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Why are Companies Outsourcing IT Operations?
Business leaders and technology executives are often faced with challenges regarding the decision of outsourcing business projects and operations. However, as emerging technologies and new skills are the cornerstones for any company’s success, it has become a standard business practice to outsource important aspects of strategy and implementation. IT outsourcing can prove to be a great move for your company to ensure the optimum utilization of existing business resources. With skilled experts by your side, you will have the opportunity to take your venture to the greatest heights.
Outsourcing certain non-core activities help businesses to stay focused on their core offerings without getting side-tracked on major projects. Savings are certainly the main aspect of outsourcing, but there are various other factors that come into play when evaluating whether to build a team in-house or outsource.
How can Tandem NZ be your strategic IT partner?
There are the many reasons why several foreign companies look to outsource work to Tandem NZ – efficient and skilled assistance, reduced cost overheads, speeding up the development process, and delivering quality applications that are at par with the latest technological trends.
Over the last two decades, outsourcing software development, business processes and related work has become a standard business practice for most companies around the world. Tandem NZ provides services like custom software development, app development, web design and development graphics design, digital marketing, e-commerce solutions, among others.
Located in the software and mobile development hub of India and a favourite destination for successfully outsourcing IT operations, Tandem NZ is uniquely placed to offer you quality outsourcing solutions. When it comes to choosing the most efficient outsourcing professionals, Tandem NZ leads the way. The following reasons will tell you why we can be your best strategy and outsourcing partners:
Highly Skilled Professionals
Tandem NZ houses highly skilled, educated, and trained professionals, working in diverse sectors. We have a robust team of software developers, UI design experts, UX developers, .NET and PHP developers, business analysts, and digital marketing specialists.
Increased Productivity at Lesser Cost
Outsourcing critical projects result in increased productivity, thereby helping you make the most of your existing resources. Moreover, it will help you explore new opportunities, take up new projects, and complete them ahead of the stipulated deadline.
How much does it cost to outsource software development with Tandem NZ? This is a question that may cross your mind when deciding to outsource your web-based applications including website design and development, UX/UI design, API development, digital marketing, among many others. Tandem NZ offers flexible pricing policies to ensure optimum convenience for you, which will eventually reduce your overall operational costs to a great extent.
Focus on Core Business Operations
Outsourcing your work can help you stay streamlined, organized, and focus on your core business tasks. Upon entering a contract with us, a dedicated development team is provided to you. These professionals work as per your time-zone to ensure that the work gets delivered in significantly shorter durations.
Our support team ensures you get The Indian time zone offers a unique advantage to companies in Australasia, US, and the UK to get their work on time, establish 24/7 customer care services, beat deadlines, and take on more projects by outsourcing services to India.
So, if you’re considering a long-term partnership with a leading IT outsourcing agency, Tandem NZ is here to help!
Tandem NZ is an IT outsourcing company that offers best-in-class services and resources to meet the needs of our customers. For all your web-based application requirements,
Companies generally use outsourcing to save money, however, the “big picture” is more complicated than simply reviewing how to reduce expenses. Following are 5 key questions you should be asking before making any decision to outsource.
1) Is outsourcing in line with your business strategy?
Cutting costs have always been often the focus when looking at outsourcing. However forward thinking businesses realise that paying attention to their long-term strategy is more cost effective that simply short-term factors. Things such as flexibility, growth, adaptability and innovation need to also be considered.
2) How much, if any, an impact will outsourcing have?
To determine if it is worthwhile you must conduct a thorough review of your current costs and operations. You process review will include both high-level reviews by top management as well as detailed analysis by managers at all levels. This was you can identify business processes that could be considered to be outsourced to help your bottom line.
Other questions will no doubt drop out of this review, for example, what areas could outsourcing improve quality while reducing costs and provide faster delivery to customers.
3) Is there support from the top?
Outsourcing failures are likely to happen if outsourcing review and selections are not in your company’s top 5 priorities. Ask yourself how does the boss feel about outsourcing?
“Starting at the top” s a winning outsourcing strategy. However, you should not stop there you need to work your way down through all levels highlighting the benefits to each area. This will give you the best chance in outsourcing success.
4) Are You Outsourcing for the right reasons?
Remember that ideally you are contracting outside your company for necessary and non-core aspects.
Always remember that your major benefit for outsourcing is that it gives you and your employees more time to focus on core activities — focusing on decisions and tasks that involve your business passion. Include this question in your outsourcing decisions; Is this a core or non-core business activity? You will be far more likely to make the right outsourcing decisions and for the right reasons.
5) How are you going to monitor your outsourcing success?
