subscribe to the RSS Feed

Wednesday, July 1, 2009

Four types of outsourcing

Posted by anthony on February 2, 2009

Outsourcing is becoming more and more popular in today’s business environment. Most companies tend to outsource some of their work functions. It is a process in which the company or individual business man contracts another company to avail particular services. There are four basic types of outsourcing, wherein the categorization is based on the nature of work being outsourced.

The first type is Business Process Outsourcing (BPO) in which call center outsourcing, human resources outsourcing (HRO), finance and accounting outsourcing and claims processing outsourcing belong. The second is Information Technology Outsourcing (ITO). It includes IT services, technical support, software testing, and website management outsourcing. The third type is Software R&D or also known as software development outsourcing. Finally, Knowledge Process Outsourcing (KPO), is the type of outsourcing that includes reading X-Rays, performing investment research on stocks and bonds, handling the accounting functions for a business or executing engineering design project.

By looking at the benefits of Outsourcing, we can deduce that it is indeed helpful and a practical choice because of its cost-effectivity. You can gain access to knowledge pool that is not available inside your own company. You can also attain flexible capacity management in which you are enabled to flexibly manage the production capacity and staff as well. The Time Zone coverage that are set up 24/7/365 operation makes your business operation more efficient.

Offshore Outsourcing Solution – A Favorable Offshoot of Globalization

Posted by james on November 18, 2008

Globalization has slowly been eliminating the dividing jurisdiction among countries even in economic ends. Today, local products are not the only things that can be shared by the world, the effects of globalization have already extended to the realm of manpower acquisition. Instead of sending workers to a foreign country having to provide relocation expenses that would go with same wage cost, the advent of Internet access and the computer technology has made it greatly possible to send the work or the function directly to the workforce while eliminating the need for relocation expenses and paying for much lower wage costs. The process of sending the work to distant off-country locations is popularly known as offshore outsourcing.

More big companies worldwide are now enticed with the idea of offshore outsourcing - the transmission of any of their system operations to a service provider based in a foreign country. This allows companies to reduce labor cost while being given outputs that adhere to the company’s specified standards Since most key market players are situated in first world countries where labor costs are very high, outsourcing to developing countries that require relatively lower compensation could prove to be the best resort. Hence, there are two main factors that are considered when adopting offshore outsourcing as a business strategy – the cost associated in outsourcing a specific operation and the quality of service that an outsourcing facility could provide.

The advantages of outsourcing can be generalized into three. First, the company who would choose to outsource a function would be able to focus on their core operations and are more likely to concentrate on ways to improve company procedures. Planning and budget estimation for operations to be outsourced will be eliminated. Instead, operational costs for the operations to be outsourced will also be fixed based on the market price of service providers. Second, the output quality level of those operations being outsourced will be increased. The competition of global service providers in their own specialties allows every company who seeks a service provider to choose from several facilities who could best give them optimal service at very reasonable prices. Factors that need to be considered when choosing a service provider would be the skills of a facility’s manpower, the kind of technology being utilized, and the accessibility to transportation, communication, and logistics. It is as if you are employing the best of employees that the world could offer. Lastly, expenses that for employee compensation would also be reduced significantly. Offshore outsourcing solution providers are generally located in developing countries where wage cost is relatively low and the number of unemployed skilled workers is high.

The Philippines as Outsourcing District in Asia

Posted by tarhata on October 29, 2008

The outsourcing industry has created fresh opportunities for the Philippines to be Asia’s business process outsourcing (BPO) force. This is due to the expansion of demands for business process and IT outsourcing solution that reach through different time zones and into the international scale. Due to this, offshore outsourcing is duly practiced.

Offshore outsourcing means an organization actually hiring an external unit to do its business functions. These services are usually provided in other countries with completely foreign subsidiaries.

In the aspect of local and global marketing, the founding of technical support outsourcing companies in our locales is considered a feasible step for these foreign corporations to implement cutback measures. Thus, it allows them to track down radically required cost reduction schemes but with high quality production.

The Philippines has emerged as an IT outsourcing solution that aims to provide offshore outsourcing services to the global market. Low cost of labor and excellent work done by Filipinos has gained the taste of these companies that have been looking for such quality conditions. Moreover, a gradual rise in growth percentage was predicted in the coming years despite the global rundown. Hence, IT outsourcing consultant companies in the country will be experiencing an affirmative impact of this so-called prediction. Philippine outsourcing then, is fast developing its lead in the Asian outsourcing industry.

For this reason, the Philippine information technology outsourcing prospects have become a positive sign of better days to come for the many skilled professionals that are only waiting to be given the chance to prove their worth.

Managing Offshore Projects, How Not to Sink in Unfamiliar Waters

Posted by Jessica Madrazo on March 31, 2008

Handling new projects are difficult enough for managers, but a walk in offshore outsourcing is more of a trudge than a stroll for those who are new in the business, and in fact, at times it just gets downright overwhelming. Apart from the typical considerations, cultural barrier and the absence of physical presence, there are more factors to take into account such as different time zones, and the complexity of the project itself.

There are several points that may guide one to get the best out of their outsourcing teams.

1. Create a merger

A delivery team is a single cooperative unit working on a single goal, and this is exactly as it should be established between onsite and offshore personnel. As an onsite project manager, it should be stressed that there is no onsite-offshore division, and your people are a single project team.

2. No role playing

Avoid playing the role of another. Function as the liaison and eliminate any barriers of communication between stakeholders and the offshore team. Playing the role of a customer will not help with the accuracy of the product, and instead, might create setbacks that could have been avoided.

3. Information Excess

Educate your personnel, not only onsite teams, but offshore as well. Inform them of the client, the organization, the business, and the benefits. Team members can never have too much information and each piece will be put to good use.

4. Over-communicate

There is no such thing as obvious. The general rule is its okay to repeat yourself, and never leave out any detail you deem as understood. Leaving those things out may provide the loophole on forgetting to mention important details.

5. Q and A portion

Question, and answer. It is most likely that offshore teams will not be very aggressive with voicing out concerns. There are some critical matters that may not be brought up and settled before it is repairable. It is important that questions, no matter how basic, are addressed to offshore teams, specifically problems they are facing, or concerns they would like to tackle

6. Listen and Talk

Because of the lack of physical presence, relationships are only formed through interaction with your offshore team. An individual e-mail here and there to follow-up on the project, or for a job well done humanizes you and shows your interest in their work. It works both ways with personal knowledge on projects, as well as establishing your role in large teams.

7. What’s happening?

Interest should be shown in the day-to-day processes of your offshore team. This does not necessarily mean trying to offer solutions to their problems, but just awareness and sympathy. It is after all your project. Even if you are not the answer to their troubles, understanding can go a long way for work relations.

8. Interconnect with managers

With offshore outsourcing, it is impossible to micro-manage. The closest, and best solution for this, is to work with offshore leadership. Build a strong relationship with the head, and managers, and allow them to implement your ideas and requests to the team. Their support is imperative for you to succeed.

9. Break the ice

Cultural barriers are expected in offshore outsourcing, but cultural familiarization is an occurrence that is most appreciated. A little research on popular sports, food, or places your team is interested in will break the ice, and bridge a rewarding experience with open communication, which is one of the biggest problems in outsourcing.

10. Celebrate

Recognition equates significance. When a team does good in a project, never fail to recognize them and their achievements. As much as possible, try to criticize in private, and praise in public, with the notification for offshore leaders when called for. Relationships are not only limited to managers, or individual staffs, but for the entire team.