'Outsource' has become a buzzword in the business world, globally. Slow growth in economies is forcing businesses to outsource, in an effort to bring down costs. However, bringing down costs is not the only objective of outsourcing. When you outsource there are two immediate benefits that are gained. The first one is cost savings and the second but more significant gain, is the freeing up of precious human resources and tied-up capital to concentrate on core competencies. Further, when you outsource you are open to enhancing operational efficiency. You get the opportunity to get the best in the business in terms of skills and experience.
The decision to outsource is easy. But to make the choice on which tasks to outsource is the tough one. You obviously can not outsource tasks that have a direct bearing on the business and its bottom line. The decision should be guided by the nature of your business.
Picking out the tasks best capable for outsourcing and assessing those tasks which will optimize your revenues is the hardest part of the decision. All tasks are not suitable candidates. Before you enter into an agreement to outsource, determine which tasks could be outsourced. The criterion for helping you make the decision include the magnitude of the task, the skill sets required, available resources and the investment required.
When you outsource, it gives you the opportunity to evaluate whether the performance on the task outsourced is better inside or outside the organization. There are many organizations that require their in-house departments to bid for tasks along with the service providers from outside. Through this process, efficiency can be assessed and suitable remedial measures taken.
While outsourcing is one option to achieve focus and strategize your business, it can not be said that it always delivers. It needs to be remembered when when you outsource, you may create a competitor and you also lose the ability to learn and innovate. A business is responsible for all actions before outsourcing. However, when such actions are transferred to the service provider, the business may lose initiative. Therefore it is imperative that the business closely monitors the performance of the service provider and communicates the needs of the business in clear-cut terms. The increasing incidents of frauds and lapses in security in outsourced activities are a cause for concern. There have to be checks at various points to ensure that these things do not happen.
Quality can not be at the cost of bringing down costs. The old adage 'Penny wise Pound Foolish' would apply. If quality of a product or a service that is outsourced is compromised, it will have direct bearing on the business. Customers who are the mainstay of any business will walk away to your nearest competitor who can give them value for money. So when you outsource, do not turn lax and expect the service provider to deliver all the time. It pays to be cautious.
There is an increasingly divided opinion of the benefits of outsourcing. However, the decision to outsource should be carefully made and viewed with the right perspective.