Like everything in business, you should be constantly evaluating and measuring results. The same is for your outsource provider, How will you know if your outsourcing supplier is delivering?
A common strategy is to put in place a Service-Level Agreement (SLA) that acts like a “scorecard” to monitor services with measures such as effectiveness, efficiency, conformity, timeliness, user-friendliness, reliability, capacity, availability, speed and quality.
Regardless of the SLA in place, a successful outsourcing partner will exceed SLA levels by always focusing on “continuous improvement” in areas such as quality, productivity, customer satisfaction and cost of delivery.
Do not forget
Choosing the right thing to outsource and the right outsource provider is a difficult job. For it to be successful it should be placed in the hands of highly responsible individuals within your business.
Do you currently outsource? Are you thinking about outsourcing? According to a 2014 Grant Thornton survey, 40 percent of worldwide businesses either outsource now or are planning to do so. Tandem NZ breaks down the 4 kEys (or 4E’s ) of outsourcing — Efficiency, Economy, Experience and Engagement.
Number 1 Efficiency
Being efficient means much more than simply cutting costs. Does outsourcing increase efficiency? If you outsource to cut costs and improve the efficiency of your business operations, you are in good company. Things get done quickly and freeing up time for your internal staff to concentrate on core business tasks will also contribute to increased business efficiency.
Several fields have successfully used outsourcing to improve the efficiency and gain an edge over their competitors; IT, data entry services, creative services, research and analytics, engineering services and financial services are a few just leading examples.
Number 2 Economy
The benefits of outsourcing have been shown to contribute to a higher standard of living for all parties involved. In the ‘offshore’ country valuable jobs and self-worth are created. In ‘home’ countries increased profits and savings see businesses invest more locally and consumer costs are frequently reduced. Basically what we call a ‘Win – Win’ situation.
Number 3 Experience
Typically concerns about security, quality and risk are expressed by companies in the early stages of an outsourcing decision.
These issues can be quickly dissipated however. Make sure to do your due diligence before finalising any outsourcing decision or contract — don’t “sign on the dotted line” unless you are comfortable that you are dealing with an outsourcing partner that can show proper process and procedures are in place.
Number 4 Engagement
Critical engagement processes are needed right from the beginning in any outsourcing relationship. Understanding and communicating issues such as objectives, scope, work processes, requirements and customer expectations need to be clearly laid out for all parties.
Engaging with your outsourcing partner on a regular basis works both ways. You must devote sufficient time for effective business communication with the outsourcing company.
The 4 kEys in one
Outsourcing comes in many shapes and forms. Some are more complicated than others. Some are long or short term plays. Find an outsourcing partner that can successfully meet your expectations and the 4 kEys described.
Outsourcing without a doubt has its critics regardless of how it can ensure you remain competitive and reduce costs. The familiar criticisms are often framed in ethical terms.
What Prompts the Outsourcing Ethics Debate?
Technology and globalisation have made it so much easier than ever before to outsource to another country. The key issues in most countries are focused on jobs and it is an emotional and political one. The possibility of “losing jobs to outsourcing” frequently ignites the controversy surrounding outsourcing.
Usually, it de-evolves into a sport like mentality of My team vs your team and becomes an easy target to criticise when a country’s economy is experiencing economic downturns such as “The Great Recession.”
While critics of outsourcing usually attempt to portray outsourcing as the “problem” by speaking of ethical issues, this is simply not true for most companies choosing to outsource they are actively using it as a growth-oriented business strategy to enhance their business and drive prosperity.
Economics of Outsourcing and Ethics
The critical importance of a profit motive for business organisations remains regardless of what some people may say. Making a profit is still the single key driving factor in any business as without that profit the business will cease to exist in its current form.
Strategic decision making by owners and managers should always use this economic wisdom and consider if that strategic decision is profit-orientated. Simply put, what is best for your company’s bottom line?
What is often overlooked when embarking on ethical outsourcing discussion is that any additional profits produced by outsourcing are then frequently allocated to new goods and services in the domestic economy that previously were not able to be made. Really in most cases, it is a “Win-Win Strategy”.
The Social Paradigm of the Ethics of Outsourcing
The greater good. Is outsourcing good for society? What ethically is said is usually different from actuality. In actuality, a capitalist society is more likely to benefit from focused use of outsourcing than to be “damaged” by the strategy.
Nevertheless, “the ethics card” is often played by critics of outsourcing — and this is especially seen within the social paradigm. While government has a genuine role to preserve and improve a society, remember that the mission of corporations in a capitalist society is to make a profit that enables the company to stay in business. What is best for your business? The bigger question for society is what does it mean for your society if your companies are making bigger profits? The downstream effects are clear.
