Website Management Outsourcing - WMO is the contracting of the management of a website and entire online environment to a third-party service provider. A variant of Business Process Outsourcing BPO, WMO is an outsourcing service typically offered to SMEs and in particular, Medium-Sized Enterprises, that don’t have a specific internal web team or web-marketing team.
The days where a single design agency or development company can create and manage a successful online offering for an organisation are gone. In today’s business environment, the online presence of an organisation is increasingly layered and complex.
Online projects now require the skills of designers, developers, hosts, project managers, editors and marketing experts in addition to an internal project team in order to create an effective online environment. This has fueled the need for WMO services.
What is WMO?
A WMO company work on behalf of a client organization to manage the designers, the hosting company, the development partners, the content editors, the online marketing company, SEO specialists and the internal marketing team of the client, to ensure that their online environment meets their commercial objectives.
Typically, a WMO company will manage the provider companies to Service Level Agreements SLA, follow best practices, and assume full responsibility for the success of the deployment and ongoing management of a website.
Just as with BPO and other forms of Outsourcing, WMO companies work with SMEs and Medium-Sized Organizations on an ongoing basis rather than a simple per-project basis – implementing new techniques and technologies to make the website more effective throughout the lifecycle of the site.
The most common examples of WMO are website marketing, website development, website design, support and maintenance, and website project management.
History
WMO is a term that was first coined by industry thought-leaders in January 2006 during a speech at the Internet Business Networking Conference in London, http://www.internetworld.co.uk/ to describe the fulfilment of the expanding needs of clients within the online sector. Today, this term and the WMO industry are growing in common usage.
Industry
WMO is a nascent industry that has only recently been labelled, but is growing at a rate of 110% year on year. Although many companies do outsource part of their website development or design to 3rd parties, very rarely do they engage a WMO provider to manage the entire process.
Current WMO providers estimate that WMO accounts for less than 2% of the total website development industry revenue (Q1 2007) – up from 0.5% in the first quarter of 2006. The WMO industry is expected to grow to a market share of 15% by Q4 2009. (ref: Internet Retailer Report on Website Management Outsourcing)
Sunday, March 30, 2008
Types of Outsourcing Services
Today most of the companies wants cost cutting in their business. Now a days Outsourcing helps to achieve such goals. Outsourcing is the process of contracting with another company or person to do a particular function. In top most cases almost organizations outsource their product or services in some way. Typically, the function being outsourced is considered non-core to the business, this help them to concentrate on their original business.
Outsourcing services can be categorized in two categories: BPO Outsourcing & KPO Outsourcing. The IT/BPO Company, for example, might outsource the services related to the information technology, business processing outsourcing and knowledge processing outsourcing. Typical BPO outsourcing services are like as multimedia & animation, bookkeeping and financial services, business consulting, CAD/CAM, call center, data entry, DTP, typesetting, Handwriting services, HR services, internet marketing, legal services, medical billing, proofreading, editing, software & technology, transcription, web design & web development and writing & Translation. Some of typical KPO services are like as knowledge processing outsourcing services, intellectual property research, animation & simulation services, data research & analytics, litigation Services, medical content & services, pharmaceuticals services, writing/content development services and database development services.
The outside firms that are providing the outsourcing services are third-party providers, or as they are more commonly called, service providers. For example ITMatchOnline.com, an outsourcing portal is a kind of service provider for service buyer, which offers projects related to BPO Services, KPO Services and Information Technology. ITMatchOnline offers some of typical popular outsourcing services like as call center, book keeping, drafting, internet marketing, software development, writing, translation and web development.
Currently, outsourcing takes many forms. Organizations still hire service providers to handle distinct business processes, such as benefits management. But some organizations outsource whole operations. The most common forms are information technology outsourcing (ITO), knowledge processing outsourcing (KPO) and business process outsourcing (BPO). The challenges of outsourcing become especially acute when the work is being done in a different country (offshore), since that involves language, cultural and time zone differences.
Outsourcing services can be categorized in two categories: BPO Outsourcing & KPO Outsourcing. The IT/BPO Company, for example, might outsource the services related to the information technology, business processing outsourcing and knowledge processing outsourcing. Typical BPO outsourcing services are like as multimedia & animation, bookkeeping and financial services, business consulting, CAD/CAM, call center, data entry, DTP, typesetting, Handwriting services, HR services, internet marketing, legal services, medical billing, proofreading, editing, software & technology, transcription, web design & web development and writing & Translation. Some of typical KPO services are like as knowledge processing outsourcing services, intellectual property research, animation & simulation services, data research & analytics, litigation Services, medical content & services, pharmaceuticals services, writing/content development services and database development services.
The outside firms that are providing the outsourcing services are third-party providers, or as they are more commonly called, service providers. For example ITMatchOnline.com, an outsourcing portal is a kind of service provider for service buyer, which offers projects related to BPO Services, KPO Services and Information Technology. ITMatchOnline offers some of typical popular outsourcing services like as call center, book keeping, drafting, internet marketing, software development, writing, translation and web development.
Currently, outsourcing takes many forms. Organizations still hire service providers to handle distinct business processes, such as benefits management. But some organizations outsource whole operations. The most common forms are information technology outsourcing (ITO), knowledge processing outsourcing (KPO) and business process outsourcing (BPO). The challenges of outsourcing become especially acute when the work is being done in a different country (offshore), since that involves language, cultural and time zone differences.
Business process outsourcing
Business process outsourcing (BPO) is the contracting of a specific business task, such as payroll, to a third-party service provider. Usually, BPO is implemented as a cost-saving measure for tasks that a company requires but does not depend upon to maintain their position in the marketplace. BPO is often divided into two categories: back office outsourcing which includes internal business functions such as billing or purchasing, and front office outsourcing which includes customer-related services such as marketing or tech support.
BPO that is contracted outside a company's own country is sometimes called offshore outsourcing. BPO that is contracted to a company's neighboring country is sometimes called nearshore outsourcing, and BPO that is contracted with the company's own county is sometimes called onshore outsourcing.
Business process outsourcing (BPO) contains the transmission of processes along with the associated operational activities and responsibilities, to a third party with at least a guaranteed equal service level and where the client contains a firm grip over the (activities of the) vendor for mutual long term success. BPO is positively related to the search for more efficient organizational designs: cost reduction,productivity growth and innovative capabilities. Hence, a source for strategic advantage.
Traditionally, BPO is undertaken by manufacturing firms. For instance Coca Cola, where almost the entire supply chain is outsourced and the company is essentially becoming a marketing organization.However, BPO is nowadays rapidly conquering the service oriented firms as well. A well-known example is provided by the Bank of America, who outsourced their entire HR function to Exult, one of the leading Human Resources BPO vendors.
BPO is often divided into two categories: back office outsourcing, which includes internal business functions such as billing or purchasing, and front office outsourcing, which includes customer-related services such as marketing or tech support. The endless opportunities IT provides, stimulates (cross-border) BPO activities. BPO that is contracted outside a company's own country is sometimes called offshore outsourcing. BPO that is contracted to a company's neighboring country is sometimes called nearshore outsourcing.
