First decide what parts of a project will be outsourced and then to create a realistic budget to avoid cost overruns and other problems. Long-term planning is necessary in order to know what to do when the application is finished and who will take control of application maintenance. Lastly, an organization must decide where to send their outsourcing work.

Where companies go for application outsourcing

Outsourcers should either look into individual freelancers or an outsourcing firm that specializes in application programming.  In order to find freelancers, first go to freelancer websites such as freelancer.com, elance.com, etc. A lot of different freelancing websites can also be found using a simple search engine query for “application freelancing.” Write clear and professional job postings in order to attract top freelancing talent and try different sites.

An alternative to freelancers is choosing an outsourcing firm. Top firms include Accenture, Tatvasoft, Unisys, and CSC. Get proposals from multiple firms in order to receive the best deal possible. It is extremely important to look at the service level agreements that the firms provide in order to find one that best suits the need of the hiring organization.

How to attract top outsourcing freelancers

More money, not surprisingly, will attract better freelancers. Top freelancers want professional projects for both the financial rewards and as resume builders. Therefore, work terms and expectations should be written for the freelancer. Finally, companies that reply to all those who bid on a project will build a good reputation and attract more people the next time they post.

Application outsourcing problems and solutions

As with almost forms of outsourcing, there are various problems that hiring organizations will encounter. However, for the most past, there are always ways of mitigating or avoiding possible problems.

• Communication- To reduce the number and severity of problems, it is important for the two partners to clearly establish the expectations and requirements of the application service in order to avoid the pitfalls of communication barriers. Hiring organizations should make sure that the outsourcing firm will be able to make the software vendors deliver (since much of it is vendor based). It can be accomplished by establishing a service level agreement that will ensure compliance to a set level of expectations.

• Security- Hackers often will try to break into an application’s code and access sensitive, valuable data or cause other problems. Thus, it is important to research how secure outsourcing companies make their applications. Applications with even minor bugs are under serious threat of being hacked. It may be necessary to hire another firm to check application security and fix errors. Outsourcing firms that specialize in application security should offer services to include run-time scanning, source code reviews, advanced manual testing, ethical hacking, application security assessments, identity management, secure authentication, and SOA security services.

•  Application maintenance- One of the main concerns for hiring organizations is who will be responsible for application maintenance after the application is built. The application will most likely need to have bugs fixed and other patches, and how this will be done must be spelled out in the SLA. Keeping the same organization for maintenance and updates offers the advantage of having people who are familiar with the workings of the software throughout the whole process without added training.

What services are provided through application outsourcing?

Application outsourcing is a broad term, and many organizations may not be entirely sure of what services it covers. The following list provides the typical services that organizations can expect to receive from application outsourcing.

• Application Development – This service involves the outsourcing firm providing skills for application development in a managed service environment. Often, the outsourcing firm will develop and enhance a packaged application software for clients. A good outsourcing firm will offer a wide range of support throughout the entire life cycle of application development. Outsourcing firms should have well-established System Development life cycles (SDLC) but often can adapt to the processes and deliverables that clients use.

• Application Support and Maintenance – Outsourcing firms can provide support and maintenance in addition to building an application for a client. The outsourcing firm will help resolves problems, incidents, and bugs that are almost always be present in all new, modified, and existing applications.

• Customer Program Management –This involves outsourcing firms devising a solution that uses one point of accountability (usually a manager) for service and contract phases of delivery. Often, the outsourcing firm will dedicate a manager and supporting team for program management to will work extensively with the client through all phases of the transition process. This is beneficial to organizations because one person manages a contract, provides flexibility, and allows changes to be added as the application process continues.

• Application Operations – Application operations involve day to day services in relation to applications. This includes monitoring of applications, performance testing, application patching, application access level control, functionality, and performance.  The support offered by outsourcing firm should include all aspects of an application life cycle.

Successful outsourcing stories that companies can relate to and imitate

If an organization is still unsure of how they can benefit from application outsourcing, there are plenty of examples of how organizations had an application need and got it solved through outsourcing. Here are some examples that should be imitated by other organizations.

• Edcon- Edcon is a South African retail group with more than 1,000 stores across southern Africa. Edcon was having trouble keeping its IT infrastructure in check with the allotted budget and had significant business challenges in regards to application development. Edcon decided to outsource in order to avoid the costs of building applications in house.  The outsourcing firm standardized services and developed new applications and capabilities. The new applications include a supply chain management solution, a Microsoft based business intelligence solution, and a credit management system.  Overall, the outsourcing firm helped Edcon reduce IT costs and helped them cope with the rapid integration of newly acquired companies.

• Canadian Satellite Radio- Canadian satellite radio is the XM radio for Canada. It offers subscribers 120 channels of radio programming.  The radio was having trouble managing the entirety of its customer base as well as building applications in order to support core business systems. The satellite radio station decided to turn to an outsourcing firm. The outsourcing firm helped build applications for the satellite radio to manage their clients, built new billing/ customer care systems, and helped reduce IT costs associated with operating core business functions.

Why global outsourcing is on an upward trend

Global outsourcing is becoming an increasing trend among businesses because of various factors. One of the leading factors is the comparative condition of richer economies in the world market. Employers are able to find employees in other countries that will do much more work for the same price as an employee in wealthier countries. A $200 budget might buy a company a week or two worth of work from an employee in India but not nearly as much in a richer country. This does not necessarily mean lower quality work because the dollar goes much further for many employees working in foreign countries.

