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IT Outsourcing – It’s an astute business decisionIn this article I am specifically looking at the option of outsourcing when it either hasn’tworked for you or been a viable optionStarting somewhere in the 90’s outsourcing became the new buzz word for many abusiness professional. With the potential for massive cost savings for any business backthen it was new and fresh and a journey into the unknown. India was the choice for outsourcing and off went many a UK company. The focus at first was calls centers andadministration departments – an obvious route for cost saving within any majororganisation.Even back then companies jumped in without looking at the negatives. How do youreplicate a service which has been 10 or twenty years in the making without losing somequality along the way? How to you replace a manager who has been instrumental in thedevelopment of your organization and understands the process backwards and forwards?As outsourcing moved on process became even more relevant and a new way of thinkingdeveloped. Mostly to counteract some of the early disasters that had occurred. All of asudden people started talking about “BPO” (Business Process Outsourcing ) and thefuture again seemed rosy. Now companies were looking at their business as a wholerather than just throwing departments over their shoulder to an outsourcing company. This is where we are today then. The world and the economic situation mean that BPOhas a real relevance.Despite early efforts to tarnish the concept of outsourcing its still going strong. Coupledwith Eastern Europe emerging as a hotbed for new outsourcing companies and a freshapproach outsourcing is slowly being restored to its original concept; used in the rightenvironments outsourcing can bring many benefits to a business.If you are well read on the subject matter you will no doubt understand the process andthe thought behind it. If not and it’s a journey your just beginning then allow me to putthis to you.
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 There are advantages and disadvantages to outsourcing
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Done in the right way and implemented properly Outsourcing can be an effectiveway of reducing your cost and improving output.
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More companies outsourced to European companies in 2008 than the US or India,by 2010 Eastern Europe it is anticipated will hold more than 30% of the globalOutsourced business. This is due to the similar wage costs in this region as well aswhat is perceived as a closer understanding of western cultures over their Indiancounterparts.
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Over half of all businesses will look at outsourcing in one form or another in 2009. The next point to understand in the process is your involvement. We have always workedwith customers and clients so that they may gain an understanding of the journey theyare about to embark on. Firstly its key to remember this – DO NOT OUTSOURCE KEYFUNCTIONS IN YOUR BUSINESS without fully understanding what the end impact will be.As a consultant on these matters we often start with the basics.
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How large is your organisation
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What is the key elements of your business which without you could not function
 
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How productive are you staff or team in each area? Is the capacity which simplyisn’t being filled due to overstaffing levels or high cost areas?
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Where are your operational costs highest?
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Has your growth been calculated against bottom line profit or have staff beenrecruited to fulfill the requirements of a customer or large project
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Where are your operational costs absorbed? Do they go against sales completedor do you need to fulfill a revenue target throughout the year to keep departmentsor teams profitable.In order to understanding the Outsourcing process you need to understand yourbusiness. Only then can you start to make decisions based on the direction and shape of your company. If you look at the first quarter of 2009 many companies have alreadystarted the attrition process. Shedding staff to more manageable numbers and were intimes of success they may have brought in more staff than needed to drvie the businessforward. Now this way of thinking is reducing departments into more compact group tolower their overall cost. The thought of compromising service over saving the business isnow a reality as businesses across the world look the shed cost elements to theirbusiness.
(Vodafoneconfirmed yesterday thatit is to cut about 500 jobs in Britain, making it the latest corporate heavyweight to slash its workforce in the face of the recession.The mobile phone company's cuts represent about 5% of its 10,000-strong workforce in Britain andcome as part of a £1bn cost-cutting drive – Source the Guardian online)
If like Vodafone or many other companies this is something you have already looked ator have completed you will know that this decision is never an easy one to make. Mostabove SME level can make a 5 / 10 % reduction in their staffing levels without impactingthe business overly. As business levels fall the prudent thing to do is to reduce yourworkforce in line with reduction of revenue streams. It wouldn’t surprise me if at the endof the financial year if their year on year sales revenue has dropped by 10% but theiroperating profit has increased due to the decrease in staffing levels.All wise and astute business decisions so far BUT…….What happens when business levels increase? What happens if key members of staff arelost in the process?And this is where outsourcing becomes relevant in today’s climate.
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Outsourcing will always carry a cost benefit either in the short term or the longterm – Meaning more staff for your money – Teams can be built and run atmanageable levels
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As Outsourcing services are monitored pro actively you will understand moreabout the elements of your business – time is black and white so overstaffing orunderstaffing is easily picked up
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 Your building a team which will remain throughout a reduction in overall companyrevenue – why lose 5 to 10% of your workforce when your overall costs can be upto 45% less than your traditional methods.
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Can offer stability within a department or business function. By outsourcingspecific business functions you can measure the success or failure rapidly.
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