Use of a BPO as opposed to an application service provider (ASP) usually also means that a certain amount of risk is transferred to the company that is running the process elements on behalf of the outsourcer. BPO includes the software, the process management, and the people to operate the service, while a typical ASP model includes only the provision of access to functionalities and features provided or 'served up' through the use of software, usually via web browser to the customer. BPO is a part of the outsourcing industry. It is dependent on information technology, hence it is also referred to as information technology enabled services or ITES. Knowledge process outsourcing and legal process outsourcing are some of the subsets of business process outsourcing.
ITES
Information technology enabled services, or ITES, is a form of outsourced service which has emerged due to involvement of IT in various fields such as banking and finance, telecommunications, etc. Some of the examples of ITES are medical transcription, back-office accounting, insurance claim, credit card processing and many more.
Firms usually from developed countries outsource such services to countries like Egypt, India, Bangladesh, China, Romania and Philippines in order to gain from large talent pool and low labor cost.
Industry size
India has revenues of 10.9 billion USD[3] from offshore BPO and 30 billion USD from IT and total BPO (expected in FY 2008). India thus has some 5-6% share of the total BPO Industry, but a commanding 63% share of the offshore component. This 63% is a drop from the 70% offshore share that India enjoyed last year, despite the industry growing 38% in India last year, other locations like Eastern Europe, Philippines, Egypt and South Africa have emerged to take a share of the market. China is also trying to grow from a very small base in this industry. However, while the BPO industry is expected to continue to grow in India, its market share of the offshore piece is expected to decline.
The top five Indian BPO exporters for 2006-2007 according to NASSCOM are Genpact, WNS Global Services, Transworks Information Services, IBM-daksh, and TCS BPO.
Acccording to McKinsey, the global "addressable" BTO market is worth $122 - $154 billion, of which: 35-40 retail banking, 25-35 insurance, 10-12 travel/hospitality, 10-12 auto, 8-10 telecoms, 8 pharma, 10-15 others and 20-25 is finance, accounting and HR. Moreover, they estimate that 8% of that capacity was utilized as of 2006.
BPO increasing the flexibility of organizations
One of the most important advantages of BPO is the way in which it helps to increase a company’s flexibility. However, several sources have different ways in which they perceive organizational flexibility. Therefore business process outsourcing enhances the flexibility of an organization in different ways.
• Most services provided by BPO vendors are offered on a fee-for-service basis. This helps a company becoming more flexible by transforming fixed into variable costs. A variable cost structure helps a company responding to changes in required capacity and does not requisite a company in investing in assets and hereby making the company more flexible . Outsourcing of for instance a fraction of the workforce provides firm flexibility and reconfiguring resource deployments and reduce response times to major environmental changes.
• Another way in which BPO contributes to a company’s flexibility is that a company is able to focus on it’s core competencies, without being burdened by the demands of bureaucratic dictate [8]. Key employees are herewith released from performing non-core or administrative processes and can invest more time and energy in building the firm’s core businesses. The key in this lies in knowing, which of the main value drivers to focus on – customer intimacy, product leadership, or operate excellence. This is exemplified by for instance the case of Dell. Focusing on one of these drivers instead of more helps a company create a competitive edge. Herewith the company becomes more responsive and is able to react faster on changes in a an organization’s environment.
• A third way in which BPO increases organizational flexibility is by increasing the speed of business processes. Using techniques such as linear programming is a way to reduce cycle time and inventory levels, which reduces a company’s slack. Supply chain management with the effective use of supply chain partners and business process outsourcing increases the speed of several business processes, such as the throughput in the case of a manufacturing company.
• Finally, flexibility is seen as a stage in the organizational life cycle. For instance in the case of Nortel, which used to be a very rigid and bureaucratic organization, BPO helped to transform the company from a bureaucratic organization into a very agile organization by means of BPO. A company can hereby help maintaining ambitious growth goals, which do not fit with regular incumbent strategies. BPO therefore allows firms to retain their entrepreneurial speed and agility, which they would otherwise sacrifice in order to become efficient as they greatly expanded. It avoids a premature internal transition from its informal entrepreneurial phase to a more bureaucratic mode of operation.
Challenges
Although the above-mentioned arguments favor the view that BPO increases the flexibility of organizations, management needs to be careful with the implementation of it. Some tends to change their atttitudes, personalities and character on how the way they talk to other clients. Although BPO has many potential advantages there are a few stumbling blocks, which could counter these advantages. Among problems, which arise in practice are: A failure to meet service levels, unclear contractual issues, changing requirements and unforeseen charges. When BPO does not work out as planned the company might well experience the way in which BPO makes a company very dependent on a vendor and therefore very inflexible. Consequently, these challenges need to be considered before a company decides to engage in business process outsourcing
Threats
Unfortunately, several studies reveal the disappointing fact that most outsourcing contracts fail to live up to their expectations. The potential dangers for achieving long term success are loss of internal business process know-how and dependency towards the vendor, not to mention theft of data. In instances of off-shore outsourcing, customer and employee information is commonly sold cheaply on the open market. Refer to the Kkaran Bahree.
A major drawback involved, in Business Process Outsourcing are the risks. Outsourcing of an Information System, for example causes for instance securityrisks, both from a communication- and from a privacy perspective, and from a knowledge perspective, a changing attitude in employees, underestimation of running costs and the major risk of losing independence, outsourcing leads to a different relationship between an organization and its contractor.
Risks and threats of outsourcing must therefore be managed, to achieve any benefits. In order to manage outsourcing in a structured way, maximizing positive outcome, and minizing risks and avoiding any threats, a Business Continuity Management (BCM) model is setup. BCM consists of a set of steps, to succesfully identify, manage and control that business processes that are, or can be outsourced.
Another framework, more focussed on the the identification process of potential outsourcable Information Systems, identified as AHP, is explained.
L. Willcocks, M. Lacity and G. Fitzgerald identify several conctracting problems, companies face, ranging from unclear contract formatting, to a lack of understanding of technical IT- processes.[
Accounting Outsourcing India is extremely popular
You can notice immense development in the business industry and every organization is striving to undertake expansion plans. This is due to the vast development in business industry and one such industry is accounting outsourcing India. Proper management and good strategy is the key aspects of an organization to outperform. Achieving a grand success is desire of every individual and so it needs good effort and managerial skills to make every unit of the firm properly functioning. Accounting is an important section of any firm as it contains finance records which is a very crucial data. Accounting outsourcing India is a significant marketing strategy that makes business to make them work smoothly. These data contain financial records, it also shows whether the firm is in credit mode or deficit.
Accounting outsourcing India is a cost effective business strategy that many businesses are looking for it. Many business specialized in any area is considering this technique. They get efficient and quality work in their defined period of time from accounting outsourcing. They unhesitatingly outsource their accounting task to an offshore destination. This business technique has led many business financial status booming. It is applicable to any size of business, it works irrespective of the extent of the firm. This approach has got overwhelming response from the businesses. Accounting is a tough job and your business needs a serious caring. This work cannot be taken lightly or you can suffer severe losses in your business. It has helped many businesses to make big and their fiscal record has seen an upward move in the growth chart. So if you are new player in the business world, you can consider this technique.