Another factor for an upward trend in global outsourcing is that U.S. dominance over the marketplace has made English the de-facto language of the business world. For many people in countries around the world, learning English is an essential to having success. Thus, this allows employers to communicate with employees from different countries through English.

Furthermore, the recent economic recessions and hard times has forced many companies to look for cheaper alternatives for completing work. Global outsourcing provides the means for companies to save more money. Companies do not have to deal with overhead costs associated with hiring, managing, and training employees. Additionally, employees and employers are usually in different time zones. Thus, this allows companies to get work done faster. An employer can essentially work a normal day and then have the work continued overnight as someone works on it in a different time zone.

One last factor for the increase of global outsourcing is new technology in methods of communication. Today employers can use many different methods to communicate with foreign workers. The increase of use in video chat has given a face to employees, making employers more comfortable working with them. Additionally, Skype and other forms of live communication have enabled easy and fast communication across continents. As foreign nations continue to build their IT infrastructure, these methods of communication and employee availability will increase.

How to mitigate global outsourcing risks

There are obvious risks associated with global outsourcing; however, there are ways to mitigate the risks involved to ensure a smooth work relationship and high-quality results.

One of the more notable risks that people associate with global outsourcing is the quality of work. Most people associate cheaper employee costs with less quality work. This may be true in some cases, but there are ways to mitigate the risk in order to get high-quality work. Employers should always look at customer referrals and reviews of employees before hiring. If the employee does poor work, then the reviews and comments from other employers will highlight it. Furthermore, it may be wise for employers to use reputable, well-established companies to find workers. Since these companies have a reputation to protect, they will more than likely provide the employer with employees who perform high-quality work.

Another risk that dissuades people from global outsourcing is a perception that there will be communication barriers between the workers and the employers. If there is a communication barrier, it is often minimal and can be avoided in most situations. The risk can be mitigated by using employees from countries that commonly use English such as India and the Philippines. Furthermore, by structuring requirements as concise and clear as possible, it will reduce the probability of an employee-employer communication problem.  Additionally, since most employers and employees will reside in different time zones, it is critical that the employer responds to employee inquiries and statements as soon as possible. It is also advised to create a time where both the employer and employee can communicate live. This is essential to maintain a strong communication relationship.

The business and personal decisions involved

Employers must weigh multiple criteria when deciding to outsource work to employees on a global scale. Similarly, once the decision is made to outsource, further factors must be considered in order to accurately and effectively get the services that the company is looking for. The following list describes some of the business and personal decisions that are involved with deciding and ultimately executing global outsourcing.

Numbers: An employer must consider the scope of the services that they will be outsourcing. Next, they must establish a budget that will accurately portray the funds necessary to meet the goals that the organization has set in place for the project. The employer should then compare the services that they will receive for the allotted budget from outsourcing globally and from other methods. If the comparison results in global outsourcing being the most financially beneficial, the employer should proceed with shopping around the market to find the best candidates possible for the budget.

Employees- Perspective employers interested in considering global outsourcing must consider the decision of whether or not they want to essentially deal with a faceless employee.  Outsourcing communication primarily uses faceless methods such as email. This can make employers feel uncomfortable, as many employers prefer face-to-face communication where they can read body language. If employers can deal with faceless employees, they should also make sure to give the most detailed and clear instructions possible when giving project requirements and expectations.

Location- Employers must consider what location to outsource services to. Global outsourcing can be found in many different parts of the world from South America to Asia. Overall, Employers should always stress for the best deal and talent possible over location. However, when given a choice, the employer should hire from countries where English plays a fairly large role in the culture. This will prevent many problems of communication between the employer and employee.

Software outsourcing involves a company outsourcing software development needs to a third party outsourcing firm. The outsourcing firm is contracted to develop the custom software in accordance with the companies’ specific requirements and instructions. The outsourcing firm will establish the specifications, requirements, and deadline through a Service Level Agreement (SLA) with the hiring organization. Software outsourcing provides many benefits, including reduction of cost and the gain of expertise. However, hiring organizations must be careful to outline their specifications in clear detail to the outsourcing firm.

Software Development Outsourcing

Why a company should utilize software outsourcing

There are numerous benefits and advantages for a company outsourcing their software needs. The list below describes some of the ways that a company may benefit.

• Ability to control costs of projects- By outsourcing, a company can agree to a set project budget with the outsourcing firm. The outsourcing firm must agree to the specifications and milestones of the agreement. This is an advantage to organizations because they can avoid the risk of exceeding budgets if they were to build a project internally.
• Experienced workers- An outsourcing company will use a team that they know will have the skills and expertise to complete a job and more than likely already have these people on their payroll. Companies can avoid having to waste time interviewing and trying to find the people with the right skill set to get the project done.
• Technological expertise consulting- Outsourcing companies will be able to provide a company with advice and consulting on the ever-changing field of technology. It is the responsibility of outsourcing firms to maintain an updated expertise on the field.
• Reduce overhead costs associated with software projects- Outsourcing reduces the responsibility of companies having to deal with overhead costs such as human resources. Companies do not have to hire and manage employees for it nor do they have to deal with providing the staff with equipment or facilities.
• Increase efficiency of company employees- Through outsourcing, a company can free up time for employees to focus on other essential tasks to the companies vision and profit centers. Furthermore, this may allow a company to save costs on personnel.
• Accurate deadline for project completion- A company can set an agreement with an outsourcing firm to have the project or milestones of a project to be completed by a certain date. This is an advantage because if the software project is built in-house, then it risks being delayed by operations and daily activities.

