The Advantages and Disadvantages of Business Process Outsourcing

Over the past few years, outsourcing has become the method of choice for small, medium, and large businesses. This trend is being predicted to go on for the coming years as more and more companies are planning to outsource not only simple business processes, but even the more complex ones. However, just like any other ventures, businesses have to consider both the advantages and disadvantages of outsourcing.

 

Companies that opt for outsourcing may not always plan or cover all the bases of the business tactic in relation to their objectives; as such, companies may experience downsides. However, the premise for consideration of outsourcing largely stems from the notions that outsourcing helps cut costs and helps the outsourcing client get ahead in their respective industries. In fact, these views are taken into account by many enterprises. Thus, it is no surprise that outsourcing is seen by many businesses as mutually beneficial to the outsourcing client and the outsourcing firm itself, in many ways.

 

One advantage of outsourcing is the focus on core business areas. The functions or projects that companies decide to outsource would not be within their control for a time, and as such, companies should identify their objectives, implement careful planning, and allocate sufficient resources. As companies are freed from the responsibility of the minor but substantial business processes, they are given the advantage to focus their time and efforts in formulating strategies that will push them forward to being leaders in their respective industries. In addition, most companies that outsource some of their business processes usually do so to allow evaluation of their organization. The evaluation determines their areas for improvement and areas to further strengthen, as well as create, business strategies that will help beat the competition.

 

Another advantage to outsourcing is the potential cost savings. Outsourcing to firms that offer advanced technology releases the company from the trouble of putting a high investment on developing their own technology. Also, most countries of the outsourced service providers realize the benefits of the outsourcing trend in the economy and hence, create policies that will encourage potential outsourcing clients and retain the existing ones. Companies that opt for outsourcing, though, should still take into account unexpected or hidden costs in the form of various preliminaries such as surveys and research studies, incorporation costs, communication expenses, and maintenance costs.

 

The most evident of all the outsourcing advantages is the acquisition of skilled professionals and the increase in levels of productivity (if you’d like to check a great company to help with employee selection, click here). For one, outsourcing provides easy access to highly skilled professionals who possess expertise in the given field. In addition, hired staff and manpower by outsource service providers are mostly, if not all, college graduates and degree holders. Thus, outsourcing clients get the highest quality of service possible at less cost.

 

At the same time, through outsourcing, companies obtain more productivity and results from the outsourced operations. Though some companies may initially regard the difficulty of monitoring and maintaining employees on a regular basis and the possibility of compromising security of certain transactions as potential pitfalls, it cannot be denied that outsourcing generates results that are mostly favorable to businesses. The outsourcing advantages of quantifiable and increasing output also follows the logic that satisfactory quality of production brings in more demand or more business for the outsourced service provider.

 

Indeed, given these advantages, companies have lots more to think about before deciding to move their business processes offshore. But with enough consideration and the right model, companies can surely take in stride these outsourcing advantages and disadvantage aspects and continue on outsourcing and on their track for excellence in their industries.

Previous post:

Brave New Leadership

Leadership does not happen in a vacuum – good leaders in one situation can be terrible leaders in another and different situations demand different leadership qualities from us. In this article, we look at how it is not only our qualities as leaders that are important; but also the fit between those qualities and the environment that we are in.

Managing your teams for sustainability

It’s partly a matter of communication and reassurance, but I suggest it has a dimension we don’t always consider – in strategy discussions do we look only to our own wisdom or that of our top colleagues and professional advisors, or do we take into account in an active and deliberate way the advice we can get from customers and political leaders? Or maybe great speakers, like Richard Jadick?

 

Environmental scanning is an essential part of any strategy development but a global economic shift is largely out of our control as organizations and individuals. What we can do is manage our teams. As we try to fix an uncertain future, how do we keep our teams motivated?

 

The more diverse perspectives you can get into your strategy process the more likely you are to come up with a range of possibilities that makes sense. Teams will be much more reassured by the actions you take to ensure this wide and diverse input into decision making because that will demonstrate that you are doing things in a way that takes political and economic uncertainties into account.

 

The future for business will rely on organizations being sustainable. Tomorrow’s Company, the business research organization, defines a sustainable company as one that, “pursues long-term success, understanding that it depends upon, and therefore must contribute to the health of the economy, the environment and society”.

 

Growth is likely to be generated from green industries and the challenge is going to be how we ensure a global level playing field so that the incentives are no longer perversely ensconced towards manufacturing those green technologies in China or the Middle East. Environmental and social controls in the global system are crucial – why does so much biotech industry developed at Universities like Cambridge end up being manufactured in China or Vietnam? Costs are lower, but why? Because there are no pension arrangements, there is no holiday leave, no health and safety, environmental or ethical safeguards. You can’t have a global system and expect the most advanced parts of the world to benefit if there are different rules for different parts of the globe.