Your task is executed with utmost care and responsibility. They are prompt in delivery of your task with absolute professionalism. You can rely on them because they are perfectionist accounting task. Your data is very precious document of your business and it is saved properly by them and so you not have to bother about it. India is a renowned destination for the accounting outsourcing services. It is a prominent player in this kind of business. There are many companies in the market and they are endeavor with each other to make itself at top. And so businesses have to face tremendous pressure and they are hampered with unlimited work. India has become the first choice of outsourcing work of any organization. Accounting outsourcing India sheds your work load and you do engage in other task of your business. You start looking for expansion plans and various new methods to bring advancement in the existing units.
Accounting outsourcing India takes very small amount of your revenue as a charge to be paid for your task. You get best work executed by the offshore nation. Being a good business owner, it is your responsibility to look after their work procedure. This will satisfy you that your accounts are maintained properly. This strategy works as a cost cutting and so you can save lots of money. You will not have to hire professionals and much of your quality time will be saved. Today, it has become one of the important marketing strategy of many businesses.
Accounting outsourcing India is a cost effective business strategy that many businesses are looking for it. Many business specialized in any area is considering this technique. They get efficient and quality work in their defined period of time from accounting outsourcing. They unhesitatingly outsource their accounting task to an offshore destination. This business technique has led many business financial status booming. It is applicable to any size of business, it works irrespective of the extent of the firm. This approach has got overwhelming response from the businesses. Accounting is a tough job and your business needs a serious caring. This work cannot be taken lightly or you can suffer severe losses in your business. It has helped many businesses to make big and their fiscal record has seen an upward move in the growth chart. So if you are new player in the business world, you can consider this technique.
Your task is executed with utmost care and responsibility. They are prompt in delivery of your task with absolute professionalism. You can rely on them because they are perfectionist accounting task. Your data is very precious document of your business and it is saved properly by them and so you not have to bother about it. India is a renowned destination for the accounting outsourcing services. It is a prominent player in this kind of business. There are many companies in the market and they are endeavor with each other to make itself at top. And so businesses have to face tremendous pressure and they are hampered with unlimited work. India has become the first choice of outsourcing work of any organization. Accounting outsourcing India sheds your work load and you do engage in other task of your business. You start looking for expansion plans and various new methods to bring advancement in the existing units.
Accounting outsourcing India takes very small amount of your revenue as a charge to be paid for your task. You get best work executed by the offshore nation. Being a good business owner, it is your responsibility to look after their work procedure. This will satisfy you that your accounts are maintained properly. This strategy works as a cost cutting and so you can save lots of money. You will not have to hire professionals and much of your quality time will be saved. Today, it has become one of the important marketing strategy of many businesses.
Effective Hr Outsourcing Solutions
HR leaders must know how to thread their way through the ins and outs of outsourcing before their organizations can build an effective HR solution.
Although HR professionals have been using outsourcing in one way or another for many years, the trend continues to gather steam. A growing number of organizations are outsourcing at least some of their HR functions.
Some point to increasing cost pressures or the need to relieve staff of their administrative burden. Others say they are looking to improve their focus, access first-rate capabilities, share risks and rewards, keep up with rapidly evolving technology, deal with increasing regulatory and compliance requirements and/or to better manage continuous change.
This article looks at the current state of outsourcing -- what HR is outsourcing now and why.
Why Organizations Outsource: The Fact and the Fiction
Most HR departments have many common expectations and perceptions about outsourcing -- not all of which are true.
When viewed objectively, Sibson, a strategic HR consulting division of The Segal Co., has observed that outsourcing actually does:
Increase efficiency. It allows organizations to take advantage of what others have learned. They already have found ways to improve efficiency and have solved many of the problems that other companies are now experiencing.
Free internal resources and allow HR practitioners to be more strategic. Instead of entering data, crunching numbers and pushing paper, HR can focus on core/non-administrative functions. Offloading the administrative work maximizes the organization's resources.
Offer access to expertise. Organizations that outsource gain access to know-how they probably do not possess. They tap into a broad network of experienced people and best practices.
There are, however, some common misconceptions about outsourcing, including the belief that it can and will in every situation:
Cut costs. Although outsourcing will provide cost savings for some organizations (mostly those that are very large and extremely inefficient), in most cases, it is dollar-for-dollar cost neutral.
Take an organization with hundreds of people in HR: If it can save just 5 percent of the $100 million dollars it spends on HR, it will save $5 million. But a company with only 10 people in HR is not going to pay for the service by shifting the work off one or two employees. What will happen is that the department will gain an increase in benefits or services -- more bang for the buck.
Keep up with the latest technology. Many HR departments are stuck with old technology and find it difficult and expensive to upgrade. Outsourcers, however, are expected to keep up with technology and provide the service at a reasonable cost.
This is true for some vendors, but not all. It is up to the organization to check and manage the relationship correctly.
Provide improved and additional services. As with technology, this is true to some extent. While the organization can get improved services, it will have to negotiate for them and they will come at a cost.
Share risk. Although it is somewhat true that risk is shared between the HR department and the outsourcer, this is typically mitigated by the contract, and that is what determines where risk stops and starts, particularly around compliance efforts. In almost all cases, the risk stays with the organization.
Why Some Organizations Choose Not to Outsource
In our experience, some HR departments prefer not to outsource because they:
Cannot justify the outsourcing fees. Outsourcing may cost more, but the organization will get more. The question is, what does the organization need, and can it afford more?
Have a competitive or strategic advantage in a particular function. If an organization does something particularly well, it has little to gain and much to lose by outsourcing it.
Fear losing control. While it is true that some control must be surrendered in any outsourcing relationship, processes can be established to ensure the organization has all the control it needs. Nevertheless, some HR departments prefer to play their cards close to the vest.
Already have the investment, infrastructure and expertise in place to perform these duties. The organization may have already made a large capital expenditure in people, process and/or technology and has costs to recover.
Believe their internal staff and systems are not ready. This is often a cultural issue. Some HR departments are not prepared for this kind of change.
Do not have the resources and skills they need to manage external vendors. They have HR practitioners, but outsourcing calls for relationship managers -- a different skill set.
Think outsourcing would be culturally unacceptable. In many cases, organizations have never outsourced because it conflicts with their practiced business policies.
Cannot find "suitable" outsourcers. Although in some cases this is just an excuse, some organizations are looking for something that does not exist. For instance, they may want to outsource the distribution of electronic files for data exchange and nothing else, which is not possible.
Have unusually high security requirements. This is largely a matter of perception. Most outsourcers have very high standards in place and pass multiple audits. Yet HR information is very sensitive and some organizations still believe they have stronger firewalls than anybody else. In short, they do not want anyone else managing their data.
What Are Organizations Outsourcing?
HR departments can outsource their technology, their people and/or their processes. The most common approach for mid-sized organizations is to outsource their technology and a part of their processes. As shows, the most popular process to outsource is 401(k) plan management, followed by pensions and benefits.
What the Data Shows
How do organizations like insourcing vs. outsourcing? Some of the findings are surprising. As demonstrates, when it comes to HR solutions (technology, people and process), HR departments that outsource say it has allowed them to avoid new information technology/capital expenditures and reduce software implementation times.
Those that use in-house solutions say it has improved employee productivity and made it easy to integrate new services.