Issues to be concerned with outsourcing software development

As with almost all the outsourcing options, software outsourcing has concerns that companies should consider when trying to decide if they should outsource their software needs. One of the foremost concerns is security. It is a large liability for a company to outsource software needs to a third party, especially if it is overseas. The company has no control over the security that the outsourcing firm implements, and they may be sending sensitive information that could damage the company or harm its reputation if exposed by security flaws. Furthermore, there may be different laws and regulations in foreign countries that perform outsourcing duties. Companies that wish to outsource software must consider the question of whether the outsourcing firm can be trusted, and if they have had security issues in the past. Larger, more established firms may be the best option because they will usually have strong security systems and procedures in place. Conversely, this security on some occasions is more in-depth and more reliable then the organization could provide in-house. However, they still lack overall control and responsibility.

Another large problem many companies may face with outsourcing software to a third party is that the outsourcing firm may not completely understand the requirements or needs of the project. This may be realized too late in the process, often when the project is finally completed. It is sometimes difficult for a company to accurately describe what they want in a project in enough detail for the outsourcing firm to complete the project to the hiring company’s expectations. Furthermore, by outsourcing, a company loses the potential to adjust the project through adding features or aspects that may become apparent over the course of developing the software. Companies lose control over the project by outsourcing and cannot manage employees.

Advice for Software Outsourcing

One of the most important and critical aspects of software outsourcing is establishing a clear understanding of the projects specifications and expectations between the company and outsourcing firm.  The hiring company should establish a specific and clear Service Level Agreements (SLA) with the outsourcing firm. In the SLA, the hiring company should define project specifications, availability, functionality, and performance of the project. Additionally, the hiring company and the outsourcing firm should establish goals and deadlines for meeting project completion. It may be wise to create a review period in the SLA that enables the hiring organization to have change requests and the ability to integrate new technology that the outsourcing company can provide. The SLA should also govern the security procedures and systems that are in place. The hiring organization may establish penalties for information that is not correctly secured.

A hiring organization should read testimonials, conduct research and ask other customers about their experience with various outsourcing firms. They should pay special attention to whether or not the outsourcing firm has the capacity to stay up to date with the software technology industry. It may be wise for the hiring organization to ask what industry publications that they subscribe to and how they plan to learn and adapt to the ever-changing field of software technology.

Software outsourcing companies

There is a multitude of software outsourcing companies that offer many software development services to a range of industries. Many of these companies are located offshore or have offices located offshore with the headquarters being located in the U.S. The following three companies are some of the leaders in the software outsourcing industry.

A-1 Technology- A-1 is a New York based software development outsourcing company. A-1 has additional locations in Florida, Los Angeles, New Jersey, Toronto, Stuttgart (Germany), Singapore, and India. They also offer offshore software development that provides custom application development as well as mobile application development. A-1 offers expertise in the areas of dot net programming, RIA/Web 2.0 (flash, flex, Ajax), Google TV, Linux programming, quality assurance services, and Apple TV.

DataArt- dataArt is a custom software development firm that caters to the fields of hospitality, financial services, healthcare, and other industries. DataArt has software engineers located in New York, London, Russia, and the Ukraine.  DataArt can offer services for Microsoft .NET, Microsoft SharePoint, Microsoft CRM, Java, Cloud Computing, Unix/Linux, and mobile platforms- Symbian, iOS, Android, J2ME, and RIM.

TatvaSoft- TatvaSoft is a software outsourcing firm located in India. They service industries in many fields, including Oil & Gas, Retail, Finance, Sports, insurance, and enterprise solutions. They offer application development, web development, .NET development, Silverlight consulting, PHP programming, Flex programming, SharePoint consulting, and application maintenance.

Software outsourcing for the little guy

Companies are not the only ones that need software outsourcing. Smaller organizations and individuals also need it done. Since software and programming is not a physical product, it is very easy to have it done by anyone, anywhere. Individuals can utilize freelancer sites to utilize quality workers internationally at reasonable rates. No job is too big or too small.

The processes and functions that are usually outsourced fall into the category of either front-end or back-end processes and functions. Back-end processes and functions consist of areas such as human resources, accounting, and finance. Front-end processes and functions consist of areas such as customer-related services. The following bulleted list contains commonly outsourced business processes.

• Document processes: This outsourcing includes marketing and communications, finance accounting, compliance documents, and customer facing.
• Human resources and training: Human resource outsourcing involves training and recruitment, management of databases, management of contracts as well as retention and attrition.
• Customer relationship management: Functions and processes outsourced are customer service and support, taking of orders, help desk support, product support, and market research.
• Intellectual property: Outsourcing includes licensing support, research, analysis of patents, and patent application management.
• Finance and accounting: Outsourcing of finance and account services includes expense management, credit and debit support, auditing, invoice management, accounts receivable and payable in addition to resolution of billing disputes.
• Supply chain management: Supply chain management outsourcing includes management of contracts, procurement, logistic support, warehouse management, and relationship management.
• Legal services: This outsourcing involves risk evaluation, mediation and arbitration, consultation, research, and support for legal functions.
• Security: Involves outsourcing for maintaining and securing data, equipment, and documents from theft. This can involve physical security, investigative services, computer and network security, and electronic security systems.
• Transaction processing: This outsourcing deals with the main function of payroll maintenance. It can also include processes such as research, payments, check and credit cards, stock trading, mortgage, loans, and insurance.
• Publishing: The outsourcing of publishing processes includes design, internet publishing, graphics, drawings, and administration.
• Research and analysis: Aspects outsourced include analytics on finance and data, market research, and primary/secondary research.
• Administrative support: This outsourcing includes conversion of documents, data entry, document scanning, processing of forms, and other secretary related tasks.
• Sales and marketing: Involves outsourcing activities relating to surveys, cold calling, pitches, and lead generation and nurturing.

