Outsourcing Business: A carefully devised outsourcing strategy allows government agencies, corporations.
And other organizations to meet institutional objectives more effectively.
Developing a sound strategy requires a cost-benefit analysis.
That takes into consideration financial costs, quality expectations, and related risks.
The following are steps for developing an outsourcing strategy.
Business Process Outsourcing (BPO) is now a huge multi-billion-dollar transnational industry.
That is expected to reach $52 billion in market size by 2023, growing at an average rate of 11% per year.
The rising dominance of e-commerce and the digital economy is leading companies to demand more data, real-time services, and a presence across multiple platforms.
As a result, more companies are outsourcing their accounting, data processing, customer service, human talent, and supply chain needs.
While India and the Philippines have benefitted from the explosion of IT outsourcing demand in the USA and UK, Africa has become the big player in BPO for the global Francophone market.
The number of BPO companies in Morocco, Tunisia, Senegal, Mauritius and Madagascar continues to skyrocket.
In Morocco, the BPO market leader in Africa, the industry employs over 70,000 people.
And in Madagascar, the number of BPOs have grown from just a handful in 2005 to 233 firms in 2018.
More BPOs are setting up shop on African soil for a variety of reasons.
The lower cost advantage of running BPO centres in Africa means that companies can be more competitive and profitable.
Also, internet speeds in places like Madagascar are faster than in several developed countries.
Thereby significantly improving the quality of service.
In Kenya, BPO firms like Samasource use local tech-savvy Africans.
To support some of the big names in Silicon Valley, such as Google.
Microsoft and Yahoo, in their artificial intelligence efforts.
Also, in January 2019, Andela – a company.
Which trains African software developers and engineers.
And outsources them to companies in the USA and Europe – raised $100 million in funding.
The investment in Andela, which was led by an investment firm co-founded by former US vice-president Al Gore, comes after an earlier $24 million investment by Mark Zuckerberg of Facebook.
These investments represent a significant validation of the potential of the outsourcing business in Africa.
As the global digital economy expands.
Africa’s large pool of young, tech-savvy English and French speakers presents a major attraction.
And promising opportunity for global BPO firms.
Looking to serve the growing outsourcing demand from clients in North America and Europe.
The outsourcing space will surely be one of the top business opportunities in Africa to watch this year.
Outsourcing has become a major trend in human resources over the past decade.
It’s the practice of sending certain job functions outside a company instead of handling them in house.
More and more companies, large and small, are turning to outsourcing as a way to grow.
While restraining payroll and overhead costs.
How can you make it work for your business?
1. Define organizational objectives.
Your goal may be to help a start-up get off the ground.
Alternatively, your organization may be well-established and focused on innovating and developing new products.
2. Pinpoint your reasons for outsourcing.
Accessing tools and skills that are not available in-house.
Reducing operational costs and accelerating organizational change are a few examples.
3. Outline a plan for achieving organizational goals.
Your company may be in the process of offering a new service to existing clients.
Or expanding the range of services to attract new clients.
Your detailed plan might include hiring outside consultants.
Buying parts from a third-party vendor or training in-house personnel to deliver services.
4. Contact outside vendors and service providers to inquire about their expertise.
One of the most important reasons to outsource a particular service is to benefit from the knowledge and experience of outside individuals and/or firms.
- Ask for cost estimates. Gathering cost estimates early on in the process will aid you in conducting a cost-benefit analysis and competitive pricing studies.
- Check references to ensure quality of services. Ask to speak to other organizations that have been served by the vendor or service provider.
5. Calculate the financial costs and savings.
Training in-house staff and funding office space and equipment for new staff may result in higher costs than outsourcing tasks to a third-party.
- Consider contract maintenance costs.
- In-house personnel must oversee outsourcing contracts.
- Which might involve an investment of time, equipment and travel expenses.
- Determine if necessary skills exist in-house.
- Salaried employees might possess required skills.
- Making it unnecessary to hire outside vendors or consultants.
6. Evaluate quality needs.
Outsourcing can be risky if an outside vendor.
Contractor or consultancy firm does not meet quality expectations.
In these cases, organizations typically incur greater costs.
Because they must have the work revised by another vendor or hire in-person staff to correct issues.
7. Outsourcing Business
Establish quality standards by talking to clients.
And holding internal meetings to develop a list of must-have qualities.
Be mindful of any cultural differences that there might be between the vendor and yourself or the end client.
If you are looking to outsource offshore.
- Distribute quality requirements.
- Make sure that your outside vendors and consultants receive a clear explanation of quality standards, both verbally and in writing.
8. Analyze cultural and communication dynamics.
The nature of the work might dictate that you outsource to domestic firms that understand the culture of your clients.
Alternatively, your needs may be technical in nature, making it more affordable to outsource offshore.
9. Evaluate legal considerations.
10. Examine relationship risks.
- Consider internal relationships. Outsourcing a significant portion of the responsibilities of in-house staff should be accompanied by an explanation. Always communicate openly with personnel to avoid misunderstandings and low employee morale.
- Examine relationships with clients. Determine how your clients will be affected by your outsourcing plans. For example, a client who is accustomed to receiving blog posts written by your in-house staff might not want the content to come from another vendor or a different part of the world.
- Discuss outsourcing plans with existing clients. Keep clients informed about upcoming outsourcing plans before implementation.
11. Hire in-house personnel who have necessary expertise.
While you might outsource large quantities of work.
Having someone in-house who understands how to oversee the outsourced tasks.
It is essential for ensuring that your organization’s needs are met and services are delivered as promised.
12. Avoid becoming locked into a contract with a single vendor.
Include language in your contract that allows you to exit the business relationship after a trial period.
This allows you to properly evaluate service quality, reliability and communication practices.