The Environmental Paradigm of Outsourcing Ethics
Environmental considerations deserve attention. Corporations are being asked to take responsibility for labour conditions and environmental standards adopted by some outsourcing vendors. The global supply chain often includes multiple opportunities to do a better job within the environmental paradigm.
Your company can frequently reduce your carbon footprint with outsourcing by reducing domestic travel and communicating electronically with outsourcing providers both locally and offshore. Achieving more with less impact. A “win-win” again.
In the end: Do what is best for your company
When it comes down to it, ethics and business have a murky past at times. Here is the triple bottom line for most companies that are using outsourcing as an effective business strategy:
Economic — Your business can expect to save time and money while improving quality. A ‘Win” for your business and your customers.
Societal — The long-term benefits for society are likely to be on the plus side. A “Win” for the wider society.
Environmental — Reducing carbon emissions and footprints is a practical outcome from your outsourcing. A “Win” for everyone worldwide.
Your company should “run the numbers” and do a cost-benefit analysis by examining the costs versus benefits of outsourcing. What is the best decision for your business bottom line and ethically?
What to do, what to do. Freelancing? Crowdsourcing? In-house? Outsourcing? Which one is the best fit for what I need to get done?
What is crowdsourcing?
Crowdsourcing: This represents the combination of two options (online service websites and freelancing individuals). It is a term that originated in 2006. The working definition of the term is: “Crowdsourcing is the process of getting work, usually online, from a crowd of people. The word is a combination of the words ‘crowd’ and ‘outsourcing’. The idea is to take work and outsource it to a crowd of workers.” So basically a marketplace of individuals offering their services.
Crowdsourcing Market Leaders
Two of today’s leading crowdsourcing websites include Upwork and Freelancer
Upwork — This crowdsourcing company was formed by the 2013 merger between Elance and oDesk. It is based in the United States (Mountain View, California) and encompasses 4 million clients and 9 million freelancers (numbers are according to Upwork, a privately held company).
Freelancer — The other major crowdsourcing platform was formed in 2009. Based in Australia (Sydney), Freelancer has almost 19 million users (based on a March 2016 report).
For Freelancer and Upwork (as well as most other crowdsourcing sites), the service companies operate on a global basis — with both clients and freelancers located throughout the world. The crowdsourcing platforms earn revenues by charging fees to freelancers, client companies or both.
One major negative for these sites is the quality control aspect. Client companies are responsible for monitoring the quality of work being delivered by freelancers.
Looking at these sites and the job contained it is clear that the majority of projects are under $500 USD while tech-related jobs may range in the more $700 – 1500 USD mark.
These Crowdsourcing platforms also create an atmosphere that tends to encourage unusually low bids in order for freelancers to get work on smaller projects. The potential of “cheaper than cheap” services available on crowdsourcing websites can be especially appealing to self-employed individuals and very small businesses that are widely believed to constitute the bulk of crowdsourcing users.
The full identity of the bidding freelancer is rarely revealed and can create a sense of not being completely sure of “what they are getting for their money.”
What are the differences between Crowdsourcing and Outsourcing
Differences like the following often act as major factors in organisations ultimately choosing outsourcing companies rather than crowdsourcing freelancers:
Cost-Effective Pricing — outsourcing companies will rarely be the “low bidder” in comparison with crowdsourcing price proposals, they do however provide the “most cost-effective price” (always important whenever “quality matters”).
Consistent Talent —Outsourcing companies usually provide benefit from having a stable workforce that they have invested in ensuring can actually do the job.
Quality Control — Most outsourcing companies guarantee quality while crowdsourcing platforms leave the quality control up to clients.
Management of External Resources — When it comes to HR any reputable outsource company will “taking care of everything” in many outsourcing assignments. This often encompasses managing all resources. In comparison, crowdsourcing operates more like a “self-service operation” in which hiring companies still need to pay attention to everything from hiring to training to being on the alert for costly mistakes.
Specialised Training — Ongoing training of their an outsource companies team members means that unlike crowdsourcing platforms businesses will not have to train freelancers along the way.
Outsourcing considerably ahead of Crowdsourcing
While crowdsourcing has made some inroads into the overall outsourcing market the traditional outsourcing model reigns supreme. The “sweet spot” for crowdsourcing appears to be seen in less technical projects under $500. In addition to cost factors, a business must decide what matters most to them.Cost-effective prices, the stability of talent, control of quality, managing resources and training requirements are all factors, the decision to emphasize a long-term Tandem NZ can result in a more successful outcome.