Benefits of outsourcing business processes

There are numerous benefits to outsourcing business processes, and many companies are starting to outsource at least some aspect of their business functions. One of the primary benefits is reduction in cost. Through outsourcing certain functions, companies can save more money then if they were to operate the function in-house.  This reason is also why many companies are choosing to outsource offshore, as offshore is usually a cheaper option for outsourcing.

Another benefit is that certain outsourcing organizations specialize in specific fields and can offer better service because it is their area of expertise. For example, if a company were trying to make their organization more secure and use the latest new technologies, then it would be wise for them to employ a firm that offers security professionals. The firm will better be able to provide the most up to date and accurate advice and suggestions on security because it is their specific niche. Furthermore, outsourcing enables an organization to concentrate on its core business functions. For instance, many companies do not consider human resource a core business function. So through outsourcing human resources, the company will be able to allocate more resources and time to their core processes that drive the company’s vision. This can lead to better performance and more revenue.

How to choose a business outsourcing company

First, companies must choose which non-core processes that they wish to outsource. The processes should not be essential to the vision of the firm, and the processes should have the potential to be re-engineered by the outsourcing firm in order for the organization to save money. Next, the hiring organization must narrow down the field of outsourcing firms based on certain criteria. Criteria that organizations should consider are expertise, cost, location, customer service, reputation of the outsourcing firm, and the transparency of operations.

The hiring organization should get quotes and look at the contracts that the outsourcing companies provide. The contracts should be read thoroughly and compared to see if there are any hidden costs or agreements that are not ideal for the hiring organization. Once there has been a thorough comparison of what different outsourcing firms can offer, then the hiring organization should make the final decision. Depending on the size of the organization, it may be wise to hire an outsourcing advisor that specializes in consulting organizations on choosing the best outsourcing firm to meet the needs of the organization. The advisor will typically also negotiate terms and contracts with the outsourcing firm.

Business process outsourcing companies

IBM Global Process Services

IBM Global Process Services is the largest outsourcing company in the marketplace today. The outsourcing processes that IBM offers to clients are customer relationship management services, finance and administration, human resources learning and recruitment outsourcing, and procurement and supply-chain management. IBM offers industry-specific processes for companies that are in the fields of banking, healthcare, government, telecom, and insurance. IBM has helped large companies such as GM, Yahoo, and Southwest airlines to meet their outsourcing needs. Working with IBM is beneficial because they are an established company that works to maintain a strong reputation.

Accenture

Accenture is the next largest business process outsourcing company. They offer three fields of process outsourcing. The first field is cross-industry business process outsourcing, which includes engineering, finance/accounting, human resources, learning, procurement, and supply chain. The second field of business process outsourcing that Accenture offers are, industry-specific services such as credit services, health administration, insurance, network, and utilities. The third field that Accenture offers is bundled outsourcing services. Bundled outsourcing services involve Accenture re-engineering the operations of the back-office to reduce cost and to increase flexibility by merging together multiple business functions.

MphasiS

MphasiS is also one of the largest business process outsourcing firms. They offer industry tailored business processing services to industries such as telecommunications, banking, capital markets, insurance, and healthcare. They also offer business process services to enterprise companies that include transportation & logistics, manufacturing, retail & consumer goods, and energy & utilities. MphasiS emphasizes their established methodologies to their clients. They claim to have an established methodology for transition, transformation, BPO-IT integration, and steadygovernance.

Specialized expertise
Besides the advantages financially, an outsourcing company also provides the advantage of offering specialized expertise. Organizations can select an IT outsourcing company that fits a specific niche. Moreover, they can choose the company to for a specialized budget or time frame such as on a project basis. For instance, an organization may need programmers who specialize in PHP. Instead of going through the expensive and time-consuming process of hiring employees who specialize in PHP, the organization instead can turn to an outsourcing company. Once the PHP programming work is completed, the organization ends the contract with the outsourcing company. In addition, the hiring organization can easily terminate a contract with an outsourcing partner if work is not up to their standard, thus making outsourcing a more flexible.

Core activities
An IT outsourcing company also provides direction to an organization. Managers can focus on the core aspects that govern their organization instead of dealing with non-core activities such as management of employees.  This saves them time as well in not having to waste time in the development life cycle of a project as it is handed off to the outsourcing company. Similarly, this enables an organization to put more capital in the core aspects instead of the non-core activities. This saves an organization on overhead costs such as equipment, office space and training.

How to choose an outsourcing company

For an organization to choose an outsourcing company, outsourcers need to consider many factors in order to choose the company that will best meet the needs of the organization. One of the most important factors is expertise. Outsourcers should research the previous projects that outsourcing companies have performed in order to determine if they best fit the requirements their organization. The hiring organization should also consider customer referrals. A quick search engine query will enable employers to uncover how outsourcing companies work in partnerships. If a company has a tremendous amount of good reviews, then chances are there will be an efficient and happy partnership between the organization and the outsourcing company. It is also important to play the field. An organization should request proposals from different outsourcing companies and try to play them off each other in order to receive the best possible deal.

