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Do you want to maximize your revenue and minimize your expenses? Do you want to get access to specialized skills and services? Do you want to concentrate more on your core business? Do you want to save on money, time and infrastructure?
If your answer is yes to any or all of the above questions, you might be interested in outsourcing. Outsourcing has several benefits. Outsource and take advantage of the benefits of offshore outsourcing. Read the following benefits of outsourcing to find out more about how outsourcing can give your business a competitive advantage!
biggest benefit that you can get while outsourcing. Outsource and reap the benefits of outsourcing.
3. Save Big!
One of the benefits of outsourcing is that you can save on every aspect of your business and increase your profits. When you outsource, you can save on time, effort, infrastructure and manpower. Since you don't have to invest in infrastructure, you can also save on making unnecessary fixed investments. Outsourcing removes the burden of changing or maintaining infrastructure. You can also save on capital expenditure. Outsourcing can also help you save on training costs, because you do not have to invest in manpower. These savings will help bring about an increase in your revenue. Your organization can also save on investing in expensive software and technologies.
One of the benefits of outsourcing is that your organization will be free to concentrate on your core business. By outsourcing all your non-core functions, your employees can be put to better use and you will be able to see a huge growth in your core business.
9. Increased efficiency
Another benefit of outsourcing is increased efficiency. Your non-core business functions will be performed efficiently by your outsourcing partner, while your core functions can be efficiently carried out in-house. Thereby you can achieve overall efficiency and see an increase in your profits.
Countries such as U.S, U.K, Norway and Australia amongst others can benefit by outsourcing. The economy of these countries has increased tremendously after outsourcing. In the U.S, after the outsourcing boom, the economy has increased, jobs have increased and the wages of American workers have increased.
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You will sign a contract with the outsourcing company that will cover the details of the service that they will be providing. Any thing not covered in the contract will be the basis for you to pay additional charges. Additionally, you will experience legal fees to retain a lawyer to review the contacts you will sign. Remember, this is the outsourcing company's business. They have done this before and they are the ones that write the contract. Therefore, you will be at a disadvantage when negotiations start.
4. Quality Problems
The outsourcing company will be motivated by profit. Since the contract will fix the price, the only way for them to increase profit will be to decrease expenses. As long as they meet the conditions of the contract, you will pay. In addition, you will lose the ability to rapidly respond to changes in the business environment. The contract will be very specific and you will pay extra for changes.
6. Bad Publicity and Ill-Will The word "outsourcing" brings to mind different things to different people. If you live in a community that has an outsourcing company and they employ your friends and neighbors, outsourcing is good. If your friends and neighbors lost their jobs because they were shipped across the state, across the country or across the world, outsourcing will bring bad publicity. If you outsource part of your operations, morale may suffer in the remaining work force.
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Ten Precautions while outsourcing Precautions need to be taken while outsourcing work due to various reasons like money, time, availability of manpower etc. There are many risks involved during process of outsourcing and thus it is imperative to choose the right service provider. The outsourcer should be honest and efficient with good communication skills. This is not a big and difficult task and all one has to to do is ask the right questions. Below are some of the pointers that one should keep in mind while choosing an outsourcing company:
1. Do your homework properly. Find out for how many years the company has been outsourcing. Get adequate information on the company as to the strength of the company and their financial situation.
2. Find out about the quality of the services provided by them e.g. whether they have an ISO and CMM certifications. Customer reference and recommendation are the best way to figure out a company's services.
3. Before you finalize the outsourcing company it is pertinent for you to take into consideration all the hidden
costs from maintenance, training,connectivity/infrastructure, transition etc. instead of just the obvious costs such as licensing and consulting costs.
4. Ensure that the company does not make unrealistic promises and keeps them.
5. The outsourcing company should meet requirements in respect to data privacy including infrastructure security (Firewalls, Access Controls, Data Encryption, etc) and human resource related like Pre-Recruitment precautions and checks, Non-Disclosure agreements, etc.)
6. Ensure that the company offers business continuity and disaster mitigation plans as a means of reducing your business related risks.
7. Companies have to be honest when dealing with invoicing and material type of contract. Always check for referrals of customer for ensuring that the company is honest in financial dealings.
8. Ensure that the company chosen for outsource work is compliant with statutory laws.
9. The company chosen should match work culture and ethics. This will help offshorer in carrying out smooth communication with the company.
10. Ensure that the chosen company has a well trained professionals on their staff and good capacity to handle the work.
Outsourcing
What is Outsourcing? Outsourcing is a strategic decision to give a task or activity to an independent contractor who determines how best to do the task or activity. The firm and the independent contractor become partners and may establish a long-term relationship. Examples of outsourced activities: IT, HR, Legal services, Manufacturing, R & D. Note: Outsourcing transactions are done in the market.
Outsourcing:
The practice of subcontracting manufacturing work, to outside and especially foreign or nonunion companies
An easy way to increase profits Nike, Cisco, Apple outsource most of their manufacturing Each could focus on research, marketing Each has gotten into trouble 2001 Nike reported unexpected profit shortfalls due to inventory problems 2000 Cisco had to write down billions in obsolete inventory 1999 Apple was unable to meet customer demand for new products Outsourcing Benefits and Risks Benefits Economies of scale reduce manufacturing costs
Risk pooling demand uncertainties are transferred Reduced capital investment Focus on core competencies Increased flexibility Risks Loss of competitive knowledge Conflicting objectives Flexibility vs. long-term, stable commitments, etc. Consider the IBM PC example.
Advantages 1. Take advantage of the cost-advantages! 2. See an increase in your business 3. Save Big! 4. Get access to specialized services 5. Concentrate more on your core business 6. Make faster deliveries to customers 7. Improved customer satisfaction 8. Benefit from time zone advantages 9. Increased efficiency
10. Give your business a competitive edge! 11. Outsourcing countries also benefit from outsourcing
Dis 1. Loss Of Managerial Control 2. Hidden Costs 3. Threat to Security and Confidentiality 4. Quality Problems 5. Tied to the Financial Well-Being of Another Company 6. Bad Publicity and Ill-Will