What do you need to know to access the ‘secret ingredient’ that outsourcing can provide your company?
The Business Case for Outsourcing
The key question when looking at outsourcing is to have a candid assessment of your company’s strategic needs and goals. The usual suspects are trolleyed out in most business cases for outsourcing:
Outsourcing provides a reliable and immediate source of an adaptive workforce that can react in a timely fashion to a rapidly changing marketplace.
Outsourcing can reduce costs, improve customer service and increase productivity.
Outsourcing improves competitive differentiation — how your company stacks up to the competition — by allowing you to tap into a fluid supply chain of highly trained professionals.
Companies are realising the world over that outsourcing fulfils a strategic need for business success.
Where should I outsource to?
India and China are unquestionably the leaders in overall outsourcing. Other destinations such as Philippines, Sri Lanka, Estonia etc have established themselves as a growing influence in the world of outsourcing. For any company looking for IT needs offshore, one place still retains the top spot far ahead of its rivals. India, take a bow.
Outsourcing has a distinctly international flavour, no surprise really is it. 6 of the top outsourcing destinations are located in India and 2 of them in the Philippines. We have picked up these cities from Tholons 2016 rankings, and highlighted their pros and cons with regard to outsourcing:
- Bangalore, India
Bangalore continues to be the world’s No.1 outsourcing destination for the past 25 years. The city offers a unique combination of a talented workforce with first-rate English skills, a large pool of vendor selection, impressive infrastructure, and partnership opportunities.
Along with a pleasant weather and a cosmopolitan culture, Bangaloreans enjoy a lively nightlife. The only trouble is the increasing traffic in certain parts of the city, which is expected to be overcome with the metro rail project.
- Manila, Philippines
Manila has fast emerged as a top outsourcing destination, particularly for Finance and Accounting Outsourced (FAO) services.
Salary costs in Manila compares favourably against other outsourcing destinations such as Singapore and Kuala Lumpur.
- Mumbai, India
More than 5% of India’s total GDP is generated from Mumbai, crazy huh.
Decent infrastructure and talented workforce make Mumbai a preferred outsourcing destination for BPO services.
- Delhi, India
Being India’s capital city and the country’s political power house, Delhi enjoys one of the lowest infrastructural constraints compared to other Indian cities.
Delhi and its adjacent NCR (National Capital Region) have seen the quicker transformation over the past 15 years, making Delhi a most favoured IT and BPO outsourcing hub.
The city is known for its extreme weather conditions. Between summer and winter, people have to adjust to sharp temperature differences.
- Chennai, India
Chennai is known as the “Gateway of South India” and produces a number of highly qualified technical graduates from its pool of top-ranking educational institutions, including the prestigious Indian Institute of Technology (IIT), Madras.
Chennai offers the finest infrastructure and a very low cost of living.
- Hyderabad, India
Hyderabad ranks second among the largest providers of IT-enabled services in India.
The largest number of highly educated professionals in India emanate from this city.
The city is currently serving as the twin-capital for the erstwhile State of Andhra Pradesh, which has been bifurcated into Telangana and Seemandra. Political movements to bifurcate the state have led to deep social tensions among the citizens of both states.
- Cebu City, Philippines
Cebu is a major commercial hub with leading universities including San Carlos and South Western.
The local government aims to grow the outsourcing industry by 15 percent in the next three years.
Experts have however observed the need for Cebu to produce more talented workforce.
- Pune, India
Pune is a well-established outsourcing IT destination with most business-friendly areas like Kharadi, Hinjewadi, and Tathawade.
The city has lower real estate costs and is house to 50+ top IT and BPO companies who have their main offices here.
The language skills in English are found to be average when compared to other cities.
- Kraków, Poland
Kraków is one of the highest ranking cities in Central Europe with reputed universities.
Advantages of investing in Krakow include quality and size of the labour market and costs related to conducting BPO business activity.
Nevertheless, the outsourcing sector in Kraków is working towards breaking certain trust barriers which still exist, making potential clients reluctant to invest in this city.
- Dublin, Ireland
Dublin offers highly qualified staff and has a globally recognised educational system.
Many companies service clients with ‘first-language’ employees.
Although an attractive destination, costs are comparatively less competitive than the other top destinations mentioned above.
What to Look Out for
Many countries are vying to become the most favourable outsourcing destination. Do your due diligence and look into the history countries have in successful outsourcing models. New and shiny something may be but tried and tested is the winning formula when looking at outsourcing.
