OUTSOURCING Contracting with another company or person for doing a particular function is known as outsourcing. The function being outsourced is normally considered non-core to the business. Service providers are those who provide outsourcing services. Outsourcing will be there as long as specialisation in work exists and now-a-days the companies are using outsourcing services to do the narrow function like payroll, billing and data entry. These functions can be done more efficiently and cost effectively by companies with special tools and facilities with trained individuals. There are several types or forms of outsourcing. Service providers are still hired by organisations to handle individual business processes like benefits management. There are organisations to outsource whole operations. Information Technology outsourcing (ITO) and Business Process Outsourcing (BPO) are the most common forms of outsourcing. Call centre outsourcing, HR outsourcing, finance and accounting outsourcing and claims processing outsourcing are the forms of Business Process Outsourcing. These deals of outsourcing consist of multi-year contracts which involve hundreds of millions of dollars. Normally the people who are doing work internally for the client will be transferred and become the employees of the service provider. Dominating outsourcing service providers are IBM, Accenture, Capgemini, EDS, CSC, HP and ACS. To speed up the time to launch some lively companies which are short of time and money apply multisourcing by using both the service providers and internal staff. Large outsourcing agreements are referred as multisourcing. These companies hire huge amount of service providers to handle almost all sides of a new project starting from product design, software coding, testing to localisation and even to marketing and sales. Normally there are four stages for the process of outsourcing. They are: (1) Strategic thinking to develop the philosophy of the organisation about the role of outsourcing in its activities. (2) Evaluating and selecting to take up appropriate projects and correct locations for the work and the service providers. (3) Contract development is to do the legal, pricing and service level agreement terms. (4) Outsourcing management which is to refine the ongoing working relationship between the client and the service providers. The success of outsourcing depends on the three factors given below. (1) For the outsourcing mission executive support in the client organization. (2) Communication to affected employees. (3) Client’s ability to manage its service providers. The professional who are doing outsourcing on both the client and provider sides should have combination of skills like negotiation, communication, project management, willingness to be flexible according to the change in business and the ability to understand the terms and conditions of the contracts and service level agreements. The challenges in outsourcing are sharp as the work are done in different countries which involves differences in cultural, language and time zone. |
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