Facts about Outsourcing that Can Save You Money

The basic benefits of outsourcing are well known by the majority of businesses: cost savings, and the ability for a company to focus on core business processes that drive revenue. However, there are hidden benefits that are often overlooked by the general public. The following describes these benefits:

  • Time zone advantages: If the hiring firm and the outsourcing firm are in different time zones, then production can be 24/7 in daytime hours. This can enable nighttime shifts at low costs, and productivity can be greatly improved.
  • Affordable expertise: Outsourcing firms are usually experts in their field. They have refined their practice and methods through years of experience and through various clients. A hiring organization can benefit from this expertise at a lower cost than an equivalent option such as a consulting firm. The outsourcing firm may provide more benefits than the work task initially appears.
  • Increase in customer service rating: The outsourcing firm will be able to focus solely on customers instead of the in-house staff being divided among tasks. Outsourcing firms can use expertise and dedicated workers in order to be more efficient than the company would normally be.
  • Risk sharing: The outsourcing company will assume some of the risk of the project when they partner with a hiring firm. The most notable, is the hiring organization not having to take the risk of training and supervising new employees.
  • Scalability: Outsourcing allows companies to quickly increase their operations without having to sacrifice long-term growth. For example, if a project requires more employees, then outsourcing will enable the project to get completed without having to recruit, hire, and train new employees. This enables companies to not have to worry about expanding beyond what they can afford.

Hidden disadvantages to outsourcing

As with the advantages to outsourcing, there are always hidden disadvantages in addition to the well-known disadvantages. Some of the well-known disadvantages to outsourcing are loss of quality control and poor partnerships with an outsourcing firm. Here are some other disadvantages:

  • Hidden costs: There are hidden costs with hiring an outsourcing firm that are not always taken into account when determining the outsourcing budget. Most of the costs will be provided in the contract that is signed with the outsourcing firm. However, companies will still have to pay for legal fees for hiring a lawyer to oversee the contract as well as any additional costs not stated in the contract. For example, the hiring organization might have to purchase new software in order for the outsourcing firm to complete their work.
  • Profit motivation: The outsourcing company is motivated by profit and not by quality. They will not strive to go above and beyond what is in the contract because it is not profitable for them. As long as the firm completes the work in the contract, then the hiring company will have to pay. By hiring an outsourcing firm, there will be little innovation and there will not be products that are above expectations.
  • Security and confidentiality threat: The outsourcing firm will have access to any confidential company information needed to complete the task (payroll, medical information). Furthermore, by granting access to some information, there is always the chance that the outsourcing firm can become compromised and access information that is not intended to be accessed by the firm, leading to stolen ideas.
  • Financial ties: By signing a contract, the hiring organization is financially tied to the outsourcing firm. If the outsourcing firm goes bankrupt, the hiring organization will suffer both money loss and the work that the outsourcing firm was providing.
  • Bad publicity: Some consumers have a negative connotation of outsourcing and associate it with cheap labor and cheap products. Sometimes, communities will have negative feelings towards outsourcing because their community has lost jobs to outsourcing overseas. This can lead to a reduction in sales or poor brand management for companies if not managed correctly.

3 tips for successful BPO outsourcing  

In order to be successful with business process outsourcing and to get the most out of the company’s invested time and money, companies should follow this list of tips:

  • Verify trust: Hiring organizations should allow outsourcing firms to conduct their business process operations without interference.  However, hiring organizations should still exercise strong vendor management in the form of service level agreements and metrics.  Companies should take the time to ensure that SLA’s are aligned with the BPO industry standards and with the company’s expectations.  SLA’s can balance the risk in the BPO partnership. The hiring organization should always the monitor the work of the outsourcing firm in the form of metrics to ensure that the work is being done correctly.
  • Enable outsourcing firm to exploit its comparative advantages: Most BPO firms make a margin on delivering the services that the hiring organization outsources. Thus, the outsourcing firm will cut costs in order to achieve this goal. The hiring organization should not interfere and place limitations with the capabilities of the outsourcing firm because it will reduce the effectiveness of comparative advantages.
  • Enable flexibility: The hiring organization should avoid having a non-flexible contract with the vendor. There are always unforeseen events, and having a flexible contract can avoid disasters. By not locking in, hiring organizations can gain leverage in contract negotiations.

Find Greater Efficiency with Small Business IT Outsourcing

Small businesses use IT outsourcing services to access new technologies and in order to reduce IT costs. IT outsourcing may improve a small firm’s speed to market for new services and products. Small businesses tend to look locally first for IT outsourcing needs, but more often are now conducting IT outsourcing through an offshore provider. However, there are disadvantages for small businesses in IT outsourcing. These disadvantages include losing control over a critical business service or activity and also a lack of flexibility.

