Off shoring, outsourcing, all are terms that are becoming very common in the market place.
They are generally also associated with job loss as companies take advantage of more experienced but low cost resources in countries like India, Philippines, Eastern Europe, etc.
Large companies have been taking advantage of outsourcing and off shoring for years.
Small and mid-sized companies have not yet taken advantage of this phenomenon and perhaps that that is the next big wave to come - once people discover an easy way to do so.
Let us look at what outsourcing and off shoring mean and what some of the challenges associated with them are: Outsourcing refers to giving work to someone outside your own company so as to only focus on core competencies in house.
Outsourcing can be done locally to others who are experts in a particular service.
For example, a small business can outsource all their accounting functions to an accountant or their website management to another company who would manage it.
This allows a small business to focus on growing the business and taking all the non-value added tasks out of their day to day activities.
So instead of doing everything themselves, they can now retain experts to perform those tasks that need to be done but are either not enjoyable or not ones that help the growth of the business.
But outsourcing has its challenges when the outsourced company is so busy that it cannot meet your deadlines or when they've over promised and can't really seem to perform to your expectations.
Off shoring refers to the taking of outsourcing to another level - outside the country where the business resides.
In off shoring, companies take advantage of skilled resources in low cost countries where labor is cheap and there is a huge availability of skilled workers.
The main benefit of off shoring is being able to get work done at a third or fifth of the cost of doing it locally in most US and Western European countries.
But the cost benefit disappears pretty quickly when work takes much longer to get done and when it is completed, it has serious quality issues.
For example, if you hired a company to do work for $10 per hour, but the work took three times longer to do than if you were doing it locally for $50 per hour; your low cost advantage is severely diminished.
Over a period of time, the hassles for such a minuscule saving can turn off a business completely and thus prevent them from using off shoring.
There are many reasons for quality and lack of timely delivery when people offshore work.
The reasons include cultural issues that lead to scope and requirement misunderstandings that lead to missed deadlines, working style differences, time differences that lead to communication problems, infrastructure issues that cause delays and inexperienced or untrained resources who botch up even simple jobs.
We all have heard horror stories of abandoned projects, simple websites that take 12 months to deploy, and help desk support that is provided by inexperienced people who make us want to scream in frustration.
Due to the internet, it is difficult for people to differentiate the real players from the fakes - people who have hung a shingle in the form of a website and claim to have 10 years or experience with large sized companies.
How do you know who is lying and who is not?Most businesses are not in a position to visit a offshore partner in India or Romania to make sure that they are what they claim on their website.
Most of these companies will promise quality and blah blah certifications but when push comes to shove, many fail to deliver on time and many have serious quality problems in whatever they do deliver.
We recommend that companies ease the entry into the outsourcing or offshoring field by partnering with companies locally who have an offshore presence.
Instead of partnering with offshore companies that have a local marketing office, identify local companies that have decided to open offshore offices.
The difference is huge.
A local company within your own country is verifiable through various means.
A local company can be easily researched by a quick trip to another state if necessary or by checking local references.
It is much difficult to do so with an offshore small company.
Once you begin the process, make sure you have level set expectations associated with daily communications, meeting time lines, penalties when deadlines are missed, etc.
And never assume that everything will work to your expectations the 1st time you begin working with an outsourced local company either.
It is a huge paradigm shift when you are used to working with someone in your office who you can assign work to in person versus when you have to assign work by phone, email, and chat.
If the right processes are put in place, long term success can be achieved.
But it will take a lot of time and a lot of patience.
They are generally also associated with job loss as companies take advantage of more experienced but low cost resources in countries like India, Philippines, Eastern Europe, etc.
Large companies have been taking advantage of outsourcing and off shoring for years.
Small and mid-sized companies have not yet taken advantage of this phenomenon and perhaps that that is the next big wave to come - once people discover an easy way to do so.
Let us look at what outsourcing and off shoring mean and what some of the challenges associated with them are: Outsourcing refers to giving work to someone outside your own company so as to only focus on core competencies in house.
Outsourcing can be done locally to others who are experts in a particular service.
For example, a small business can outsource all their accounting functions to an accountant or their website management to another company who would manage it.
This allows a small business to focus on growing the business and taking all the non-value added tasks out of their day to day activities.
So instead of doing everything themselves, they can now retain experts to perform those tasks that need to be done but are either not enjoyable or not ones that help the growth of the business.
But outsourcing has its challenges when the outsourced company is so busy that it cannot meet your deadlines or when they've over promised and can't really seem to perform to your expectations.
Off shoring refers to the taking of outsourcing to another level - outside the country where the business resides.
In off shoring, companies take advantage of skilled resources in low cost countries where labor is cheap and there is a huge availability of skilled workers.
The main benefit of off shoring is being able to get work done at a third or fifth of the cost of doing it locally in most US and Western European countries.
But the cost benefit disappears pretty quickly when work takes much longer to get done and when it is completed, it has serious quality issues.
For example, if you hired a company to do work for $10 per hour, but the work took three times longer to do than if you were doing it locally for $50 per hour; your low cost advantage is severely diminished.
Over a period of time, the hassles for such a minuscule saving can turn off a business completely and thus prevent them from using off shoring.
There are many reasons for quality and lack of timely delivery when people offshore work.
The reasons include cultural issues that lead to scope and requirement misunderstandings that lead to missed deadlines, working style differences, time differences that lead to communication problems, infrastructure issues that cause delays and inexperienced or untrained resources who botch up even simple jobs.
We all have heard horror stories of abandoned projects, simple websites that take 12 months to deploy, and help desk support that is provided by inexperienced people who make us want to scream in frustration.
Due to the internet, it is difficult for people to differentiate the real players from the fakes - people who have hung a shingle in the form of a website and claim to have 10 years or experience with large sized companies.
How do you know who is lying and who is not?Most businesses are not in a position to visit a offshore partner in India or Romania to make sure that they are what they claim on their website.
Most of these companies will promise quality and blah blah certifications but when push comes to shove, many fail to deliver on time and many have serious quality problems in whatever they do deliver.
We recommend that companies ease the entry into the outsourcing or offshoring field by partnering with companies locally who have an offshore presence.
Instead of partnering with offshore companies that have a local marketing office, identify local companies that have decided to open offshore offices.
The difference is huge.
A local company within your own country is verifiable through various means.
A local company can be easily researched by a quick trip to another state if necessary or by checking local references.
It is much difficult to do so with an offshore small company.
Once you begin the process, make sure you have level set expectations associated with daily communications, meeting time lines, penalties when deadlines are missed, etc.
And never assume that everything will work to your expectations the 1st time you begin working with an outsourced local company either.
It is a huge paradigm shift when you are used to working with someone in your office who you can assign work to in person versus when you have to assign work by phone, email, and chat.
If the right processes are put in place, long term success can be achieved.
But it will take a lot of time and a lot of patience.
SHARE
