which offer a variety of services that publishers need - copywriting, editing, proofreading, graphic design, etc. However, there are also challenges on their end. For instance, content can obviously be outsourced, but can service providers meet the content influx? Another factor to consider is the vendors' sustainability. Unfortunately, most say they can deliver way more than what they are capable of. Can they keep up to the demand of the industry?
Overcoming the challenges faced by the publishing industry will depend on sustainability of the publisher and of the service provider should the former decide to outsource some of its business processes. If both parties manage to keep up then the dilemma of the industry will be resolved.