Make Outsourcing Work through These 3 Basic Tips

Competition in the outsourcing has become very stiff that countries of offshore outsourcing providers usually intervene to boost competitiveness.  There is a growing trend nowadays of foreign countries providing favorable business environments and incentives to outsourcing companies.  This is especially noticeable in the current efforts of new players such as China in creating an exclusive business hub dedicated to off-shoring companies servicing corporations of Western industrialized nations.  These economic and business zones have the most relaxed state regulations from labor management to almost free tax policies.  The trend of providing favorable business environments for outsourcing companies resulted to increased capabilities of countries challenging India s dominance of the outsourcing market.

On the other hand, India has been trailblazing new path for its outsourcing efforts.  Indian service providers have developed what they call near-shoring operations.  This is a counter measure which will try to attract investors by providing the facilities of outsourcing companies near the parent company.  Near-shoring has been developed by European companies specifically capture the large and cheap labor pool of former Eastern European states.  India made it a strategy to generate more clients for its outsourcing companies.  Near-shore facilities, will significantly cut the parent companies expenditures in terms of management cooperation, product deliveries, and service provision. 

The outsourcing industry is growing from year to year.  It has become a major industry in some countries that fuel local economies and market.  The current trend now is increasing innovation in service deliveries to capture more companies that will outsource their business operations.

Outsourcing is a powerful business tool that can be used to significantly enhance profitability, savings, and efficiency.  There are good practices that companies can emulate to make outsourcing work for their benefit.  Making outsourcing work will certainly improve corporate performance and will open new opportunities for growth.

First, outsourcing should not be a hire and forget event.  It should be pointed out that companies must continue to exercise control and macro management of the providers operations.  Although the outsourcing provider is generally responsible for quality deliveries, safety, and maintenance of product and services standards, parent companies must ensure that all these are being followed by offshore companies.  This would further reduce risk, wastage, and serious quality issues.

Second, it would be best to establish good working relationship with an outsourcing provider.  This can be made possible through effective communication, appointment of regular liaison, and allowing flexibility to some business practices.  Although the outsourcing market provides numerous options, it would still be difficult to establish relationship with a new provider.  Shifting from different outsourcing providers could disrupt normal business operations.  Contracting new providers also will take time which could affect other corporate segments.  So it would be ideal for companies to try to stick to an outsourcing company and maintain good business relations with them.

Finally, companies must negotiate the best service level agreement that is flexible and can accommodate major changes in the nature of outsourcing operations. The SLA must also integrate a viable exit plan that will clearly define details of contract termination.