The employee productivity example is particularly interesting because it is contrary to what most HR professionals think: that outsourcing will improve productivity. In this instance, the portion of organizations with in-house solutions that say productivity has improved is actually 20 percentage points higher than those that have outsourced.
Conclusion
HR has evolved a great deal in recent years, moving away from administrative work to become a respected function and a partner in the organization's business. Now, it is becoming a business leader that is ROI-focused and technology savvy.
Outsourcing is one of the levers HR has used to move along this path. Although the reasons to insource or outsource HR processes, technology or people continue to vary from organization to organization, outsourcing remains a popular approach for delivering HR services.
Although HR professionals have been using outsourcing in one way or another for many years, the trend continues to gather steam. A growing number of organizations are outsourcing at least some of their HR functions.
Some point to increasing cost pressures or the need to relieve staff of their administrative burden. Others say they are looking to improve their focus, access first-rate capabilities, share risks and rewards, keep up with rapidly evolving technology, deal with increasing regulatory and compliance requirements and/or to better manage continuous change.
This article looks at the current state of outsourcing -- what HR is outsourcing now and why.
Why Organizations Outsource: The Fact and the Fiction
Most HR departments have many common expectations and perceptions about outsourcing -- not all of which are true.
When viewed objectively, Sibson, a strategic HR consulting division of The Segal Co., has observed that outsourcing actually does:
Increase efficiency. It allows organizations to take advantage of what others have learned. They already have found ways to improve efficiency and have solved many of the problems that other companies are now experiencing.
Free internal resources and allow HR practitioners to be more strategic. Instead of entering data, crunching numbers and pushing paper, HR can focus on core/non-administrative functions. Offloading the administrative work maximizes the organization's resources.
Offer access to expertise. Organizations that outsource gain access to know-how they probably do not possess. They tap into a broad network of experienced people and best practices.
There are, however, some common misconceptions about outsourcing, including the belief that it can and will in every situation:
Cut costs. Although outsourcing will provide cost savings for some organizations (mostly those that are very large and extremely inefficient), in most cases, it is dollar-for-dollar cost neutral.
Take an organization with hundreds of people in HR: If it can save just 5 percent of the $100 million dollars it spends on HR, it will save $5 million. But a company with only 10 people in HR is not going to pay for the service by shifting the work off one or two employees. What will happen is that the department will gain an increase in benefits or services -- more bang for the buck.
Keep up with the latest technology. Many HR departments are stuck with old technology and find it difficult and expensive to upgrade. Outsourcers, however, are expected to keep up with technology and provide the service at a reasonable cost.
This is true for some vendors, but not all. It is up to the organization to check and manage the relationship correctly.
Provide improved and additional services. As with technology, this is true to some extent. While the organization can get improved services, it will have to negotiate for them and they will come at a cost.
Share risk. Although it is somewhat true that risk is shared between the HR department and the outsourcer, this is typically mitigated by the contract, and that is what determines where risk stops and starts, particularly around compliance efforts. In almost all cases, the risk stays with the organization.
Why Some Organizations Choose Not to Outsource
In our experience, some HR departments prefer not to outsource because they:
Cannot justify the outsourcing fees. Outsourcing may cost more, but the organization will get more. The question is, what does the organization need, and can it afford more?
Have a competitive or strategic advantage in a particular function. If an organization does something particularly well, it has little to gain and much to lose by outsourcing it.
Fear losing control. While it is true that some control must be surrendered in any outsourcing relationship, processes can be established to ensure the organization has all the control it needs. Nevertheless, some HR departments prefer to play their cards close to the vest.
Already have the investment, infrastructure and expertise in place to perform these duties. The organization may have already made a large capital expenditure in people, process and/or technology and has costs to recover.
Believe their internal staff and systems are not ready. This is often a cultural issue. Some HR departments are not prepared for this kind of change.
Do not have the resources and skills they need to manage external vendors. They have HR practitioners, but outsourcing calls for relationship managers -- a different skill set.
Think outsourcing would be culturally unacceptable. In many cases, organizations have never outsourced because it conflicts with their practiced business policies.
Cannot find "suitable" outsourcers. Although in some cases this is just an excuse, some organizations are looking for something that does not exist. For instance, they may want to outsource the distribution of electronic files for data exchange and nothing else, which is not possible.
Have unusually high security requirements. This is largely a matter of perception. Most outsourcers have very high standards in place and pass multiple audits. Yet HR information is very sensitive and some organizations still believe they have stronger firewalls than anybody else. In short, they do not want anyone else managing their data.
What Are Organizations Outsourcing?
HR departments can outsource their technology, their people and/or their processes. The most common approach for mid-sized organizations is to outsource their technology and a part of their processes. As shows, the most popular process to outsource is 401(k) plan management, followed by pensions and benefits.
What the Data Shows
How do organizations like insourcing vs. outsourcing? Some of the findings are surprising. As demonstrates, when it comes to HR solutions (technology, people and process), HR departments that outsource say it has allowed them to avoid new information technology/capital expenditures and reduce software implementation times.
Those that use in-house solutions say it has improved employee productivity and made it easy to integrate new services.
The employee productivity example is particularly interesting because it is contrary to what most HR professionals think: that outsourcing will improve productivity. In this instance, the portion of organizations with in-house solutions that say productivity has improved is actually 20 percentage points higher than those that have outsourced.
Conclusion
HR has evolved a great deal in recent years, moving away from administrative work to become a respected function and a partner in the organization's business. Now, it is becoming a business leader that is ROI-focused and technology savvy.
Outsourcing is one of the levers HR has used to move along this path. Although the reasons to insource or outsource HR processes, technology or people continue to vary from organization to organization, outsourcing remains a popular approach for delivering HR services.
Data Entry Outsourcing: Where to Find the Most Competent and Affordable Outsourcing Company
As an owner of a company or a business, you want to save money as much as possible in order to profit more and let your company grow. Thanks to the internet, outsourcing your business process can be done in other countries where qualified, and experienced computer operators are widely available at a very low cost.
Countries such as India, Philippines, China and other developing countries are now accepting outsourcing as part of a very lucrative industry.
Data entry work is one such thing that businesses and companies today are outsourcing to lighten the heavy workload and also to do it more efficiently, faster, and more accurate.
First of all, before you consider this option, you have to know what data entry is all about. Data entry operations include data conversion, image and document processing, image enhancement, catalog processing services, photo manipulation services and others.
Data entry is a constant need for some organization or companies that needs to document its daily activities. So, if you need data entry jobs, you should consider outsourcing it to other companies abroad that offer quality data entry jobs at a very affordable price.
There are a lot of benefits that you can take advantage of if you outsource your data entry jobs. One is that you will be able to have your data entry jobs done at a very affordable price; two is that you will be able to get it done professionally by competent people; and three is that you will be getting rid of this extra work in your company. Meaning that you will be effectively separating your company’s work into manageable pieces.
Data entry is often used in medical billing and transcribing. It can be done by freelancers or an outsourcing company from other parts of the world. Over the past two decades, data entry companies and freelancers have been doing this work.
While it is true that data entry jobs can be done in-house, but there are certain jobs that should be done by experts rather than your staff. If you need a particularly large job in data outsourcing, it would take a lot of time and will require overtime for your staff if you do it in-house. However, if you outsource it, your company will function more normally and focus on more important work in your business.