With regards to Tandem NZ, the choice was simple. Base ourselves in the number one spot for outsourcing in the world with access to the best source of talent available to ensure our customers get the quality they need.
Find out more about how outsourcing could work for you, especially when you only have to deal with a locally based NZ company.
It is not unusual that you are sitting there reading about outsourcing and agonising and questioning what to do when you are thinking about whether to outsource or not. What should I outsource? What should I keep in-house? What will people say if they find out? Will it be too hard to work with an offshore team? These and many more questions will be flying around while the many practical and economic benefits of outsourcing will be sitting front of mind.
Time-consuming activities are the bane of many a business. One of the best benefits of outsourcing is freeing yourself and your team from these time-consuming activities. But how do you determine what activities these could be?
A decision matrix!
What is the Outsourcing Decision Matrix
The idea is simple, divide your thinking into four quadrants that help you visualise whether to consider outsourcing or not.
Functions that should be considered for outsourcing are those which must be done to keep the business running but are not important to the overall strategy of the business. Outsourcing these tasks will ultimately “free up” managers and other employees to apply themselves to “more important” work such as improving innovation.
In-house functions are typically those that are strategically important and business managers can control the most vital processes directly by keeping these tasks internal.
The 4 Quadrants of the Outsourcing Decision Matrix
The four quadrants of the Outsourcing Decision Matrix consist of the following:
Form a Strategic Alliance — This is the most appropriate quadrant for tasks that add little to operational performance but are nevertheless high in strategic importance. In simplest terms, these operations do not need to be done in-house and can be fulfilled via a strategic alliance that still allows control from a distance.
Retain — Operations in this quadrant should be kept in-house. These tasks represent activities that are both high in strategic importance and have a significant impact on operational results. You and your business managers should maintain maximum control and should not outsource these operations.
Eliminate — In addition to identifying candidates for outsourcing, the decision matrix can also help you identify candidates to be eliminated entirely. These tasks represent operational tasks that do not contribute in a meaningful way to daily business performance and are not important to your overall business strategy. Why keep them at all?
Outsource — Tasks that are not strategically important but are important for successful performance of operations belong in this quadrant. They are not worth spending valuable in-house time for managing and should be outsourced to a cost-effective outsourcing company.
How to Create Your Customised Outsourcing Decision Matrix
A simple three step process can be applied to make effective outsourcing decisions:
Step 1 — Identify the Strategic Importance of an Operational Task
Ask a series of questions such as the following: Does the task contribute to what makes your company unique? Is it vital to your competitive position? What role does the task play in how customers view your services, products, and company?
Step 2 — Identify How Operational Tasks Contribute to Daily Performance
Next, you should think about the role of each task in terms of the impact on daily operations: How important is it really? If the task is performed badly, what will happen? Will operations come to a halt if the task is delayed or incomplete?
Step 3 — Position Each Operational Task on the Decision Matrix
After performing the first two steps, you are ready to “plot” each task on your individualised decision matrix. However, this is also an excellent point to review where you initially placed tasks on the horizontal scale (operational performance) and vertical scale (strategic importance). If you didn’t do so already, you should seek a consensus among key managers as to their assessment of the strategic and operational assessment of each task. Wide disagreements should be a warning sign to look at specific tasks more closely.
As with any two-by-two matrix, you should be prepared to apply common sense where necessary. The lines between quadrants cannot always be perfectly determined.
Remember that the best starting point is actually before Step 1 — creating a list of all operational tasks associated with a specific business unit. When this list is assembled, ask department heads or other managers to be as narrow as possible.
Strategic Choices – Making Outsourcing Easier
As with any major decision, overall outsourcing should make life easier and make your business more successful and cost effective. Evaluate your tasks and outsource options and determine if you proceed to outsource with a reliable partner, like Tandem NZ and will you be able to realise the key benefits.
Once upon a time, only the ‘big guys’ could consider outsourcing functions of their business. times have changed and now not only can those large multinational organisations benefit but now small businesses can realise the benefits of outsourcing. In fact, they can potentially get bigger gains because of how many new jobs are being created in smaller companies. Is it something you should consider? One of the best ways is to ask yourself what’s in it for your company. What are the Benefits and advantages of outsourcing for you?
Generally held Benefits of Outsourcing
Pretty much there are eight “universal benefits of outsourcing” — Regardless of your business focus, you should expect to realise these significant benefits:
Infrastructure Flexibility — With little or no infrastructure requirements your organisation can add an unlimited workforce.
Business Continuity — Your company will minimise continuity risks due to natural disasters and political events.
Focusing on Core Areas — Enable you to focus on your core strengths and to outsource non-core functions.
