While Outsourcing stands for giving out a part or certain parts of your business operations to a regional or local distinct business entity, offshore outsourcing implies delegation of the selected business operations to an offshore location outside the country.

The two concepts share some advantages and differ on others. The common benefits of outsourcing and offshore outsourcing include doing away with the burden of mundane business operations that can be easily and skillfully handled at an off-site location, generally for a lesser budget. Outsourcing is a brilliant idea to relieve the business entity from vain exertion and instead pay better attention to ones specialized services areas or may be provide more agile customer care. Also, outsourcing excuses the enterprise from the substantial set up costs, viz. the cost of work space, manpower, stationery, systems and other miscellaneous expenses that would otherwise incur, if the jobs are not outsourced.

While local outsourcing manages just a couple, offshore outsourcing comes with a whole baggage of advantages. The highlights of offshore outsourcing remain the niche economies available at the offshore location, including exceptional professional talent for considerably lower costs. In fact, inspired by the dynamism of offshore outsourcing model in India, not less than 40% of the Fortune 500 companies are already taking advantage of it, including big names like MicroSoft, Motorola, Oracle, GE and Lucent.

Economies of scale is another citable advantage from Offshore outsourcing, as offshore destinations generally conduct themselves as specialized ventures that also take up similar jobs from other companies across the globe. As statistics has it, offshore outsourcing can bring down the costs for you from 50% to 30%, subject to onsite and offshore resources.

Offshore outsourcing also allows you to make a careful choice as regards the standard timeframe on offer, so as to render the effective working hours almost round the clock. For example, IST and EST are complimentary in nature with around nine and a half hour difference. This in turn, considerably shrinks delivery time for US-based companies translating into achievement of business targets well within budget and sped up job schedule.

Moreover, offshore outsourcing can span across wholesome backend business operations; the most prominent of all being IT and IT enabled services (ITES) with a whopping 28% of the entire share. As per reliable reports, majority of IT based outsourcing contracts are already moving to India, in spite of competitive rates offered by China and Russia. India offers wider talent and more purchasing power for US dollar, in turn saving billions of dollars for its US counterparts.

Outsourcing has taken the world economy by storm. Many a companies worldwide have gained enormously from it and gradually but surely, outsourcing from an option is becoming a mandate to remain competitive.

As we move down the food-chain, numerous small-medium companies still struggle to find the right outsourcing partner. Even if an outsourcing partner is identified, the relation is not successful due to various reasons.

The primary reason for the failure is the mindset – outsourcing is almost always taken synonymous to cost-cutting. This has proven to be a time-bomb for many companies as they end up outsourcing to firms that offer the lowest bid on a project.

Some of the important points to be kept in mind while outsourcing are:

• You get what you pay for: The old clich holds true in the case of outsourcing as well! The cheapest vendor might not always be a good choice as they might try to under-sell to gain your project. A solid outsourcing partner would have overheads in the form of infrastructure and would have people on payroll. If you are on a look out for a long term relation – it may be a good idea to pay a little extra but to ensure that both parties make a profit.
• Look for partners, avoid fly-by-night operators: Easier said than done! For maximizing ROI, outsourcing should be considered as a continuous process rather than a one-time activity. Find yourself an honest and reliable partner rather than looking for vendors each time you wish to outsource.
• Transparency: Maintain transparency be it processes, timelines and costs (if possible). This would help you manage your commitments and estimate the deliverables.
• Don’t expect the stars: While outsourcing, expect the initial “turbulence”. As any other process, it might require initial leg work for the processes to smooth up and work as you expect them to.
• Don’t step into multiple boats: One good reliable partner is better than having 10s of unreliable vendors. Concentrate on finding one good partner.
• Shop around but be careful: Relatively better outsourcing companies are quite wary of replying back to templatized e-mails sent to various vendors seeking a figure. Study, choose a few. and provide your complete contact details while sending an inquiry. If possible, use your own domain to send an e-mail to establish authenticity.
• Walk with your partner: Attrition is very high in outsourcing favorable developing nations – your partner might face loss of one or more employees taking care of your project. Cultivate the culture of open-ness so that your partner can communicate clearly the reasons, if any for delay so that you may expect accordingly.
• Communication: Don’t expect your outsourcing partner to be available 24×7 – schedule and maintain a communication plan that is feasible in the long run.
• 24×7 work cycle: Yes, it is possible! It might take some time before you can actually get it going!
• Commit but do not over-commit: Commit if you can – however, do not promise something that you cannot fulfill!

The aforementioned points come from the other side of the fence and is a result of numerous outsourcing successes over the past years. These cannot guarantee but should certainly help in a better outsourcing experience.

I welcome any questions or feedback that you might have.

Happy Outsourcing!