Outsourcing is a powerful tool that can help businesses avoid getting bogged down in operational minutiae and clearly focus on the most essential functions of their business. It can also cause more headaches and delays than it’s worth if executed improperly. Knowing when and what to outsource is important, as is how to manage the relationship between your business and the third party you’ve hired.
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A growing number of companies outsource call center services, software development, accounting services, and more to third-party companies. Business process outsourcing that entails many tasks, such as human resources, call center customer service, document processing and management, and more, is a $27 billion industry worldwide. According to Statista, a survey of business leaders found that 57 percent said cutting costs and gaining access to expert service providers drove the move to outsource business processes.
Small-to-medium-sized businesses, and even some larger firms, may not have the staff to devote to tasks like data entry and customer service. These duties may be left to personnel specializing in other areas, increasing their workload by adding tasks that they’re neither trained for nor do they enjoy. This can negatively impact the performance of these employees’ “real jobs” and the other work they are tasked with completing.
Outsourcing allows vital employees to concentrate on their primary missions and ensures that important, but tedious work such as call center operations and data entry is completed by professionals who are trained to perform that work.
When outsourcing business processes to an outside firm, companies give up some level of control over that work as it no longer happens directly under their management. Companies choosing to outsource need to be comfortable with the level of control they retain over their work and have trust in the third-party provider they choose to perform outsourced tasks.
Assess the Situation
The decision to outsource shouldn’t be taken lightly. Companies deciding to outsource call center operations and other business processes should do a careful inventory of their needs and the limitations of outsourcing to make the best possible decision. The following are some issues companies should address in their decision-making process:
- Define goals – Have a clear picture of what you intend the outsourcing arrangement to accomplish. Know what services you will require, and understand how outsourcing these tasks will benefit your business. Is your goal to cut costs? Are you more interested in freeing up employees for important tasks? Or is ensuring customer service work is completed by trained professionals your ultimate goal? Knowing what you’re looking for helps you in negotiating a service agreement with outsourcing firms. If you’re not sure what you want, the third-party provider can’t provide it to you.
- Keep costs in mind – Actual and projected savings from outsourcing projects don’t always match up. If saving money is a primary motivator for outsourcing, make several estimates concerning how much outsourcing can save your firm, and err on the side of conservatism. Does the amount that you’ll save make outsourcing services worthwhile? Also consider whether outsourcing is beneficial if it does not save money, or even costs more than doing the work in house. Outsourced services can be valuable even if they’re more expensive if the quality of the work completed is substantially higher.
- Don’t abdicate responsibility – Just because you’ve outsourced services, it doesn’t mean you can just forget about them. While avoiding micromanagement, have controls in place to ensure that you still have ownership of the tasks being outsourced. Also have plans in place to take control of the outsourced work again if the provider does not perform to specifications.
- Cheapest isn’t always best – Although it is tempting to farm out work to the lowest bidder, sometimes the company with the lowest prices also offers the shoddiest services. Again, this is where researching potential partners for outsourcing comes in handy. By researching the background and past performance of firms you’re considering hiring for outsourced work, you can determine whether a low price is a true value or the only selling point a subpar firm has to offer.
- Consider the talent pool – Carefully research potential providers of outsourced services before moving forward with an outsourcing plan. Are there good providers in the area that can perform the work you wish to outsource? What experiences have other companies similar to yours had with outsourcing business processes? Will you need to provide specialized training to the third-party provider to ensure work is done properly?
- Decide how far you wish to outsource – One of the benefits of outsourcing is that it allows companies to take advantage of reduced costs of labor overseas. However, language and cultural barriers may create problems that cut into the benefits of outsourcing, particularly for tasks where a high level of communication and cultural understanding are necessary.
When considering outsourcing a task to a foreign firm, ask yourself the following:
- How mission critical is this task? Is this something we can trust to a third party?
- How much communication between our staff and the third-party company will be needed?
- Will the third-party company be interacting with customers? How often and to what extent? Could language and cultural barriers detract from customer service?
- How vital is telecommunications technology to outsourcing this task?
- Does the overseas firm have staff who are fluent in English and capable of regularly interacting with English speakers?
- Have a contingency plan – What happens should the third-party firm you’re outsourcing work to go out of business or encounter a business disruption because of a natural disaster, civil unrest, or more mundane reasons, such as Internet outages? Companies outsourcing work to third parties need to have contingency plans in place should their provider encounter a business disruption or should the relationship end. Contingency planning will allow companies to continue to operate and provide services should a hiccup in the outsourced work occur.
- Have a quality control plan in place – Before hiring a third-party firm for outsourced services, have a plan to monitor the quality of the services this firm provides. Depending on what you’re outsourcing, there are a number of ways to monitor quality. Recording outsourced call center calls can help provide quality assurance, as can random audits of data entry tasks. Regular checks will help ensure that your outsourced services are being performed up to expectations.
Meeting with a representative of the third party you’ve contracted outsourced services with is also important. Periodic conversations about the services provided and whether they’re meeting expectations can help the company correct any problems that may arise. In outsourcing, communication is everything, so be sure to take the time to speak in person, or via phone or teleconference with your service provider several times per year.
- Get it in writing – Should you decide to move forward with outsourcing business processes to a third party, getting all aspects of your arrangement with this firm spelled out in writing is important. A written agreement will help to eliminate any ambiguity concerning expected services and fees, thus removing potential causes of conflict. A written contract also helps you obtain accountability from your service provider, as it should clearly spell out all terms of the arrangement. Be sure that management thoroughly reads the contract and understands all terms before signing.
Datamark is a business process outsourcing company with more than 20 years of experience in outsourcing call center, digital mailroom, data entry, document processing, and document management services, among others. Datamark provides onshore and offshore outsourcing facilities, accommodating the needs and budgets of its clients in optimizing their business functions.