Business Expansion Choices Are Expanded —Even the smallest company can venture more easily into new markets and business opportunities because of reduced costs enabled by outsourcing.
Staffing Flexibility — Businesses no longer need to hire and fire due to the ups and downs of fluctuating business cycles.
Risk Management Improvements — Risks due to data losses are shared with or transferred to outsourcing partners with established risk management practices.
Reduced Technology Expenditures — One of the biggest cost savings due to outsourcing is created by eliminating expensive technology and software upgrades.
Offering 24/7 Service to Customers — In a 24/7 world, your customers often want everything “now” or “tomorrow at the latest.” Outsourcing allows you to say “Yes” to your clients’ most urgent demands.
Outsourcing Advantages for Specific Business Functions
There are even more benefits above the top 8 mentioned above which may be more than enough for you. Consider other functions in your business like, operations, human resources, customer service, and marketing.
Operations — First, having an increase in your talented workforce generally means they are capable of higher output. Second, gain access to specialised skills that might not even be available locally. Third, all business services can be delivered faster and with higher quality.
Human Resources — With appropriate outsourcing, small businesses can quickly improve recruiting and new workforce screening.
Customer Service — Customers will almost always be delighted to find your customer service channels open on a 24/7 schedule. Only your competitors will be disappointed to see that your company now also offers more customer service to potential customers than they do.
Marketing — In most small businesses, there is a lengthy list of marketing activities that can be effectively outsourced with a resulting savings of both time and money. Examples include web design, content writing, and brochure design/publishing.
But wait there’s more…
There are also hidden business advantages of outsourced solutions that you should consider beyond the “obvious advantages”:
Increasing your Competitive Edge — when it comes to putting some serious distance between your company and “the other guys” outsourcing provides you with a unique advantage in talent access, capability and cost.
Time is money — Leveraging differences between time zones means you can effectively extend your business working day. You can literally provide “overnight service” on key projects when your outsourcing provider completes work while you and your employees are sleeping.
Expand strategic thinking — You can use the funds generated by savings due to outsourcing to realise business expansion or to reduce pricing and improve customer loyalty or tick off those shelved ideas.
So what next?
The benefits of outsourcing can be substantial for small business owners — if you find the right partner in the right location. Being able to access offshore talent and teams while interfacing with a local company would seem like a complete win – win scenario. If only there was such a company…..
Is using outsourcing a good idea for startups? It already provides winning strategies for established companies but would it also enable start ups a competitive edge they are looking for.
To outsource or not to outsource, that is the question.
“If you deprive yourself of outsourcing and your competitors do not, you’re putting yourself out of business.”
~ Lee Kuan Yew, Noted Diplomat
Rapid and cost effective access to knowledge and talent is crucial for established business enterprises as well as start ups. Only then can you gain a timely edge in winning customers and beating your competitors.
For start ups however you have a much shorter ‘launch window’ and also much higher expectations than those seasoned businesses. Your aggressive startup goals are also accompanied with less money with which to work with than an established company. Add to this the shorter timeframes being relatively common among startups, outsourcing frequently makes even more business sense to a startup operation than for an established company.
The answer for a startup is clear from a couple of simple questions. Can an outsourced solution do what you need as a reduced cost, more quickly and better than if you did it yourself? What should you be focusing on – growing your business or dealing with functions that could easily be outsourced?
So which processes could Startups Outsource?
Primary tasks for companies doing it themselves are “core competency” functions, mission-critical tasks that require creative thinking and tasks that involve direct contact with the client.
Once you have identified these then everything else should be ‘fair game’. Only subject to whether it is more cost-effective than an in-house alternative. One key advantage of outsourcing for startups is that it frees up crucial resources that can be directed into more profitable activities.
When is it too far for outsourcing?
We all know a lot of startups fail in their first year of operation. Many less make it 10 years.
How can outsourcing assist in reducing these business failure rates? Here is a year-by-year outline of a way to use outsourcing and where to use outsourcing:
- Year 1 — Outsource only IT Development, Digital Marketing and Finance functions.
- Year 2 — Consider “non-core” Operations in outsourcing decisions.
- Year 3 and Beyond — Outsource expanding Operations as you grow the company.
For example, during the 1st year startups should limit most outsourcing to key areas such as IT and digital while core business processes are established.
Where should you find the best Outsourcing destinations?
Geography poses no limits when outsourcing. In today’s high-tech world companies can work with their outsource teams in far away locations as easily as working with a business just located down the street.