So, if you have a time-consuming and expensive data entry jobs that your company needs to finish, you can consider outsourcing the data entry jobs to freelancers, or data entry companies that accepts outsourced jobs. For example, catalog management can prove to be very time consuming and expensive. This will involve handling and maintaining paper catalogs. By outsourcing it, you will save a lot of money and still have time for your company’s priority.
Data entry outsourcing will certainly change the way you run your company. It will let you save a lot of money, get the job done professionally, and it will allow you to effectively manage your company’s priorities and workloads.
Always remember that before you hire a company or a freelancer to outsource your data entry jobs, you should first check the quality of their work and their work experience. It is recommended that they should have at least experience in the field of data entry jobs you will be outsourcing.
Countries such as India, Philippines, China and other developing countries are now accepting outsourcing as part of a very lucrative industry.
Data entry work is one such thing that businesses and companies today are outsourcing to lighten the heavy workload and also to do it more efficiently, faster, and more accurate.
First of all, before you consider this option, you have to know what data entry is all about. Data entry operations include data conversion, image and document processing, image enhancement, catalog processing services, photo manipulation services and others.
Data entry is a constant need for some organization or companies that needs to document its daily activities. So, if you need data entry jobs, you should consider outsourcing it to other companies abroad that offer quality data entry jobs at a very affordable price.
There are a lot of benefits that you can take advantage of if you outsource your data entry jobs. One is that you will be able to have your data entry jobs done at a very affordable price; two is that you will be able to get it done professionally by competent people; and three is that you will be getting rid of this extra work in your company. Meaning that you will be effectively separating your company’s work into manageable pieces.
Data entry is often used in medical billing and transcribing. It can be done by freelancers or an outsourcing company from other parts of the world. Over the past two decades, data entry companies and freelancers have been doing this work.
While it is true that data entry jobs can be done in-house, but there are certain jobs that should be done by experts rather than your staff. If you need a particularly large job in data outsourcing, it would take a lot of time and will require overtime for your staff if you do it in-house. However, if you outsource it, your company will function more normally and focus on more important work in your business.
So, if you have a time-consuming and expensive data entry jobs that your company needs to finish, you can consider outsourcing the data entry jobs to freelancers, or data entry companies that accepts outsourced jobs. For example, catalog management can prove to be very time consuming and expensive. This will involve handling and maintaining paper catalogs. By outsourcing it, you will save a lot of money and still have time for your company’s priority.
Data entry outsourcing will certainly change the way you run your company. It will let you save a lot of money, get the job done professionally, and it will allow you to effectively manage your company’s priorities and workloads.
Always remember that before you hire a company or a freelancer to outsource your data entry jobs, you should first check the quality of their work and their work experience. It is recommended that they should have at least experience in the field of data entry jobs you will be outsourcing.
Saturday, March 29, 2008
Get Accurate With Accounting Outsourcing
Spending hours on drafting and redrafting the accounts books of your business can try out your patience. Moreover checking each of the transactions can also consume a lot of your time, resulting in exhaustion and irritation. Accounting is just no child’s play and requires tremendous amount of expertise and accuracy. Moreover maintaining accounts is indeed a tiresome process, wherein most of your time you will need calculate and recalculate your transactions. But then this entire tedious process can not even be overlooked as maintaining a daily and accurate hard copy of your financial transactions is something that helps in determining the financial standing of your business. This further helps you to determine the graph of the profit or the loss that your firm is experiencing. Despite knowing the fact that maintaining accounts is an important task, you might be short of people who have proficiency in this field and can handle the work efficiently. In this scenario the best solution you can opt for is accounting outsourcing. In fact accounting outsourcing could help you solve all your problems and queries related to the accountings of your firm.
Any business firm, whether a large scale one or a small scale one, should be crystal clear while stating their financial transactions. This can only be done if the regular accounting work and financial reports are made precisely. This precise accounting work does call in for the investment of apt professionals who have thorough connoisseur in their work. Considering this fact you can always have an upper hand by adopting accounting outsourcing services. Considering accounting outsourcing services for your business will not only guide you and your business towards the right path of accounting, but will also help you in delivering the best and the most accurate accountings. Accounting outsourcing vendors make sure that the accounting outsourcing services provided by them help your business earn the maximum amount of profits and revenue. Apart from being assured of good revenues, once you adopt accounting outsourcing services you can also be rest assured about accurate and precise financial data at your disposition.
While you plan to adopt the accounting outsourcing services offered by an accounting outsourcing vendor or firm, you will have to look in through some details of the accounting outsourcing firm. The things that you will need to consider when selecting an accounting outsourcing firm are the authenticity of their organization and their work, the work experience and the expertise that they have in the field. Moreover you will have to understand the requirement of your business and then accordingly look out for an accounting outsourcing firm that suits your business requirements. The accounting outsourcing professionals who are hired have expertise in various fields of accounting and can handle their responsibilities very competently.
As accounting is a very sensitive issue you must make sure that you keep a track on the work of the accounting outsourcing firm that you have hired for your business. This will not only help you to stay up to dated with the work but will also help you to understand the work of accounting with more accuracy and expertise. Accounting outsourcing helps to maintain the daily record of the transactions and the various other financial issues of your business helping you to have accurate and scrutinized business records.
Any business firm, whether a large scale one or a small scale one, should be crystal clear while stating their financial transactions. This can only be done if the regular accounting work and financial reports are made precisely. This precise accounting work does call in for the investment of apt professionals who have thorough connoisseur in their work. Considering this fact you can always have an upper hand by adopting accounting outsourcing services. Considering accounting outsourcing services for your business will not only guide you and your business towards the right path of accounting, but will also help you in delivering the best and the most accurate accountings. Accounting outsourcing vendors make sure that the accounting outsourcing services provided by them help your business earn the maximum amount of profits and revenue. Apart from being assured of good revenues, once you adopt accounting outsourcing services you can also be rest assured about accurate and precise financial data at your disposition.
While you plan to adopt the accounting outsourcing services offered by an accounting outsourcing vendor or firm, you will have to look in through some details of the accounting outsourcing firm. The things that you will need to consider when selecting an accounting outsourcing firm are the authenticity of their organization and their work, the work experience and the expertise that they have in the field. Moreover you will have to understand the requirement of your business and then accordingly look out for an accounting outsourcing firm that suits your business requirements. The accounting outsourcing professionals who are hired have expertise in various fields of accounting and can handle their responsibilities very competently.
As accounting is a very sensitive issue you must make sure that you keep a track on the work of the accounting outsourcing firm that you have hired for your business. This will not only help you to stay up to dated with the work but will also help you to understand the work of accounting with more accuracy and expertise. Accounting outsourcing helps to maintain the daily record of the transactions and the various other financial issues of your business helping you to have accurate and scrutinized business records.
Success With Bookkeeping Outsourcing
It is needless to say that managing the financial aspect of every business is a vital part of equation of success and every organization understands it significance. Conversely it is also true that doing this work can be actually tiresome and time consuming as well. If you really want a solution of all your bookkeeping problems then bookkeeping outsourcing is the answer for you. The best thing about bookkeeping outsourcing is that you get a chance to save money and precious time that you can utilize in other important activities. Bookkeeping outsourcing definitely benefits your business as it assists you in managing financial and accounting activities proficiently.
