The 5 Ws of

Outsourcing


 Why Outsource

 Flexibility
 Growth
 Innovation
 Access to talent, skills and new markets
 The most tangible benefit of outsourcing is that additional
infrastructural and resource costs can be avoided. For many
years, outsourcing has been chiefly known as a tool to cut costs.
According to statistics by Harvard Business Review, 97% of
companies used outsourcing as a cost-reduction strategy. That
has been changing. In 2013, an IAOP survey found that about
50% of companies outsource for cost-effectiveness — both long-
term and short-term.
 Who to Outsource

 The first stage is to select who you are going to
outsource work to. There are several freelancers who
have specific niches, such as graphic design,
bookkeeping, and web design. These freelancers may
work on their own or in a team. The benefit of the
latter scenario is that a team has increased capacity to
meet your needs.
 Review their websites

 Through this process, get to know and understand
how much experience the outsourcer has in their field,
the quality of the services that they offer and how
responsive they are to customers.
The reputation of any outsourcer – be they an
individual or a company – can give a good idea of
what your experience with the entity will be. In our
hyper-connected world, it is not that difficult to learn
anything you need to know about a company. Social
media platforms, website testimonials, and reviews
can assist with this.
 Find a specialty in your
industry

 When reviewing a provider’s website, look for
certifications. If an industry body has awarded them
a certification, they are undoubtedly good at what
they do. Try to choose a provider who is in the same
area that you are, as this will make face-to-face
meetings easier. Do not base your decisions solely on
this, though. If they are not within driving distance,
virtual meetings are an option.
 Check their work samples
and contact their references

 Ask for references before any agreement is finalized,
because these will tell you much about the quality of
service, how timely deliveries are, and the nature of
customer support services. By contacting the clients
of your outsourcing partner, you can find out more
about their abilities.
 What to Outsource

 Business is founded on a set of expertise – skills that are
responsible for making the business money. There are also
certain necessary functions that do not contribute to the
bottom line and cost the business money. However, these are
essential to the smooth operation of the company.
 Thus, when choosing what to outsource, do an inventory of
these functions. See how much this cost and if you will be able
to reduce costs by outsourcing them. Outsourcing functions
such as graphic design, marketing, and social media, human
resource, logistics, IT, legal outsourcing services, etc., reduce
any risks associated with these tasks, as the responsibilities are
transferred to the outsourcing company.
 
 Just because you outsource areas of your business
does not mean that you should take a hands-off
approach to the outsourcing providers. As they are
not as well versed in your business as you are, they
will have questions that you will need to answer.
Keep lines of communication open so that they feel
comfortable with coming to you.
 When to Outsource

 Any business which feels that it can reduce its
infrastructure costs through strategic outsourcing should
do it. To survive in financial crises, cutting operational costs
can minimize damage to your organization.However, a
survey conducted by Outsourcing Revolution discovered
that the main reason for outsourcing has gone beyond only
cost savings. Over 90% of firms surveyed claimed that
outsourcing is vital to their growth strategies. In 2016 a
survey conducted by CGS found that the top aims for
outsourcing include better efficiency, additional
current/effective IT, the capacity to focus on core
capabilities, and increasing customer satisfaction.
 Where to Outsource

 Most freelancers work virtually. Some work from
home and others from an office. They may not be in the
same time zone as you.
 India and China have the most technical skills in the
world. The area is not that convenient, and the time
difference is quite significant. Despite this, India and
China are top of mind when it comes to programming
outsourcing, and they charge affordable rates. Indian
developers charge between $10 and $25 per hour.
Chinese developers charge between $30 and $40 per
hour.
 
 The downside is that the economic and political situations of these
regions are not stable and could influence your business
negatively. This shows that certain companies are interested in
receiving services at the cheapest rates and are willing to take risks
to get these.
 Cities such as Argentina, Brazil, Egypt, the Philippines, Sri Lanka,
and Vietnam are catching up quickly with India and China in
terms of outsourcing. Latin America is the most attractive for US
customers because of its proximity to North America. Eastern
European businesses offer highly competent outsourcing
developers. These people can cope with innovation well and are
known for their high-quality education and a good command of
English.
 How to Outsource

 Deciding Which Tasks to Outsource
-Determine which tasks could be outsourced that
would save the company money. Consider outsourcing
those tasks which involve specialized skill set or
equipment. The tasks you should outsource are those
that require specialized equipment or skill sets that
your company or your employees do not have.
 How to Outsource

 Don’t Outsource Fundamental Business Processes -
Outsource tasks that can be done well by someone
outside of your organization.
 Outsource Small Tasks First
-Start with a fairly small task for your outsourcing
partner. This will let you see the quality of their work
without taking on too much risk.
 Locating an Outsourcing
Partner

 Set the Qualifications Required -Secure a partner
who can perform the assigned tasks in a way that
will benefit your business. Use an outsourcing
agency for overseas placements.
 Interview Those Potential Outsourcers -Contact
each one individually and discuss your
requirements.
 
 Send out a Request for a ProposalRequests for a
Proposal will include items such as a request for a
price estimate, a description of the services required,
and examples of the outsorcerer’s previous work.
Don’t only search for the lowest price. Choose the
lowest bidder if their quality of work is equivalent to
your own and in keeping with what you expect from
your outsourcing partner
 
 Create a Contract -This lays out the details of your
business relationship. It will define the services that
they will provide, when those services will be
provided, and how those services will be paid for.
 Streamline Communication -Establish effective
communication with your outsourced partner so that
you can communicate plans and performance
objectives.