Some specific countries might emerge as better candidates for your specific outsourcing needs. Based on findings reported by Click and Duening, the leading international destination for Business Process Outsourcing is India. Once you choose a preferred country, say India, do your due diligence on that country and other research about the leading outsourcing destinations in India.
How to find a good Outsourcing partner
Key things to look for when evaluating an outsource partner are:
- International Expertise: In a global economy, you want multilingual skills and the ability to work with customers in multiple countries.
- Quality Standards: Ask for examples of their work.
- Pricing Flexibility: With scarce financial resources, startups should demand outsourcing partners that provide pricing choices.
- Specialized Skills That Meet Your Needs: Startups should confirm that their outsourcing partners have an existing team of specialised professionals who can start on the project immediately.
What Is Your Next Step Before Outsourcing?
Outsourcing is used by a growing number of startups — including your competitors. Access cost effective options and skill set to enhance your business while you focus on the most important job of any startup, finding customers and growing your brand/business.
While outsourcing to date has mainly been a substantial cost cutting play for businesses, today’s leading companies are now approaching outsourcing in innovative and surprising ways looking to activate, create, integrate and amplify their businesses value. Outsourcing is creating new opportunities for service providers and their clients.
More and more businesses are looking outward to expand their market and will lead this by outsourcing more tomorrow than they are today. Specific sectors in Finance, HR and of course IT are leading the charge across the globe.
Do you want to outsource a part of your business processes but wondering whether the job you have in mind can be outsourced? Are you unaware about which jobs can be outsourced? The answer to these questions is that almost any business process or work can be outsourced as long as data transfer is possible. If there is an operation in your business that can be done remotely in another room on a computer it can be outsourced. In fact over $88 billion US dollars was exported from software companies outsourcing from India in 2014 alone.
So some of the key services that can be outsourced in most businesses would be:
- Finance & Accounting
- Big data Analysis
- Data entry
- IT System administration
- Web Development
- UI/UX Design
- Artificial Intelligence
- Software Development
- Specific software support and development like Salesforce, Microsoft Dynamics, etc
- JAVA Developers
- Data Scientists
- Digital Marketing
- Graphic Design
- Video animators and editors
- Mobile App Design & Development
- Customer support services
- +much more…
In fact the reality is that with a labour pool of over 1 million people in Bangalore – India for IT alone, whomever you require to give your business the edge can be found. You name it and you can find it.
But how do you access these skills?
The increasing emphasis on delivering value beyond cost savings means outsource service providers are rapidly evolving into innovation centers with the aim of creating improvement opportunities for their clients. The savviest businesses use their providers to help them find, filter, and manage the many transformative products and services the marketplace to improve business performance.
However there is still an elephant in the room when it comes to outsourcing. We have talked about this in previous articles “Is outsourcing right for you?”, the common headaches of communication, interpretation, culture and distance are still prevalent in accessing offshore organisations.
A way to bridge these headaches is to work long and late/early hours building up a rapport with your offshore company until they understand who you are and what you want in detail. Thus ensuring the quality you require. But what if you could access the power of outsourcing aspects of your business all while dealing with a local provider? No more late nights and frustrating conversations. No more not getting what you asked for back. Imagine that. Quality delivery, no communication misunderstandings or issues and no late night phone calls or dropped skype calls. Saving you and your business precious time and money.
One such solution is Tandem NZ. You can now “Outsource without Headaches”. Tandem NZ have a local Christchurch based office as your key interface and a development centre in Bangalore, India providing world class outsourcing services and helping clients via high performance staff management. It is your one stop shop for outsource tasks from within your business or fulfilling hard to find resources and engaging with a forward thinking service provider focused on providing added value to your business not just cost cutting.
Tandem NZ provides you a local office to manage your external offshore team, outsourcing without the headaches. Take your business to the next level, let’s chat about your business goals and what outsourcing options may be available for you.
To find out more about Tandem NZ and what possibilities they have for your business get in touch via our website www.tandemnz.co.nz or call Chris on 021 823 857.
Outsourcing is a strategy that companies employ where the contract outside their core teams functions to specialised efficient service providers who ultimately become valued business partners. Outsourcing can be defined as “the strategic use of outside resources to perform activities traditionally handled by internal staff and resources.”
So Why Do It?
The reasons for outsourcing are wide and varied but eventually, comes down to what your company values and needs. It is not always about the money either.
Some of the most common reasons include:
- Reducing and controlling operating costs.
- Improving company focus.
- Gaining access to world-class capabilities.
- Freeing internal resources for other purposes.
- Streamlining or increasing efficiency for time-consuming functions.
- Maximizing use of external resources.
- Sharing risks with a partner company.