Bookkeeping outsourcing makes accounting hassle free for you and keeps a bird’s eye on all transactions because you cannot afford to miss a single transaction as it can hamper the growth of your business. It is always a wise decision to hire bookkeeping outsourcing service for a business. An added advantage of hiring a bookkeeping firm is that you will be able to pay more attention to those issues which are ignored due to your busy schedule. Also the accountability of making accurate entries in ledger and day books rest with the bookkeeping outsourcing firm as the firm will be answerable to you in case of any mistake. Hence bookkeeping firms ensures accuracy and answerability in maintaining accurate financial records and statements.
Bookkeeping outsourcing has become a vital part of many businesses due to its accountability and efficiency. You can not only maintain transaction through bookkeeping services but can retrieve it whenever you need. Bookkeeping outsourcing includes data entry, single entry; commercial bookkeeping on computerized systems so that it may serve your business in best way. Your financial records and statements reflects the condition and size of your business therefore perfectly maintained accounts can help you in deciding future strategies and expansion plans. A profit and loss statement can help you in deciding which step is causing loss and what should be done for betterment. Bookkeeping outsourcing is therefore a big help for organizations by not only making properly maintained and processed accounting data available at a short notice, but also enabling the business to employ the resources, thus made available, in other divisions as well.
Selection of a bookkeeping outsourcing service is one of the most important decisions an individual or businesses can make. The essential thing that one should keep in mind while hiring a bookkeeping outsourcing service is the authenticity and accountability of that firm. Every company prefers services from such a firm where accounting professionals have genuine qualification and certificate from board of notification so make sure that the bookkeeping firms you are hiring have qualified professionals. Once you are satisfied then only the task of handling sensitive financial data and maintaining accounts can handed over to a bookkeeping outsourcing firm. Bookkeeping outsourcing is giving wonderful result that is why it is becoming key strategy of many businesses to hire bookkeeping services. Bookkeeping outsourcing can be your trusted partner in maintaining and expending profits.
Bookkeeping outsourcing makes accounting hassle free for you and keeps a bird’s eye on all transactions because you cannot afford to miss a single transaction as it can hamper the growth of your business. It is always a wise decision to hire bookkeeping outsourcing service for a business. An added advantage of hiring a bookkeeping firm is that you will be able to pay more attention to those issues which are ignored due to your busy schedule. Also the accountability of making accurate entries in ledger and day books rest with the bookkeeping outsourcing firm as the firm will be answerable to you in case of any mistake. Hence bookkeeping firms ensures accuracy and answerability in maintaining accurate financial records and statements.
Bookkeeping outsourcing has become a vital part of many businesses due to its accountability and efficiency. You can not only maintain transaction through bookkeeping services but can retrieve it whenever you need. Bookkeeping outsourcing includes data entry, single entry; commercial bookkeeping on computerized systems so that it may serve your business in best way. Your financial records and statements reflects the condition and size of your business therefore perfectly maintained accounts can help you in deciding future strategies and expansion plans. A profit and loss statement can help you in deciding which step is causing loss and what should be done for betterment. Bookkeeping outsourcing is therefore a big help for organizations by not only making properly maintained and processed accounting data available at a short notice, but also enabling the business to employ the resources, thus made available, in other divisions as well.
Selection of a bookkeeping outsourcing service is one of the most important decisions an individual or businesses can make. The essential thing that one should keep in mind while hiring a bookkeeping outsourcing service is the authenticity and accountability of that firm. Every company prefers services from such a firm where accounting professionals have genuine qualification and certificate from board of notification so make sure that the bookkeeping firms you are hiring have qualified professionals. Once you are satisfied then only the task of handling sensitive financial data and maintaining accounts can handed over to a bookkeeping outsourcing firm. Bookkeeping outsourcing is giving wonderful result that is why it is becoming key strategy of many businesses to hire bookkeeping services. Bookkeeping outsourcing can be your trusted partner in maintaining and expending profits.
Payroll Outsourcing Companies
Payroll outsourcing companies deal with outsourcing of payroll activities. They do the actual work of tallying hours and creating the paychecks for all the employees of a client. Payroll means a sequence of accounting transactions dealing with the process of paying employees for service provided, holding money from employees for payment of payroll taxes, insurance premiums, employee benefits, garnishments and other deductions. The payroll outsourcing companies provide the processing of non-core activities of a company. Payroll outsourcing companies usually have a group of experts, who can complete jobs quickly and efficiently, giving the management more time for development activities. Shifting the payroll burden to another firm means less work for in-house staff, eliminating the need for them to learn new, specialized duties.
Outsourcing companies undertake the burdensome responsibilities of administration, payroll record keeping, tax duties and claims, printing and delivering checks, and providing management reports. The experienced personnel in the outsourcing companies guarantee that your payroll files and details are accurate, prompt and professional. When there are problems regarding payroll activities the professionals in the outsourcing company can offer you reliable advice and rapid resolutions.
Signing up with a payroll outsourcing company saves time, resources and money for any small or big business establishment. The payroll outsourcing company will need to be given updated information once a week or once a month, depending on how often the employees are paid. An ideal payroll outsourcing company is one which is aware of all state and federal regulations. It should have credibility and sufficient facilities to handle the job undertaken.
offshore outsourcing
Offshore outsourcing, a type of business process outsourcing (BPO), is the exporting of IT-related work from the United States and other developed countries to areas of the world where there is both political stability and lower labor costs or tax savings. Outsourcing is an arrangement in which one company provides services for another company that could also be or usually have been provided in-house. Offshore simply means "any country other than your own." The Internet and high-speed Internet connections make it possible for outsourcing to be carried out anywhere in the world, a business trend economists call globalization. In general, domestic companies interested in offshore outsourcing are not only trying to save money in order to be more price-competitive against each other, but also to enable them to compete with businesses in other countries.
Critics of offshore outsourcing worry that if too much IT-related work is farmed out to other countries, home-grown IT talent will "dry up." They point out that once a company begins outsourcing overseas, they will find it difficult to reverse the trend and justify paying more in salaries, taxes, and job benefits for the same work they used to outsource. Proponents maintain that the judicious use of offshore outsourcing will help make all IT workers become more productive and allow companies to develop more agile and responsive business models, which in turn, will raise salaries for domestic workers in all countries.
According to the IT research and analysis firm Gartner, by the year 2004 more than 40% of IT-related businesses will either be investigating the possibility of offshore outsourcing or will have already shipped some IT-related work overseas.
Today’s businesses thrive on the ability to provide maximum service at lowest cost. This perhaps explains the present intense wave of IT Outsourcing to tech-suave countries like India.
Today, India is an attractive intellectual capital for global Information Technology companies. As government policies become more liberal in terms of reduced licensing requirements, fewer restrictions on investment, etc, IT outsourcing to India helps to leverage from immensely intelligent, skilled and dedicated resource at great cost-effective prices.