It is also important to keep in mind that it may not be necessary to go with a company. For a smaller project, a single freelance may all be that is required. Sites to include Freelancer offer access to qualified freelancers the world over.

Tips for efficient partnerships
It is important for employers to be concise and clear in giving project requirements and instructions to potential outsourcing partners. It is a good practice to assume that the partner knows nothing when writing requirements, since carefully written instructions can make a huge difference with the results. Furthermore, managers should make sure that the outsourcing partner knows the timelines and fees that are in place. Do not wait until the last minute to hire an IT outsourcing company. By making preparations early, an organization has more time to probe the entire field of potential partners and will be able to choose a partner who best fits the needs of the organization. A well-fit partnership will benefit both the organization that is hiring and the outsourcing partner.

How to find IT outsourcing companies
IT outsourcing companies can be found below or through a search query. After finding the names of various firms, the user should then look for reviews and referrals of the firms to see if they can meet their needs. Another beneficial way to find IT outsourcing companies is to talk to people who are in the similar field and have used outsourcing companies in the past. They will often provide honest and truthful information about the quality that the outsourcing firms provided them. People also need to pay attention to the small details of choosing an outsourcing company. Frequently, people neglect the IT outsourcing contract that the firms provide and sign it without thoroughly reading it. People should specifically pay attention to the pricing. Sometimes an IT outsourcing firm will stick in extra costs that were not part of the original estimate.

Largest IT outsourcing companies

IBM Global Services
IBM Global Services currently is the largest IT outsourcing firm in the World. One can receive many IT services from IBM, most notably data center outsourcing, application security services, managed security services, managed storage, managed server services, network outsourcing, and output management. Many organizations choose IBM Global Services because it has one of the largest global infrastructures with thousands of employees. IBM is a well-established company, and many organizations feel comfortable that IBM Global Services will be a good partner because IBM will attempt to maintain the high level of service that they claim to have for their partnerships. As a result of IBM Global Services being so large, they have developed tools, methods, and processes that will increase the level of service that they provide to their partnerships.

Wipro
Wipro is located in Bangalore, India and is one of India’s largest IT outsourcing firms. They claim to cater to more than 150 Fortune 500 global clients and employ over 120,000 people from 70 nationalities. Organizations can find a wide range of IT outsourcing services that Wipro provides. These services include: architecture consulting, application development and maintenance, testing services and web services, enterprise security, business intelligence and data warehousing, enterprise applications services, system integration, and e-business.

Computer Sciences Corp
Computer Sciences Corp (CSC) is one of the largest IT outsourcing companies in the world. They have headquarters located in Falls Church, Virginia but have major offices in Australia, Asia, and Europe. CSC employees over 97,000 professionals and have clients in over 90 countries. CSC reported revenues of $16.2 billion for the second quarter that ended on September 30th, 2011. The IT outsourcing services that they provide is IT infrastructure outsourcing, application outsourcing, and system integration. CSC is good for organizations that are trying to solve mission critical, complex problems.

For a larger listing of the top IT outsourcing companies, IAOP of the 100 best IT outsourcing companies based on four characteristics: size and growth, management capabilities and organizational competency. It can be found here.

In conclusion, IT outsourcing is a superior way for companies to cut down on financial cost while gaining employees who are experts in the required fields. The company can avoid costly overhead charges that come with hiring and managing employees. There is a lot of IT outsourcing companies to choose from and plenty of resources to help employers make the correct hires.

Why are people turning to offshore IT outsourcing and what advantages does it bring for them?  For many businesses, finding competent and affordable people is the first reason they consider outsourcing the IT jobs.  With many countries, the education rates might be a concern, but countries like the Philippines value education very highly, and the literacy rate is also reflective of that.  So you can gain a very skilled and educated workforce for a fraction of the cost you might have to pay in your home country.  Information technology is also a very sought-after field, and you are finding a market that offers you low-cost investment, dedicated workers, and the way you position your outsourcing can give you worldwide, twenty-four-hour support.

So offshore IT outsourcing provides the greatest in efficiency and bottom line profits.

• 24/7 Worldwide coverage
• Educated Workforce with dedicated support (although education levels will vary considerably)
• Low Cost
• High level customer service (QA is still needed)
• Strategic development

Offshore IT outsourcing also provides companies a way to achieve business goals, gain an edge in their market, increase their return of investment, and decrease their overall operational expenses.  Many companies today are outsourcing a large amount of their business services; this is just taking that one step further and reaching out to grasp the best versatility while offering focus on core business needs.

Of course, it seems that offshore IT outsourcing has been most effective in utilizing the talents in India, the Philippines and other areas of Asia.  The reasons they are highly noted are, great talent, low cost, and flexibility.  Most companies will see short-term gains as well as long-term effects.

Some of the greatest short-term gains that are seen are:

• Immediate reduction in overhead due to headcounts and attrition rates are lower.
• Immediate ability to gain specialized services with recognized talent.
• Focus of core business goals and utilizing resources in a more effective manner.
• Ability to define delivery requirements and demand results without effects of losing skilled staff.
• Utilizing the latest in IT technology at the most affordable rates.

Long-term gains:

• Savings on expense of labor and benefits that are understood upfront based on length of contract.
• Ability to retain more talented individuals and build your staff on a worldwide basis.
• Creative source of reviewing problems with teams looking from outside in.
• Profits increase from global presence and allow you the ability to gain market share in areas you might not have shown that presence previously.