What IT services do small businesses typically outsource?

Small businesses decide to outsource various IT operations such as:

  • Development and implementation of IT systems
  • Development and maintenance of applications
  • Business process outsourcing- front and back office functions
  • IT service desk and support
  • IT security
  • IT maintenance and backup and recovery
  • Running of core business applications

Offshore IT outsourcing versus local outsourcing for small businesses

Offshore IT outsourcing providers usually offer cheap, affordable rates for small businesses. However, these outsourcing companies are located in different countries, and the small businesses may struggle with monitoring the legal and regulatory practices of the offshore outsourcing firm. The small businesses should conduct regular audits with an offshore IT outsourcing firm. On the other hand, local outsourcing provides usually higher rates but offers a better relationship for the small business. The small business can communicate more effectively and faster with a local IT outsourcing company. Furthermore, a local company may reduce communication costs.

In addition, a small business will be faced with the decision of whether to outsource to a large firm or a small firm. A small firm offers the ability to have a close partnership with better service. However, a small outsourcing firm may be limited in resources and skill. Small businesses can also outsource to large companies such as Accenture. These large companies may offer more resources, skills, and can be cheaper. However, the quality of service may suffer and they might not have a deep understanding of the needs of a small business.

How to price IT outsourcing effectively for small businesses

Increasingly, small businesses are creating payment schedules that are meant to incentivize success for the outsourcing firm. These include fixed price and time and materials pricing. Fixed pricing involves the outsourcing firm taking on the majority of the risk. The price is fixed per job, and the requirements are outlined. Time and materials pricing gives the outsourcing firm flexibility in the firm defining the scope of the project. The outsourcing firm uses the amount of time and materials needed in order to complete the job at the cost of the hiring company.

However, some of the most successful pricing approaches being taken by small businesses are combing both pricing options. For instance, small businesses are splitting outsourced IT projects pricing into two parts. The first part is well defined, usually through a SLA, and most likely will not change. The second part is the part that is likely to change as the results of each phase are shown. This is usually seen in web design outsourcing where the price will be fixed at price per page. Then, additional changes requested by the hiring organization will be paid per time basis. The combination of the pricing models allows for flexibility but prevents spiraling costs for the hiring organization.

Small business IT outsourcing trend- operational outsourcing

A fast growing trend among small businesses in IT outsourcing is to outsource ongoing processes, not just IT project outsourcing. For example, system maintenance, system security, and hosting are all examples of ongoing process outsourcing.  This requires that the outsourcing firm have greater responsibility and understanding of the hiring firms’ business and its operations. This requires a stronger and often long-term partnership. It is important for hiring organizations to evaluate outsourcing firms to see if they have a strong understanding of legal and regulatory issues. This is important if the outsourcing firm is to manage many of the hiring organizations’ ongoing processes.

Recommended companies for IT outsourcing for small businesses  

Velorium: Velorium is an IT outsourcing firm specializing in providing low cost outsourcing for small businesses. Velorium’s infrastructure allows their clients to outsource various critical and repetitive tasks to overseas employees at considerably lower costs than United, Canada, or Europe. They provide IT outsourcing needs such as customer service, order processing, online marketing, data entry, trends analysis, graphics design, 3D animation, website development, and software programming and process automation.

Comm Solutions: Comm Solutions handles the daily operations of a hiring organization’s network. Comm Solutions small business IT outsourcing can help to enhance a hiring organization’s internal IT staff or serve solely as a company’s internal IT department which would allow a company’s staff to focus on different areas of business. The company offers a wide-ranging suite of infrastructure, security, and assessment it outsource support solutions to help strengthen and support a client’s network environment.

DCG Technical Solutions: DCG Technical Solutions provides outsourced IT services to small business clients who depend on reliable servers and PCs for cheap operating costs. DCG’s outsourced IT support programs are designed to make the IT infrastructure reliable and robust. DCG is a leading provider of IT Outsourcing, Computer Network Services, and IT support. Their knowledgeable network engineers, combined with good IT best practices, helps their clients better utilize their network servers and PC’s.

Make Your Business Grow with Sales Outsourcing

Sales Outsourcing Overview

Almost any company can use sales outsourcing, from virtual companies looking to create a sales team to large companies trying to increase profits. Sales outsourcing involves outsourcing the tasks associated with conducting business sales.  Such tasks usually involve:

  • Planning and managing of sales campaigns- direct marketing, lead generation, email marketing, social media marketing, and other methods
  • Day to day operational sales decisions and activities that are handled by outsourcing firm
  • The recruiting, training, and managing of a sales team
  • Sales strategy consulting

How to develop a sales growth strategy that outsourcing firms can follow

In order for hiring organizations to get the most out of sales outsourcing, they must be able to develop a strategy that the outsourcing firm can follow. Hiring organizations must gather information about their clients, successes and failures, and the market in order to understand and to create a firm strategy. The following tips should help those considering sales outsourcing in creating a successful sales growth strategy for outsourcing firms to follow.