Offshore outsourcing to India means gain in more than one way. It is an opportunity to expand service levels beyond ordinary. It is an opportunity to tap into reduced labor cost, 24/7 productivity, dedicated staffing, technical expertise, excellent communication and interaction, and industry-leading infrastructure, making it easy to do business effectively.
Web application development, data management, custom product development, CRM and ERP solutions, e-commerce solutions, quality assurance and testing, technology helpdesk and support, are few of the numerous services being outsourced offshore in order to utilize skilled professionals globally.
However, there is more to IT outsourcing than what meets the eye.
For offshore outsourcing to be successful there must be an effective beginning-to-end corporate strategy that accounts for the various likely product development challenges. Cultural issues, transitional costs, excessive service-level expectations, security concerns, stringent legal issues, etc, are few factors to consider before moving towards outsourcing offshore. It may be best to deal with a customer-focused company having years of proven experience offering dedicated offshore outsourcing services as per client’s specific requirements.
Outsourcing
Outsourcing is an arrangement in which one company provides services for another company that could also be or usually have been provided in-house. Outsourcing is a trend that is becoming more common in information technology and other industries for services that have usually been regarded as intrinsic to managing a business. In some cases, the entire information management of a company is outsourced, including planning and business analysis as well as the installation, management, and servicing of the network and workstations. Outsourcing can range from the large contract in which a company like IBM manages IT services for a company like Xerox to the practice of hiring contractors and temporary office workers on an individual basis.
Outsourcing is subcontracting a process, such as product design or manufacturing, to a third-party company. The decision to outsource is often made in the interest of lowering firm costs, redirecting or conserving energy directed at the competencies of a particular business, or to make more efficient use of labor, capital, technology and resources. Outsourcing became part of the business lexicon during the 1980s.
Overview
Outsourcing involves the transfer of the management and/or day-to-day execution of an entire business function to an external service provider. The client organization and the supplier enter into a contractual agreement that defines the transferred services. Under the agreement the supplier acquires the means of production in the form of a transfer of people, assets and other resources from the client. The client agrees to procure the services from the supplier for the term of the contract. Business segments typically outsourced include information technology, human resources, facilities and real estate management, and accounting. Many companies also outsource customer support and call center functions like telemarketing, customer services, market research, manufacturing and engineering.
Outsourcing and offshoring are used interchangeably in public discourse despite important technical differences. Outsourcing involves contracting with a supplier, which may or may not involve some degree of offshoring. Offshoring is the transfer of an organizational function to another country, regardless of whether the work is outsourced or stays within the same .
With increasing globalization of outsourcing companies, the distinction between outsourcing and offshoring will become less clear over time. This is evident in the increasing presence of Indian outsourcing companies in the US and UK. The globalization of outsourcing operating models has resulted in new terms such as nearshoring and rightshoring that reflect the changing mix of locations. This is seen in the opening of offices and operations centers by Indian companies in the U.S. and UK.
Multisourcing refers to large (predominantly IT) outsourcing agreements. Multisourcing is a framework to enable different parts of the client business to be sourced from different suppliers. This requires a governance model that communicates strategy, clearly defines responsibility and has end-to-end integration.
Process of outsourcing
Deciding to outsource
The decision to outsource is taken at a strategic level and normally requires board approval. Outsourcing is the divestiture of a business function involving the transfer of people and the sale of assets to the supplier. The process begins with the client identifying what is to be outsourced and building a business case to justify the decision. Only once a high level business case has been established for the scope of services will a search begin to choose an outsourcing partner.
Supplier proposals
A Request for Proposal (RFP) is issued to the shortlist suppliers requesting a proposal and a price.
Supplier competition
A competition is held where the client marks and scores the supplier proposals. This may involve a number of face-to-face meetings to clarify the client requirements and the supplier response. The suppliers will be qualified out until only a few remain. This is known as down select in the industry. It is normal to go into the due diligence stage with two suppliers to maintain the competition. Following due diligence the suppliers submit a "best and final offer" (BAFO) for the client to make the final down select decision to one supplier. It is not unusual for two suppliers to go into competitive negotiations.
Negotiations
The negotiations take the original RFP, the supplier proposals, BAFO submissions and convert these into the contractual agreement between the client and the supplier. This stage finalizes the documentation and the final pricing structure.
Contract finalization
At the heart of every outsourcing deal is a contractual agreement that defines how the client and the supplier will work together. This is a legally binding document and is core to the governance of the relationship. There are three significant dates that each party signs up to the contract signature date, the effective date when the contract terms become active and a service commencement date when the supplier will take over the services.
Transition
The transition will begin from the effective date and normally run until four months after service commencement date. This is the process for the staff transfer and the take-on of services.
Transformation
The Transformation is the execution of a set of projects to implement the service level agreement (SLA), to reduce the total cost of ownership (TCO) or to implement new services. Emphasis is on 'standardisation' and 'centralisation'.
Ongoing service delivery
This is the execution of the agreement and lasts for the term of the contract.
Termination or renewal
Near the end of the contract term a decision will be made to terminate or renew the contract. Termination may involve taking back services (insourcing) or the transfer of services to another supplier.
Reasons for outsourcing
Organizations that outsource are seeking to realize benefits or address the following issues:
- Cost savings. The lowering of the overall cost of the service to the business. This will involve reducing the scope, defining quality levels, re-pricing, re-negotiation, cost re-structuring. Access to lower cost economies through offshoring called "labor arbitrage" generated by the wage gap between industrialized and developing nations.
- Cost restructuring. Operating leverage is a measure that compares fixed costs to variable costs. Outsourcing changes the balance of this ratio by offering a move from fixed to variable cost and also by making variable costs more predictable.
- Improve quality. Achieve a step change in quality through contracting out the service with a new service level agreement.
- Knowledge. Access to intellectual property and wider experience and knowledge.
- Contract. Services will be provided to a legally binding contract with financial penalties and legal redress. This is not the case with internal services.
- Operational expertise. Access to operational best practice that would be too difficult or time consuming to develop in-house.
- Staffing issues. Access to a larger talent pool and a sustainable source of skills.
- Capacity management. An improved method of capacity management of services and technology where the risk in providing the excess capacity is borne by the supplier.
- Catalyst for change. An organization can use an outsourcing agreement as a catalyst for major step change that can not be achieved alone. The outsourcer becomes a Change agent in the process.
- Reduce time to market. The acceleration of the development or production of a product through the additional capability brought by the supplier.
- Commodification. The trend of standardizing business processes, IT Services and application services enabling businesses to intelligently buy at the right price. Allows a wide range of businesses access to services previously only available to large corporations.
- Risk management. An approach to risk management for some types of risks is to partner with an outsourcer who is better able to provide the mitigation.
- Time zone. A sequential task can be done during normal day shift in different time zones - to make it seamlessly available 24x7. Same/similar can be done on a longer term between earth's hemispheres of summer/winter.
- Customer Pressure. Customers may see benefits in dealing with your company, but are not happy with the performance of certain elements of the business, which they may not see a solution to except through outsourcing.