 

One alternative is to build niche industries – very specialized businesses in a global sub-niche, too small in scale to bother taking it to China. Those industries rely on identifying high value, small volume production that can take place here and that is going to be a key means of restoring employment.

 

The future of human resources

Scientists are looking at the ethical and social consequences of what are known as ‘Smart Robots’ – these are not the next generation of robots that are coming, they are the next, or next, next generation. The idea of a Smart Robot is one that is able to continue to learn and improve itself, that can then produce smarter versions of itself. We are not there yet,   but theoretically, they are possible and they may be produced in the next 25 years or so. But what is going to hit us by 2012 is Intelligent Robots.

 

We’ve had robots from the ‘80s, for example in the automotive industry where they performed simple mechanics and threw out of employment a low-skilled, blue-collar workforce.

 

The new generation of Intelligent Robots will look like human beings, they will speak to you in several languages, joke with you, flirt with you and, in Japan, teachers are being substituted with robots in pilot form. They can detect when something is wrong and identify the defective part for replacement. Intelligent Robots have the potential to replace all security guards, receptionists and secretaries – and most doctors,  lawyers, and bankers. The speed with which they are deployed will depend on how quickly they are accepted. Initially, they will cost between £12,000 and £100,000 – not too astronomical!

 

So, starting in 2012 leaders may have to make the decision as we go into recruitment, do we recruit a person or do we recruit a robot? The principle going forward is going to be very straightforward – more and more we will need to recruit human beings who are smarter than their robot equivalents.

 

Three Core Competencies of the Future

The core competences of the future will not be those we are producing now, so unless we address this issue in our school systems the problem of unemployment will certainly increase. As confidence grows and we begin to think about expanding again, we must consider these three core competencies in the kind of people we are recruiting.

 

Finding and retaining customers

We are in a historically unprecedented situation where we are able to produce much more than the world needs of everything. In a world of over-production, the key becomes a market competition – if you want to survive you need to find and retain customers.

 

Managing the whole supply chain

As a result of the rise of technology, we will find industrial boundaries eliminated and the rise of mega-corporations will increase. How do we manage supply chains in these huge organizations? How do we ensure that our staff doesn’t operate as ‘sales prevention officers!’

 

Creativity and innovation

According to the late Peter Drucker, marketing is selling and promoting today’s products, while innovation is anticipating tomorrow’s needs today. Developing a culture of innovation will be an essential aspect of competition, attracting new customers and streamlining structures and processes.

Do Top Money Market Funds exist?

Finding the top money market funds can be a really daunting task, but most investors who are looking to make big cash in a quick manner would abide by it.

One of the most famed cash management tools is money market funds. Often, these tools are cited as the safest kind of mutual fund. But a beforehand examination to understand them, their benefits and their suitability to your investment needs is a prerequisite. In simple terms, money market funds can be defined as those mutual funds that invest in money or capital markets. You either borrow money or loan it. Top money market funds are the ones you have similar to deposit accounts with top-notch banks that accept your money and utilize it for investment purposes. What you get in return is the portion of earnings in the form of dividends that come from it. In general terms, monthly income is what money market funds pay.

 

The Benefits of Top Money Market Funds

Money market funds are normally short term investments that mature in a period of less than 13 months. The risk is highly subsided owing to the short duration nature of these funds. As the lending of money is for a shorter time frame, the probability of getting back your money is much higher. Top money market funds include: Us treasury issues, short-term corporate paper, and certificates of deposits. Depending upon the kind of money market fund that is bought, the securities vary. But the major factor of concern is whether or not the dividends earned are taxable or tax-free. This type of investment grants you the privilege of writing checks that draw from a money market fund. This serves the twin purpose of enjoying the dividend advantage and ease of cash access. But then you need to verify about the fees and the restrictions to be abided as specified by the institution. Top money market funds are in every way suitable for the practical cash parking in the short run. These needs could be as varied as down payment for a house or car or going on a vacation. Also the liquid nature of these funds allows you to sell shares in money funds at any point of time.

 

Decent returns from secure investments are the best bet that top money market funds offer. The liquidity factor of these funds grants the luxury of drawing out money even within a few days after beginning business. Another benefit is the profits earned from increasing interest rates. Putting in your money in an investment that adapts itself to the market movements is the key to reap profits. Quick ways to make big cash is the major allurement behind these funds. An interest rate of 2 to 2.5% is what you can always expect from these funds. These may hold you in a situation of ambiguity because savings accounts offer a higher than 3.5% rate. The answer is the taxes you pay on a savings account may not be as better at the end as top money market funds. The best way to ensure you’ll get the best results is to get assistance from a qualified company, like Erlybird, that has good experience in the field and great professionals.