Offshore IT outsourcing is an emerging market that certainly will grow and improve with time.  Just as you might be unsure of someone you hire into your organization now that same risk also occurs with offshore IT outsourcing.

Some other risks that you have to consider, and may or may not be a great offset to your cost savings, are very real issues.

Security is number one concern that needs to be weighed in outsourcing IT offshore.  You have a high risk of security breach, and must ensure that the intellectual property information is protected and that all your documents are not only secure from competitors, but also safe within your chosen IT service.    Another consideration that needs to be given before jumping into outsourcing is culture differences.  Since your outsourcing is being done offshore, you have to review carefully all the impacts of culture that will affect your business and just be sure you comprehend and work this into your plans.  You need to be sure all government concerns are addressed, especially since the US Patriot Act has been established.  While none of these are showstoppers for your outsourcing, they are areas that need to be well understood and considered.

How should you find the best offshore IT outsourcing company for you?  First, start by asking the right questions.  Understanding the company’s experience is your starting point.  You need to know how long they have been in business, ask for their references and see if they have had any contracts cancelled and why.  Second, you need to know what their pricing is.  Get a pricing structure; see what you are paying for, what kind of discounts they offer and how they handle long-term commitments.  Third and most important, you need to know what level of technology the company possesses.  Since you are contracting the firm to handle your IT, it is imperative that they are leading edge with both software, hardware and able to provide state of the art service.

The key to finding the right offshore IT outsourcing company is to do your ground work. So research the great talent that it has to offer, find a fit for your business and expand your horizons, go global and wrap your hands around the world.

Advantages of customer support outsourcing
Customer support functions of any business in customer service can be time consuming and labor intensive. Complaints and routine inquiries require research of the issue in question and trying to resolve problems while maintaining professionalism. Certain times of the day may also experience high volumes of requests for support. By outsourcing this function, employees can focus on core functions of the business. It can help maintain productivity by concentrating time and resources on what the business is set up to do.

Outsourcing saves money in terms of salaries and training costs. By outsourcing, there is less overhead for the business as customer service is not done in-house. Money does not need to be spent on expensive costs of training programs for of new and existing employees.

Outsourcing can bring 24-hour service coverage in customer support functions. Contract firms that specialize in these services often have employees work in shifts around the clock to be available to handle customer needs. Businesses do not need to worry about staffing needs. If done in other countries, salary considerations like shift differential may not be an issue.

For firms that need to provide customer support but only on an irregular basis or at low volume, outsourcing can be ideal. They do not have to pay for employees who will have nothing to do in some periods but be overwhelmed in others.

Customer support outsourcing also gives the benefit of language. If services are outsourced to Latin American countries, services can be provided to bilingual or Spanish speaking individuals in the U.S. English is spoken primarily in India and the Philippines. Outsourcing services can be used there providing English speaking staff at a lower rate of pay. However, part of the outsourcing process will be ensuring those who will be answering the phone are highly proficient in the language.

Disadvantages of customer support outsourcing
Proper customer support often requires detailed knowledge of a company and its products. When outsourcing, it is difficult to train employees in this knowledge. There is also the fact that they will have no loyalty to the firm they are answering calls for.

To make sure the vendor is doing the job properly, time and resources will need to be devoted to monitoring their work.

Choosing an outsource firm and avoiding problems
There are steps that can be taken to choose the right firm and avoid problems. These are your customers and how they are dealt with reflects on your company. The way customers are treated can either enhance dissatisfaction or ensure repeat business. It is the only human contact many customers will have with a company and must be done properly.

It is important to look for a firm that is familiar with your industry. Check if the outsourcing companies have worked with similar businesses to yours. See if they specialize in your area of business, or if they provide general customer support services. Have someone in command of the outsourcing account who can handle a smooth transition of services.

Good customer service requires the right technology. Make sure the outsourcing firm has the proper technology infrastructure and software.

When setting up a program for customer support outsourcing, review the reporting standards of firms to see how they handle inquiries. Companies should have ways to track data and calls. Check to see the format they use and if it conforms to your needs and specifications. It is also important to know exactly where the calls will be handled.

When contracting with an outside firm, it is vital to set up a way you can independently monitor calls and service to customers. Customer service is an important aspect of any business, and there is less control when an outside party handles it. It is necessary to have access to information to include recorded calls, time spent on calls, number of customers served per day and any other data that can help evaluate the services provided. Arrangements should be made in advance with both parties prior to finalizing contracts.

To reduce the risk of the vendor taking secrets to another company, sign a non-disclosure agreement. Know what percent of that vendor’s business will be with your company and their financial health.

In addition, refuse any offer by outsourcing companies to set up their own in-house number for your business. Keeping your own number will make it possible to change companies at any time should the need arise.

Scripts for how to greet customers will need to be developed for outside firms that will best reflect your business and services. Staff should be trained specifically for your company’s needs. If possible, review the turnover of firms that you may work with. Places with high turnover may be continually dealing with new employees who cannot offer the best service due to lack of experience.

Benefits of outsourcing
There are a lot of benefits of outsourcing. Some of these include:

• The ability to utilize all the training and capital investments that the outsourcing service has made.
• Greater efficiency and return on investment.
• Projects that are not going as planned can be dropped more easily since there is less of a political or emotional attachment to them.
• Greater flexibility and the ability to concentrate more on the core business.
• Process improvements that come with increased specialization.