Self- evaluation: In order for a hiring organization to get the most out of a sales growth strategy, they must conduct an honest assessment of their performance. In their assessment, they should look at lost clients/leads, competitor changes and successes/failures, opportunities that have been missed, and trends in the market.

Obtain a new perspective: The clients that hiring organizations work with can provide valuable information for a sales strategy. The hiring organization should talk to clients that the organization has a comfortable working relationship with. Ask the clients if they have any needs, if they are using different resources to fulfill their needs, and why they continue to do business with the hiring organization. It also may be helpful for the organization to poll other customers and ask questions such as how they found them, what kind of sales materials stick out to the customers, and how they look for other companies in the same field. Hiring organizations should consider incentives for customers that answer the questions, such as a discount on the next order.

Categorize and analyze: The hiring organization should separate their clients and leads into different categories. Example categories can be leads that use a competitor’s product, leads that did not use any product in the market, and customers who are currently using the hiring organizations products. After this categorization, the hiring organization should analyze and come up with solutions on how to reach each category differently and more successfully. Then, it should consult with the outsourcing firm in order to create a sales growth strategy that uses the new ideas.

How to determine whether or not to outsource sales

Companies may face difficulty in deciding whether or not to outsource sales. Companies when determining to outsource sales should use the following criteria:

  • Customer Satisfaction- If the hiring organization’s customers are not as happy as the company would like, then they should consider outsourcing sales. An outsourced sales campaign by a professional firm can greatly increase the satisfaction of customers, which can lead to the retainment, and procurement of more customers.
  • Revenue growth- If revenue cannot be increased through current means, then it is suggested to outsource sales in order to obtain new strategies and professionals who can cause an increase in revenue. An outsourcing firm may be able to provide more tools, expertise, and personnel than the hiring organization currently has or can afford through an in-house sales team.
  • Shifting market forces- If the marketplace is shifting, then hiring organizations should consider outsourcing sales in order to successfully adapt to the new market. Outsourcing firms often can share risks and offer a cash infusion to hiring organizations, which can help them adapt and thrive in a shifting market landscape.

How to determine a good outsourcing firm partner:

Hiring organizations may struggle in finding a sales outsourcing partner that meets the needs and goals of the company. The following list describes qualities that make a good sales outsourcing partner. The ideal outsourcing company has the following three qualities:

  • Ability to be flexible: A good outsourcing firm will be able to be flexible in making changes to meet the needs of the hiring organization and of a changing marketplace. In sales, time is incredibly important, and making adjustments fast can result in dollars gained instead of lost. These outsourcers understand this importance and have the ability to realign staff and resources based on changing needs of the company and/or marketplace.
  • Professionalism: Good outsourcing firms will be able to act as an extension of their client’s sales teams. By acting as an extension and being professional, they can support the client’s marketing and sales better and offer reputable advice that the company’s team can easily follow and adjust to. Furthermore, the professionalism of the outsourcing firm’s staff may cause the hiring organizations staff to be more professional.
  • Experience: Experienced outsourcing firms will be able to have insider information on what works with sales and marketing. Their teams have knowledge that the hiring organization’s team does not. They have overcome challenges and have learned from these experiences. Experienced firms can offer a new perspective and can uncover tactics and markets that the hiring organization never realized existed.

Top sales outsourcing companies

Acquirent: Acquirent provides outsourced sales solutions for companies that range from small software startups to Fortune 500 companies. The company is located out of Evanston, Illinois and has over 50 employees. Acquirent specializes in the recruiting, training, and managing sales teams that act as either part of the client’s sales infrastructure or as their entire sales engine. The company attempts to deliver “a transparent and totally accountable solution with a focus on metrics, training, and the use of the latest technology in sales.”

Netpique: Netpique is a professional sales outsourcing and consulting company located in Palm Coast, Florida and was founded in 2004. The company excels in delivering new customers within targeted customer acquisition costs. They use a unique sales outsourcing model and a customer acquisition model to drive the incremental revenue of their clients. Netpique helps clients to understand a desired sales channel and then to create a strategy to adhere to that channel.

Sales Partnerships, inc: The company was founded in 1997, and provides complete sales outsourcing solutions to large enterprise and middle market clients. Sales partnerships sell client’s products and services in the field through inside sales, or as enterprise sales reps traveling, as the clients need them. The company recruits the sales personnel, manages the teams, and closes the deals while reporting the metrics of the campaign.