When contemplating outsourcing, a lot of organizations begin with the same question—which tasks should be outsourced and which should remain in-house. There are complex questions and the answers could have big effects on the company’s short-term and long-term success. Making the correct decision could significantly add to the bottom line of an organizations when it comes to increased efficiency and cost savings.
In choosing a service provider, it is important to note that not all vendors are equal, and on top of savings, there are various factors that should be looked into before making the decision.
The factors could include the following:
In choosing a service provider, it is important to note that not all vendors are equal, and on top of savings, there are various factors that should be looked into before making the decision.
The factors could include the following:
1. Technical expertise – the workforce that would handle the daily work of development, documentation, quality management and analysis of a project is the heart and soul of the outsourcing engagement. In this scenario, a bigger headcount is not always the best choice. A small team of internal specialists could be more effective than a pool of junior engineers in an offshore setting. So, it is paramount to ask the prospective vendor regarding its standard knowledge management processes and training programs. The access to technical expertise must also include knowledge transfer from the provider to the in-house team too.
2. Quality – should not suffer when a business sends an operation or part of is to a third-party vendor. Luckily, the huge majority of outsourcers have embraced industry-wide quality management standards and processes. In selecting the best vendor for a company, it is necessary to review how quality is managed within the firm.
2. Quality – should not suffer when a business sends an operation or part of is to a third-party vendor. Luckily, the huge majority of outsourcers have embraced industry-wide quality management standards and processes. In selecting the best vendor for a company, it is necessary to review how quality is managed within the firm.
3. Vendor’s expertise in the business space – Not all vendors are equal, but it helps if it has had a comprehensive experience in the certain business vertical and space. Previous experience in delivering projects could mean that the business could access the wealth of industry and technical knowledge of the provider.
4. Degree of asset specificity – the nature of the enterprise inputs need assets as well as restrict the choice of outsourcing strategies. The theory of transaction cost is that the higher the degree of asset specificity, the higher the cost and so the bigger investment risk. The ideal choice for this kind of market transactions is a special degree of low asset that’s easy to acquire. For a medium degree of asset specificity, the offerings or product could be outsourced to external suppliers to gain economies of scale.
4. Degree of asset specificity – the nature of the enterprise inputs need assets as well as restrict the choice of outsourcing strategies. The theory of transaction cost is that the higher the degree of asset specificity, the higher the cost and so the bigger investment risk. The ideal choice for this kind of market transactions is a special degree of low asset that’s easy to acquire. For a medium degree of asset specificity, the offerings or product could be outsourced to external suppliers to gain economies of scale.
5. Overall business strategy – one should ask if outsourcing is simply a knee-jerk reaction to the call for cutting cost or if this strategy is a more long-term engagement that is vital to the overall strategic plans of an organization. After all, the permanence or temporariness of outsourcing in the operations could affect internal processes, resource acquisition, budget allocation and security clearance.
Outsourcing has grown because of competitive and economic pressures that have made it a necessity for organizations and businesses of all sizes to equip their services and products with high quality. It has been common knowledge that the process is one of the effective tools in boosting sales. It could also leverage alternatives that could significantly reduce cost and renders an efficient operating method.
Outsourcing has grown because of competitive and economic pressures that have made it a necessity for organizations and businesses of all sizes to equip their services and products with high quality. It has been common knowledge that the process is one of the effective tools in boosting sales. It could also leverage alternatives that could significantly reduce cost and renders an efficient operating method.