Downsides of outsourcing services
Of course, there are also downsides to using outsourcing services. These include:

• Loss of control
• Possible need to share trade secrets
• Having to deal with different time zones, cultures and possibly legal environments.

All of this underscores the need to thoroughly understand outsourcing before undertaking it. An outsourcing service needs to be chosen just as carefully, if not more, than an employee or another partner would be chosen.

Points to consider when choosing an outsourcing provider
Notability and references: It is usually not a good idea to go with an untested and unknown firm. Important projects should always go to a notable firm that can provide references. In addition, make sure they are financially stable and can provide bank records to that effect.

• Experience: One of the advantages of outsourcing is the ability to take advantage of the experience of a firm that is specialized in a task, and thus avoid the mistakes that come from doing a process in house. Only choose companies with expertise in the field.
• Monitoring and reports: Be it onsite or other means, the outsourcing service needs to provide ways for work to be closely monitored and to furnish reports on their progress.
• Sub-outsourcing: Be sure to go directly to the source and never with a firm that will in turn sub-outsource their projects.
• Comparison matrix: To best compare the offers from different outsourcers and get the best price, create some type of comparison matrix that breaks down the various services provided and the costs.

Types of outsourcing services
Most major outsourcing falls into one of the following categories:

• Manufacturing outsourcing: Being something that requires very specialized equipment and skills, manufacturing has long been outsourced by many companies.
• Knowledge process outsourcing (KTO): This involves the outsourcing of knowledge intensive processes. This can include research and development, data analysis and network management.
• Business process outsourcing (BPO): This type of outsourcing has really taken off in recent years. It involves the contracting of a third party to perform an entire business process. This can be anything from human resources to accounting.

Some common BPO outsourcing services
While outsourcing services cover everything from health administration to infrastructure and supply chain, some of the most sought after BPO services are below.

Payroll outsourcing
This type of outsourcing includes data entry, updates, tax filing, summary reports and payslip processing. One special advantage of payroll outsourcing is the tax guarantee most providers offer. They will take responsibility for any IRS penalties from mistakes made (an all too common occurrence for small businesses).

This form of outsourcing, like many others, requires that the provider stays on top of legal requirements and has software to transmit data securely.

Human resource outsourcing
These services will handle compliance with government HR audits, handbooks and other requirements. They will also take care of employee relations and can administer employee benefits programs.

With so much to keep up with, outsourcing human relations is one of the best ways to free up a company’s resources for its core mission while giving employee performance better attention.

Software outsourcing
With software as complicated as it is, digital products that can easily be transmitted and so many good coders spread across the planet, software outsourcing is very popular. See the following advice to avoid some of the mistakes people make in software outsourcing: hiring programmers.

Web design and SEO
As with software outsourcing, web design and search engine optimization are also services that are very suited for outsourcing.

Outsourcing services for everyone
Keep in mind that technology now makes it possible for anyone to outsource from anywhere in the world, and it is not just for businesses outsourcing processes. See Elancer, for more information on hiring Freelancers or go directly to Freelancer and find your outsourcer today.

For larger outsourcing projects
It Match Online is one resource to help larger organizations find the outsourcing services they need.

With the growth of outsourcing, the need to better understand it and know the cost of outsourcing processes becomes more apparent. Outsourcing is far from a magical cure all to lower costs and needs to be approached with caution.

What is business process outsourcing?
Business process outsourcing, BPO, is when a company outsources an entire business process, such as accounting or payroll, to a third party. BPO can be categorized into what is called back office outsourcing, internal business functions to include accounts receivable, payroll and human resources. On the other hand, front office outsourcing covers services directly related to customers to include call centers, debt collection and help desks.

While outsourcing is often assumed to take place overseas, the third party provider could be anywhere from next door or on the other side of the planet.

Other business outsourcing processes
With technological improvements and the growth of outsourcing, the types of processes that can be outsourced have greatly expanded from the days when they were concentrated in manufacturing.

Knowledge process outsourcing (KPO): This involves the outsourcing of more skilled work to include that which is more knowledge and information related. Some of the processes involved are data analytics, market research and investment research to name a few. Considered a higher level of BPO, it is best utilized by those more experienced in outsourcing.

Recruitment process outsourcing (RPO): Is another outsourcing process that is commonly targeted for outsourcing in which firms transfer their recruitment to outside providers.

Firms that are outsourcing will often become too fixated on labor rates and neglect to look at the whole picture. To get the real cost of outsourcing processes, it is necessary to carefully consider all the likely drawbacks as well as benefits.

The upside of outsourcing
Outsourcing is popular for a reason and does offer many benefits. These include:

• More nimble and flexible firms: By outsourcing, firms are freer to experiment and reinvent themselves more easily. The pace of business can also be speeded up.
• Focus on core businesses: While processes that have been outsourced still need to be monitored, when done in the right way, outsourced processes take up a lot less time when they are done outside vs. when they are done in house.
• Less need to invest: When certain processes are outsourced, companies no longer have to purchase equipment for those jobs. This eliminates the need to invest in equipment and personal that might not be fully utilized.
• Lower taxes: Companies can sometimes reap tax advantages when they outsource to areas with more favorable tax climates.
• Reduced costs: Although many companies become too fixated on labor costs, they, along with other costs, can certainly be lowered through outsourcing with the right approach.

