Both big and small companies may need to resort to outsourcing their business functions. Either they choose to outsource most of their functions or just a handful of them so that they can focus on core business aspects. In both cases, they need to take into consideration some key factors, which will ultimately help them make an informed decision.
Let’s take a look at some of the factors to consider for taking outsourcing decisions for your business.
1) Cost Savings / Pricing
When you talk in pure financial terms, outsourcing should improve your business bottom lines through reduced operational costs. When selecting an outsourcing company, you need to determine if that company will help you achieve that goal in the near future. If not, chances are that you’ll end up spending more than you end up saving.
To determine the savings, you would need to identify the cost of carrying out this function in house and then compare the cost of outsourcing it. You don’t need to be an expert analyst to figure out where you’re heading. All you need to see is whether outsourcing will help you reduce a significant amount of your capital in hiring employees and equipment.
It is also critical to remember that you will need to maintain a balance between the quality and quantity of the services provided by the outsourced company. So, when looking at the pricing of the outsourcing company, cost savings in the core functions aren't the only factor to consider. Examine all services provided by the outsourced company. For example, some vendors will also offer customer support at no extra charge or offer robust training programs of their employees.
2) The Resources and Technology
Technology and resources are two considerations that are essential when you choose to outsource. Getting answers to these questions will lead the way to select a vendor who has the best resources and updated technology for seamless handling of your business functions.
- Does the vendor have an office with up-to-date systems?
- What tools and technologies do they use for administrative management of your project?
- Can the vendor handle the most rigorous of the outsourcing functions?
- Are their resources trained to use the core tools and technologies that you use?
3) The Ability To Meet Deadlines
Timeliness in outsourcing is as important as the costs. For instance, if a vendor fails to meet deadlines, it can lead to major bottlenecks. That alone will nullify any cost-saving benefits that you had anticipated while hiring them.
You need to ensure that the vendor adheres to the promised quality and timeliness. One of the ways to do this is by making all your queries beforehand. If you find that the vendor has little quality control measures or does not have any backup plan should they miss a deadline, it is better not to hire them in the first place.
4) Minimal Supervision
When you hire an outsourcing vendor to work on your business requirements, it’s a given that they are going to take care of each task from start to finish. There should be no room for sloppy or shoddy work and they should be able to produce the results.
Choosing a responsible vendor who will be in charge of the projects including adequate supervision and oversight is a must-have so that you only need to supervise them minimally and let them take it from there. This will give you more time to focus on your core business functionalities.
5) Trustworthiness / Security
Before you sign on the dotted line, do make it a point to visit the vendor’s site, even if the vendor is off-shore. If you are unable to make a site visit due to your constraints (not because the vendor doesn't allow site visits), also research on the internet to find more about the firm, the infrastructure, safety practices and the team that works there.
This will help you assess the reliability of the service providers. If you have a reference who has worked with a vendor in the past, you can also ask them about the firm. This takes us to the next point.
6) Who’ll Will Be on and Lead the Team
You can’t just have blind faith in the outsourcing team even if you’re saving significantly by hiring them. Find out all that you can, including the team members who’ll be working on the projects and who’ll lead that team. Ask questions to determine their training, certifications and length of time with the vendor.
Learning these facts upfront will save you from several agonies at a later stage. Moreover, when you know that your business functions are in able hands, you’ll be at peace.
7) The Service Level Agreement
The SLA (Service Level Agreement) is one of the most crucial documents when we talk about outsourcing partnerships. At the time of creating the document, make it a point to ensure that every single detail is written clearly. This will help you avoid you any kind of confusion or ambiguity especially about the quality of the services you’ll be getting.
It also makes sense to hire a lawyer especially to manage your outsourcing endeavor so that you don’t end up in any legal trouble.
Communication is the key to outsourcing whether you’re working onshore or with an offshore team. The vendors should be able to handle your queries and promptly reply without making you wait indefinitely.
Their communication skills need to be spot on without any space for cultural or other communication barriers. This ensures that they have clearly understood your requirements and can address any issue that may crop up.
To control your client relationships, all communications should be between you and your team and the vendor's team. Vendors should have procedures in place so that the outsourcing team does NOT speak directly to your clients.