Outsourcing: Benefits Unlimited

Studies reveal organisations off-shore / outsource work mainly to take advantage of high-quality work for less money. But, cost reduction is not the only factor that drives them to off-shore / outsource. Other benefits derived from the trend includes an improved focus on company core competencies, freeing of internal resources and revenues for other purposes, obtaining resources that are not available internally, while gaining access to world class capabilities and technology. As for the latter, many companies have begun to look at developing software that will allow a linking of system implementation and business process outsourcing.

The recent success of off-shoring / outsourcing to India due to cheap labour rates, qualified skilled labour, availability and quality training of educated staff means that more and more companies are realising the immense potential and benefits to be reaped from off-shoring / outsourcing to service providers in India, especially in the IT sector.

Of course, there are risks involved in off-shoring / outsourcing, but they can be countered and mitigated through diligence and a well-drafted legal contract. A company can reduce the risk of off-shoring / outsourcing to a service provider by assessing the following:

1. Potential of the service provider.

Location.

2. Political, economic and social stability of the location of services.
3. Infrastructure of the country.
4. Legal system i.e. intellectual property and data protection, contract enforcement, etc.
5. Technical aptitude, language skills, etc. of work force.

With a rapidly changing business environment and a shortening of international boundaries, information / data sharing, e-mail, internet and other technologies have expedited many business processes, while providing access to a world market of potential customers. This has led to information security and other functions to snare a great percentage of the company’s annual IT budget, in large part due to the downside of e-revolution i.e. website defacement, hackers, viruses, worms, bugs, Trojan horse.

As local IT professionals and security specialists demand salaries in excess of $60,000/-, the downturn in USA / European economies, many organisations are looking at off-shoring / outsourcing a part or all of their IT functions to a capable service provider in India, or elsewhere. With low investments in staff and upfront contracts, they are happy with a process that provides quality work at reduced costs, while increasing company profits. Becoming popular due to immediately available financial benefits, other benefits from off-shoring / outsourcing include:

1. Annual contracts.
2. Managed / monitored services that lower employee headcount and salary costs.
3. Cost reduction in on-going training and tools provided to company IT staff.
4. Reduction in recruitment costs.
5. Reduction in administration costs i.e. holidays, sick / temporary cover costs.
6. Reductions in maintenance costs.
7. Reduction in upgrades costs.
8. Reduction in insurance costs, and more.

Off-shoring / outsourcing on project basis saves a company money, money that can be re-deployed elsewhere for improved efficiency or simple enjoyment of increased company profits. Off-shoring / outsourcing help initiate a change as fixed costs turn into variable costs, and release capital and investment that can be utilised elsewhere, where it is needed most. As capital costs come under control, an organisation becomes a more attractive investment possibility as capital is utilised in additional revenue generating pursuits.

Further, by off-shoring / outsourcing, an organisation buys talented supplementary skills, lowers its exposure to risk, and obtains peace of mind. As profits rise and costs reduce, investors, shareholders, and customers gain confidence in the organisation, thereby giving it a competitive edge.

As off-shore / outsourcing service providers consolidate positioning themselves to offer a wide range of services. All in all, the off-shoring / outsourcing is expected to rise as the industry matures and benefits far outweigh the risks.