Company Outsourcing Plan Pt. 1
It’s hard to believe, but some people are under the impression that they can outsource a service or a product’s development the same way they order lunch from the nearest corner deli. Yes, it’s true that outsourcing consultants can facilitate the process so much that it can appear as easy as signing off on yet another project.
But the truth of the matter is that outsourcing is a very extensive process that warrants more than a passive understanding. Here, you’ll find a roadmap of sorts(point to more extensive roadmap) that introduces you to each step of the typical outsourcing plan.
· Understand what outsourcing really is.
A big mistake companies make in approaching outsourcing is failing to appreciate its true meaning. Outsourcing, as a whole, is the act of delegating a contracted work process (a task or series of tasks) to a 3rd party. It doesn’t dictate where outsourcing will occur, such as with onshoring, offshoring, or nearshoring, nor does it imply the hiring of permanent staff.
· Decide whether outsourcing is appropriate.
Community revolt and access to proprietary information are two of the most critical reasons why some companies choose not to outsource. Before taking the plunge, make sure (1) you’re aware of how outsourcing may impact the company’s surrounding community (and be prepared for the consequences should the impact be negative(point to news examples online and off)), and (2) you have a way to secure proprietary information and restrict its access(link to news example of an outsourced security breach) to the highest authority.
· Identify appropriate outsourcing goals.
Chances are, if you’re wondering what you can outsource, you aren’t ready to take the plunge. Those who are prepared to outsource have already identified the tasks or work processes(link to examples in book) that are too costly, too time-consuming, and/or too complicated to do in-house. Their only concern at this point is determining whether outsourcing validates their own goals, which may be any number of things, including cost reduction, quality improvement, market expansion, or extended hours of operation.
· Identify associated costs and create a budget.
Notwithstanding the actual cost of a contract, there are two main costs associated with outsourcing, and both play a significant role in determining a feasible budget. The first type of expense — that is, direct costs, is tied to a specific process and may include the cost of planning, consulting a lawyer, traveling, vetting candidates, negotiating, transitioning employees, management, and training.
The second type of expense, indirect costs, is not directly tied to any process, and may include taxes, administration and security costs, service fees, and overhead. Both direct and indirect costs can influence the amount of funds you have available to outsource, and by comparing them with your outsourcing goals (see above), you can determine whether your reasons for outsourcing are validated.
· Identify liabilities and risks, and work to minimize them.
This part of the process addresses all of outsourcing’s “scary parts,” and it’s often what frightens some companies away from it. In a nutshell, any company seriously considering outsourcing must decide, beforehand, how it will prevent security breaches, copyright violations, data loss, illegal behavior and other work-related crimes. Assuming contracted work exempts a company from the liabilities described above is not only wrong, it’s dangerous.
Continued…