Criticisms of outsourcing
Public opinion
There is a strong public opinion regarding outsourcing (especially when combined with offshoring) that outsourcing damages a local labor market. Outsourcing is the transfer of the delivery of services which affects both jobs and individuals. It is difficult to dispute that outsourcing has a detrimental effect on individuals who face job disruption and employment insecurity; however, its supporters believe that outsourcing should bring down prices, providing greater economic benefit to all. There are legal protections in the European Union regulations called the Transfer of Undertakings (Protection of Employment). Labor laws in the United States are not as protective as those in the European Union. A study has attempted to show that public controversies about outsourcing in the U.S. have much more to do with class and ethnic tensions within the U.S. itself, than with actual impacts of outsourcing.
Against shareholder views
For a publicly listed company it is the responsibility of the board to run the business for the shareholders. This means taking into consideration the views of the shareholders. Shareholders may be interested in return on investment and/or social responsibility. The board may decide that outsourcing is an appropriate strategy for the business. Shareholders have a responsibility to make their views known to the board of directors if they are against outsourcing.
Failure to realize business value
The main business criticism of outsourcing is that it fails to realize the business value that the outsourcer promised the client.
Language skills
In the area of call centers end-user-experience is deemed to be of lower quality when a service is outsourced. This is exacerbated when outsourcing is combined with off-shoring to regions where the first language and culture are different. The questionable quality is particularly evident when call centers that service the public are outsourced and offshored.
There are a number of the public who find the linguistics features such as accents, word use and phraseology different which may make call center agents difficult to understand. The visual clues that are present in face-to-face encounters are missing from the call center interactions and this also may lead to misunderstandings and difficulties.
Social responsibility
Some argue that the outsourcing of jobs (particularly off-shore) exploits the lower paid workers. A contrary view is that more people are employed and benefit from paid work.
Quality of service
Quality of service is measured through a service level agreement (SLA) in the outsourcing contract. In poorly defined contracts there is no measure of quality or SLA defined. Even when an SLA exists it may not be to the same level as previously enjoyed. This may be due to the process of implementing proper objective measurement and reporting which is being done for the first time. It may also be lower quality through design to match the lower price.
There are a number of stakeholders who are affected and there is no single view of quality. The CEO may view the lower quality acceptable to meet the business needs at the right price. The retained management team may view quality as slipping compared to what they previously achieved. The end consumer of the service may also receive a change in service that is within agreed SLAs but is still perceived as inadequate. The supplier may view quality in purely meeting the defined SLAs regardless of perception or ability to do better.
Quality in terms of end-user-experience is best measured through customer satisfaction questionnaires which are professionally designed to capture an unbiased view of quality. Surveys can be one of research. This allows quality to be tracked over time and also for corrective action to be identified and taken.
Staff turnover
The staff turnover of employee who originally transferred to the outsourcer is a concern for many companies. Turnover is higher under an outsourcer and key company skills may be lost with retention outside of the control of the company.
In outsourcing offshore there is an issue of staff turnover in the outsourcer companies call centers. It is quite normal for such companies to replace its entire workforce each year in a call center. This inhibits the build-up of employee knowledge and keeps quality at a low level.
Company knowledge
Outsourcing could lead to communication problems with transferred employees. For example before transfer staff have access to broadcast company e-mail informing them of new products, procedures etc. Once in the outsourcing organization the same access may not be available. Also to reduce costs, some outsource employees may not have access to e-mail, but any information which is new is delivered in team meetings.
Qualifications of outsourcers
The outsourcer may replace staff with less qualified people or with people with different non-equivalent qualifications.
In the engineering discipline there has been a debate about the number of engineers being produced by the major economies of the United States, India and China. The argument centers around the definition of an engineering graduate and also disputed numbers. The closest comparable numbers of annual gradates of four-year degrees are United States (137,437) India (112,000) and China (351,537).
Work, labour, and economy
Net labour movements
Productivity
Offshore outsourcing for the purpose of saving cost can often have a negative influence on the real productivity of a company. Rather than investing in technology to improve productivity, companies gain non-real productivity by hiring fewer people locally and outsourcing work to less productive facilities offshore that appear to be more productive simply because the workers are paid less. Sometimes, this can lead to strange contradictions where workers in a third world country using hand tools can appear to be more productive than a U.S. worker using advanced computer controlled machine tools, simply because their salary appears to be less in terms of U.S. dollars.
In contrast, increases in real productivity are the result of more productive tools or methods of operating that make it possible for a worker to do more work. Non-real productivity gains are the result of shifting work to lower paid workers, often without regards to real productivity. The net result of choosing non-real over real productivity gain is that the company falls behind and obsoletes itself overtime rather than making real investments in productivity.
Standpoint of labor
From the standpoint of labor within countries on the negative end of outsourcing this may represent a new threat, contributing to rampant worker insecurity, and reflective of the general process of globalization (see Krugman, Paul (2006). "Feeling No Pain." New York Times, March 6, 2006). While the "outsourcing" process may provide benefits to less developed countries or global society as a whole, in some form and to some degree - include rising wages or increasing standards of living - these benefits are not secure. Further, the term outsourcing is also used to describe a process by which an internal department, equipment as well as personnel, is sold to a service provider, who may retain the workforce on worse conditions or discharge them in the short term. The affected workers thus often feel they are being "sold down the river."
The U.S.
Outsourcing became a popular political issue in the United States during the 2004 U.S. presidential election. The political debate centered on outsourcing's consequences for the domestic U.S. workforce. Democratic U.S. presidential candidate John Kerry criticized U.S. firms that outsource jobs abroad or that incorporate overseas in tax havens to avoid paying their fair share of U.S. taxes during his 2004 campaign, calling such firms "Benedict Arnold corporations". Criticism of outsourcing, from the perspective of U.S. citizens, by-and-large, revolves around the costs associated with transferring control of the labor process to an external entity in another country. A Zogby International poll conducted in August 2004 found that 71% of American voters believed that “outsourcing jobs overseas” hurt the economy while another 62% believed that the U.S. government should impose some legislative action against companies that transfer domestic jobs overseas, possibly in the form of increased taxes on companies that outsource. One given rationale is the extremely high corporate income tax rate in the U.S. relative to other OECD nations , and the peculiar practice of taxing revenues earned outside of U.S. jurisdiction, a very uncommon practice. It is argued that lowering the corporate income tax and ending the double-taxation of foreign-derived revenue (taxed once in the nation where the revenue was raised, and once from the U.S.) will alleviate corporate outsourcing and make the U.S. more attractive to foreign companies. Sarbanes-Oxley has also been cited as a factor for corporate flight from U.S. jurisdiction.
Policy solutions to outsourcing are also criticized.
Security
Before outsourcing an organization is responsible for the actions of all their staff and liable for their actions. When these same people are transferred to an outsourcer they may not change desk but their legal status has changed. They no-longer are directly employed or responsible to the organization. This causes legal, security and compliance issues that need to be addressed through the contract between the client and the suppliers. This is one of the most complex areas of outsourcing and requires a specialist third party adviser.
Fraud
Fraud is a specific security issue that is criminal activity whether it is by employees or the supplier staff. It can be argued that fraud is more likely when outsourcers are involved. In April 2005, a high-profile case involving the theft of $350,000 from four Citibank customers occurred when call center workers, acquired the passwords to customer accounts and transferred the money to their own accounts opened under fictitious names. Citibank did not find out about the problem until the American customers noticed discrepancies with their accounts and notified the bank.
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