Outsourcing: The key to reduce costs and increase quality

Companies in the US have been trying hard to find ideas to increase productivity levels of the company. Outsourcing allows companies to send non-core tasks to companies overseas. With the overseas offering to do work related to the non-core tasks at significantly lower costs, companies can reduce on the cost investment by them on resources to do non-core tasks. More importantly, with the service providers and the client company equally focusing on quality and timely delivery of the services, companies in the USA can afford to get quality services at reduced costs. This also allows them to allocate their resources to focus on core business processes which in turn may increase the company productivity and revenue.

Functions like Accounting, Payroll Processing, Medical Transcription, Data Entry, Software and Applications Development and much more can be outsourced overseas. Companies can outsource a function if it is a non-core task to the company and if the companies get a significant cost advantage by outsourcing the work. After a company decides to outsource the work, it would need to select a 3rd party service provider overseas who could offer these services at a negotiated cost between the service provider and the client company. Needless to say, the service provider needs to have the necessary expertise and experience to provide the outsourcing services to the client company in the USA. A company should ideally do a feasibility test either by himself or through an offshore outsourcing consultant to determine the 3rd party service providers' capabilities and abilities.

There are many 3rd party service providers in countries like India, Philippines, Pakistan, Malaysia who have recognized the demand for outsourcing in the United States of America. Whilst India provides services at a very low cost and has a large pool of English speaking graduates, Philippines commands an excellent infrastructure at its disposal. The 3rd party service providers situated in these countries tap into the advantages provided by the country, combine them with infrastructure and resources and provide services for the functions outsourced to them in a cost-effective and a qualitative manner.

For any outsourcing contract to be successful, it is important that companies realize that Project Management of the work, risk management of the 3rd party service provider and quality management of the work is extremely important. Companies who outsource the work need to be pro-active about these three aspects even before the contract is signed. A lot of the functions that are outsourced may require the company to train the service provider exhaustively before the work could be done. All these factors put together along with the 3rd party service provider's commitment to provide quality services at a low cost will result in a win-win situation for the company which does Outsourcing.

Bottom-line, Outsourcing is good for your organization if it is managed efficiently.