The cost of outsourcing processes
There are costs to outsourcing that can sometimes outweigh its benefits. Both sides need to be considered.

• Competition for good labor: Since outsourced processes cannot be monitored as easily as those done in house, it is paramount that outsourced work be performed by workers with the right skills. The growth of outsourcing has increased the competition for these workers in some fields, particularly in some places overseas where different education levels sometimes put the needed skills in short supply.
• Management overhead: Those outsourcing processes need to develop monitoring processes that include incentives, disincentives and quality control that can potentially require more time than keeping the process in house.
• Employee morale and work environment: Outsourcing can hurt employee morale and cause firms to lose good employees. In addition, workplaces can lose the cooperative feelings that come with people working together.
• Communication and time zone problems: If the outsourcing takes place overseas, the service provider may be operating in a totally different time zone. In addition, the number of skilled English speakers may be limited leading to various communication problems.
• Quality control: Not only is it harder to monitor quality when work is performed in another location, but cultural and other differences may lead to the provider misunderstanding or not doing what is needed.
• Missed deadlines: The potential for missed deadlines is almost always greater when the work is not performed in house.
• Protecting intellectual property: Outsourcing necessitates the sharing of information. The potential of that info reaching the wrong hands always exists.
• Legal problems: Legal issues are certainly no fun and are even worse if the other party is in another jurisdiction with different laws and customs.

The fact that outsourcing keeps growing in spite of these and other potential costs is a testimony to its real benefits. To increase the chances of success, have a plan that incorporates the following points before getting started on the outsourcing path:

• Continuously look for process improvements that may eliminate the need for outsourcing or change the direction it will take.
• Be sure to have a lot of proposals before deciding on any offer.
• Have a flexible migration plan in place whenever outsourcing any process.
• Always look at the whole picture and do not become too fixated on labor costs.
• Never forget that even outsourced processes will require some monitoring and management.
• Be very specific with any contract but flexible as required.
• Have strong incentives and disincentives.
• Be sure of the reputation and financial stability of the vendor.
• Do periodic cost evaluations.
• Be sure of the vendor’s commitment to quality.
• The vendor should be offering something the company outsourcing does not already have.
• Make sure the vendor has procedures to protect any trade secrets that might need to be shared.

Nobody can ever be exactly sure what the cost of outsourcing processes will be so approach any outsourcing in a measured and methodical way, especially when first starting out.

Advantages of Philippine outsourcing
Outsourcing to the Philippines offers many of the advantages that can be found when outsourcing anywhere. There is the potential to access plentiful and sometimes very skilled labor at lower rates. There can also be tax advantages when the nation the work is being outsourced to has a more favorable tax environment. Depending on the business, there are other advantages to include the greater flexibility that comes with not taking on employees directly and the ability to concentrate on one’s core business.

The history of the Philippines gives it certain unique advantages in outsourcing. After being a colony of both Spain and the US, many Westerners can find more cultural affinity with people in the Philippines than they can with those in other Asian nations. More importantly, the English ability of Filipinos is on average tends to be among the highest in Asia. In addition, being in a different time zone than North America, it is ideal for companies that operate around the clock.

Disadvantages of Philippine outsourcing
Some of the problems that have kept the Philippines less developed economically can also pose challenges for those outsourcing there. Corruption has long been epidemic and security needs to be improved. In addition, cultural differences and attitudes toward work offer challenges, and workers being located so far away have disadvantages even in a time of instant communications. Anyone outsourcing to the Philippines needs to start out slowly and proceed with caution.

The types outsourcing to consider
Regardless of where it is performed, outsourcing is generally classified into several different categories: Business Process Outsourcing and Knowledge Process Outsourcing and Technology Outsourcing. Depending on the needs of the outsourcer, all of them can be carried out in the Philippines.

Business Process Outsourcing (BPO): In this type of outsourcing, also referred to as back office outsourcing, a business process is outsourced to another company. Common examples of this are when businesses outsource their entire accounting, human resources, manufacturing or financial functions. By doing so, businesses can shed processes that have little to do with their core business and hopefully take advantage of services that specialize in these functions and perform them better.

Knowledge Process Outsourcing (KPO): This is often though thought of as a higher form of BPO and centers on highly skilled services. Types of services include market research, analytics and management, web survey analysis and other technical skills. This type of outsourcing is not only useful for companies looking to cut costs but also makes it possible for those who need certain technical skills on an irregular basis to easily access them.

Information Technology Outsourcing: With the world changing so fast, every company needs technology and technology services, but many do not know about it efficiently. Information technology outsourcing allows companies to use skilled technology workers wherever they may be to perform various functions to include website development, creating applications and network infrastructure.

Some common forms of Philippine outsourcing
Call centers: This is the single biggest segment of the Philippine outsourcing industry. With a deep pool of low-cost and proficient English speakers, it is ideal for companies looking for ways to outsource customer support and other services offered by call centers.

Legal and medical transcription: The large number of English speakers in the Philippines makes this another field in which the Philippines is a good place to outsource. Operative reports, medical summaries, chart notes and the like are all commonly done by Philippine outsourcers.

Finance and accounting services: With a relatively educated workforce, this is another field in which Philippine outsourcing is strong. Account maintenance, payroll processing, auditing, asset management and other related services are often offered by Philippine companies.

Web design and software: While the Philippines are behind India in this type of outsourcing, it does offer skilled coders at lower costs than in more developed countries. In situations such as website design where being able to communicate ideas well is especially important, the Philippines can be a good choice.