The Advantages of Outsourcing

• Lower labor costs
• Less overhead
• Less payroll taxes
• Increased efficiency
• Less human resource issues
• Information Technology savings

Disadvantage of Outsourcing

• Less direct control over processes
• Negative Stigma (off-shore outsourcing)
• Changes in processes may be more difficult to implement
• Trade Secrets
• Possible language barriers

Are you Afraid of Business Process Outsourcing (BPO)?

Many people shudder when they hear the term “business process outsourcing (BPO),” immediately remembering a bad customer service experience. Not all outsourcing is bad. With some intelligent thought behind your outsourced project, huge dividends can be paid to your organization and its customers.

Outsourcing does not mean sending every business process to India or China. Outsourcing can be as simple as sending a document scanning project to a local imaging company. Outsourcing to a labor rich country can also be a very good thing if carried out correctly.

The World is truly a global economy now.  In order to remain competitive you must use business process outsourcing to your advantage.  If you can save money, increase productivity and boost customer satisfaction by BPO, you had better because your competitors will.

Why outsource?

One of the biggest benefits of outsourcing is being able to redirect valuable resources toward what ever it is your business does best. Costs can not be measured in just dollars and cents. The Opportunity Cost must also be factored in. What does it really cost you to create or implement a new imaging system?  Might that time or money be better spent on your real money making processes?

Trust

When I outsourced my first project, I was as nervous as a parent sending their only child off to their first day of school. Actually, come to think of it, that was my first outsourcing project. Even though I thoroughly researched the preschool I was sending my son, I was still a bit nervous. Outsourcing is really no different.

If you are in business for yourself, you probably think of your business as your baby. Trusting someone else with any part of their business is unthinkable to some. It's easy to believe no one will care for your business processes as you would. Giving up control is the biggest drawback to outsourcing. It’s true, this is an obstacle, but good measure of control can still be maintained while outsourcing your project.

How to maintain control

Just as you would maintain control over your child’s college education by checking his or her grades on a regular basis, you can audit the work another company performs for you. Weekly calls can be placed to chat with the supervisor who is in charge of your outsourced project, Just as you might call you son or daughter at school.

Much like visiting a college to determine if it’s the right type of environment for your child, the same can be done with a data processing company. You can visit their Data Centers to make sure certain privacy rules are being adhered to and that the facility is secure. Always ask for references and check them. If a company you would like to do business with can not provide references look for other companies.

What are you good at?

Are you great at Data Processing or Document Scanning or for that matter a good preschool teacher? My guess would be no or maybe you just don’t have the time to learn how.

Just between you and me, I would be a terrible kindergarten teacher. If I were to home school my son, I would not be able to work and earn money to pay the bills. In a nutshell staying home everyday with my son would cost me the opportunity to earn money to pay the rent.

Outsourcing business tasks that are not directly bringing cash into your business is really the same thing as sending your kids to school. Did you really get into business to scan documents or supervise a data entry staff?  Does your company have the time and resources to devote to imaging, data processing or database creations?  I did happen to get into that business and that’s what earns my company money.

Is it cheaper?

How much might it cost you to educate your child yourself? The cost of a teaching accreditation and the time it takes to get might cost you about  $500,000.00. This process is both expensive and time consuming.  It would be less expensive and easier just to send the child to preschool, just as it would be easier to call in an imaging company to do your project for you.

Many data processing jobs are now sent oversees which offends many Americans. People don’t like to feel as if they are contributing to the epidemic of selling off American jobs.

Most customers care about the quality of the job and price. All things being equal, a better bottom line will always win out. If you can lower your costs you will be more competitive. Ultimately, this is the biggest benefit of outsourcing. 

Due to fierce competition, I was forced to match my competitors pricing scheme. He used offshore indexers and I used my own internal staff. My costs were about 40 percent higher than his and my clients made it clear to me that cost was a big concern. After three audits of my outsourced data I was amazed to find out just how good the data was.

The data was as good as my employees for three reasons. I very carefully researched the company I would eventually choose. I audit the work they put out on a daily basis, and I only outsourced portions of work that made good business sense.

Can outsourcing hurt me?

Outsourcing which is purely driven by cost cutting can hurt you. Have you ever spoken to a Dell representative in India about your broken computer? If you have, you've probably had a negative experience. The language barrier just may be too difficult to overcome for many people. This could lead to an overall customer service nightmare.

Dell should have outsourced this task to a call center employing employees who speak English as their first language or kept the project in-house. Not every project should be outsourced the same way.

What types of projects can be outsourced?

There are many types of projects that can be outsourced. If handled correctly, the advantages of outsourcing the types projects listed below will always far outweigh the disadvantages of outsourcing.

• Document Scanning
• Data Entry
• Forms Processing
• Claims Processing
• document web hosting