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Forget the Initial Savings: Offshore Outsourcing is a Long-Term Investment

June 9, 2011 By
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Offshore outsourcing stemmed from a logical idea: if our company can hire offshore workers to do the same work for a fraction of the cost, why wouldn’t we outsource? How can we afford not to? Unfortunately, most companies see a bottom-line price and expect to start saving money right away. Outsourcing is a long-term investment, not a short one. Here are some of the expensive initial costs you’ll encounter:

  1. Severance Packages.
    Severance packages aren’t the only layoff expense you’ll encounter: you’ll need to keep plenty of employees on hand until the transitional period is complete. If you don’t offer retention bonuses as an incentive for employees to stay, they’ll leave the company at the first sign of a new job.
  2. Advisor and Legal Fees.
    Selecting an outsourcing vendor is a costly and lengthy process. You’ll need to draw up a contract and hire outsiders to make sure it holds water. Look out for any hidden expenses that aren’t included in the contract.
  3. Travel Expenses.
    You’ll need to travel overseas to see your new outsourced department. You’ll want to make sure it’s up to your company’s standards…and seeing operations in action will make it much easier to manage later.
  4. Low Productivity.
    Your company’s productivity will take a definitive nosedive. Employees have new job descriptions, you’re faced with a language barrier, and you’re working with people across several time zones. If a mistake happens, it’s going to take a lot longer to fix.

Offshore outsourcing may save you money in the long run, but it’s a costly investment filled with headaches initially. Be sure you do the math before signing the contract.

Filed Under: Business, Outsourcing Tagged With: , ,

Business Mergers – Many Things Can Go Wrong. Many Things Can Go Right As Well

February 8, 2011 By

You can never classify a business decision as completely beneficial or completely harmful. That is just not the way the system works. Each and every decision can have different impact on your business.

If you have misunderstood the market wrongly but if you implement your decision differently as compared to what was envisaged in the office, you can still redeem yourself and salvage the situation. On the other hand, a perfect product marketed and launched in the perfect way can still go wrong if customers are not respected.

In some cases, the business is so bothered about getting its planning right that it forgets that people are the ultimate judge of what they do. Let’s take mergers for example. Even your best efforts can fail in making your merger a success. You might have spent a lot of time assessing different bids and might have chosen the one that offers short term as well as long term growth prospects.

However, ignoring your human resource and presuming people will get along with a new bunch of colleagues, who were competitors earlier, can backfire. While you may be aware of the long term and strategic potential of your merger, your own employees may be more interested in their profit, their ego and their self respect.

In such a scenario, you may have a civil war in your own organization just because you hurried the merger and did not marketed properly to your own employees. In other cases, you may make the mistake of attaching too much importance for employee satisfaction.

Employees do not work for money alone but they certainly do appreciate a rise in pay. Hence, there are many ways to make your business decision a success. In the same way, there are equally numerous ways to see your business decision end up as a failure. Keep these factors in mind when deciding upon the merger.

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How to know when to outsource tasks from your company

December 22, 2010 By

Outsourcing involves bringing in a third-party company to help the operations of a company. This can be very beneficial for company, but it must be done at the right time and in the right way. If not, outsourcing can ultimately harm your company. Several factors indicate the right time to outsource. You must evaluate your company to know if you are ready or are in need of outsourcing.

If the task you are thinking about outsourcing is vital to bringing in profits or staying competitive, then you should not outsource the task. Only outsource activities that do not have direct effect on your profits. Do not trust a different company if it will affect your company’s performance to meet a deadline.

The best tasks to outsource are those that are routine and trivial. If you think the activity wastes your company’s time and resources, such as manpower and energy, then the task is ideal to outsource. This will make the workload lighter and easier for your company. Your employees will then only have to focus on the directly important tasks.

Will it be cheaper to have someone else do the tasks than have your company do it? If so, the task is ideal for outsourcing and you should start on the outsourcing arrangements. In business, nothing speaks louder than money. Because of this, if you see that outsourcing an activity will save your company money without jeopardizing your performance, then go ahead and outsource.

Sometimes, there are tasks that are economically cheaper to do inside the company but also cause a drain in your resources. If you see your employees devoting too much energy to a task, which ultimately harms your company’s overall performance, it might be best to outsource the task and have your employees focus on vital tasks instead. While this may cause you to spend more money, it will generate more profits in the end.

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How to outsource effectively

December 20, 2010 By

Outsourcing is an important part of a business. It can become a hindrance to your company’s success or the secret to being effective. When outsourcing a task, make sure it is an activity your employees do not enjoy doing. If they enjoy performing those tasks, then do not stop them. This will ultimately hurt their overall performance. Get your employees feelings on outsourcing a task before you actually make the arrangement. Although you cannot make your decision solely on how they feel, getting employee input is often overlooked.

In addition, if the task requires a specific skill or knowledge in order to complete the task, it might be a good indication to outsource it. Before outsourcing, look at your employees’ skills to see if they can do the task, if not it would be practical to have an outsourcing firm pick up the task.

To outsource tasks effectively, you must have a clear list of expectations for the outsourcing firm you wish to collaborate with. When you outsource a task, you are giving control and supervision to another company. You need to make sure you have set clear standards and have communicated your expectations well. Consume a contract detailing your company’s agreement with the outsourcing firm. Regularly access the performance of the outsourcing firm to see make sure they meet your qualifications.

Make sure you schedule consistent meetings with the outside firm and have a set meeting time with the people you hire. This allows you to stay in the loop and stay updated. You should check up on problems and their progress. By doing so, you will know what changes to make with your business to make it more effective. You will want to have a backup plan to cover any emergencies and if your outsourcing company falls through. One good sample of this having backup records for your accounting service.

Filed Under: Business, Outsourcing Tagged With: , , ,