However, these reasons are not enough on their own! You need to ensure that when accessing outsourced services, you are achieving more than one of the above list and are also ready for the requirements needed to make for a successful outsourcing program.
What Requirements Do You Need?
In the good old days, “cost” or simple “headcount reduction” were the main drivers to outsource functions of your business. But the times have changed and the key drivers now are more often strategic and focused on enabling companies to leverage senior in-house staff strength and using outsourcing as a way to extend teams to meet demands and market expansion.
Nowadays, the areas for a successful outsourcing program include:
- Clarity concerning company goals and objectives.
- A strategic vision and plan.
- Vendor selection.
- Relationship management.
- Properly structured subcontract and vendor agreements.
- Open communication with stakeholders.
- Senior leadership support and involvement.
- Careful attention to personnel issues.
- Short-term financial justification.
Two aspects of the above are key, so let’s look a little further into these:
- Open communication; and
- Executive and senior management support.
Everyone concerned should be involved in this process. Having open channels of communication to determine stakeholder requirements and having executive support is critical for a successful adoption of an outsource strategy. Whatever the final outsourcing arrangement looks like, there will be a need to carefully manage the change focusing on the key reasons and outcomes that should be achieved.
Any senior manager should be able to articulate the goals and objectives of the organisation. Strategic objectives like outsourcing must be a top down approach with clear communication about how the initiative will benefit the organisation.
Like all things considered, choosing an outsourcing partner is not the end of the executive’s journey, they must be looking ahead and recognise their own responsibility for the success of the outsource program.
Ensuring Outsource Success
Ongoing management and open communication are vital to the success of the outsourcing relationship. An outsourced team is simply an extension of your in-house team and not the enemy.
Senior management must stay involved and meet at appropriate intervals to discuss the relationship and any issues or successes. Additionally, meetings should be happening at the operational level to ensure delivery success and quality levels are as per agreed levels.
Let’s chat about your business and how a solid outsourced strategy can add value.
So this could be a bit controversial but I think it needs to be discussed. In NZ we have a shortage of quality IT resource. FACT! One of the key issues preventing global expansion of NZ companies is access to talented resource at affordable rates.
As a business owner what are you to do? You are being pulled multiple ways. You have your employees on one hand telling you, “offshore people are useless, that more people are needed in the team right here”. Or that, “the work we are doing is too specialised to do remotely, they need to be sitting right next to us”. Or even a – “we can’t outsource this work because we are already too busy. Oh, and the guy you tried to hire last time was useless, he/she didn’t have enough experience”.
Then on the other hand you have your board or your shareholders or even your wife saying you need to grow the business. You should develop more products but you need to reduce your budget. Why is your HR cost so high? We need that thing done next week, not a month from now! Sounds familiar?
Offshore development, resource-optimizing, co-sourcing, outsourcing – those dirty words. But are they the answer? Outsourcing your resource gaps is by far the most viable option that exists for you to extend you team, plug those holes and develop your business. The best thing about it is that, usually, it is a much more cost effective way of business operation. And in today’s world, technology makes outsourcing easily accessible, as if you had your team right in the next room. What did your staff say again? If they are unable to work with someone in another room, perhaps the issue is not with the other room but with them! Food for thought.
With outsourcing you can find the resource skills readily, and those resources are usually a third to half cheaper than local guys (whom you can’t find anyway). So why are you not outsourcing parts of your company? I will tell you why.
You are scared.
All the stories you have heard about outsourcing problems can be traced to two key items –
▶ Cultural miscommunications; and
▶ Scope inconsistencies.
But what if there was a way to eliminate those two issues? Imagine if you could just deal with a local NZ-based company like you do for everything else, and yet gain access to offshore talent and pricing benefits, well, then your risk is no more than hiring any other local company.
If you could do this, wouldn’t that enable you to address both your day to day operational needs as well as satisfying the board? And just maybe, the wife as well? Luckily now there is a solution that fits this bill. Tandem NZ provides you a local office to manage your external offshored ring fenced team – thereby outsourcing without the headaches.
Take your business to the next level.
To find out more about Tandem NZ and what possibilities they have for your business get in touch via our website
We are excited to have our NZ and Bangalore, India office up and running and being able to remove the headaches of outsourcing for many IT companies.
A New Zealand founded company offering world class outsourcing solutions to businesses in any industry.
Tandem NZ provides offshore software development services to help clients increase their software development capacity and efficiently turn their ideas into working products. Our deep technology background, collaborative culture and creative problem-solving skills enable us to proactively offer solutions for the most complex challenges.
To find out how we can help you call Chris on 0800 846 795