Outsourcing is the process of designating another company to perform certain functions or operations that are used to be done internally.  A lot of manufacturing companies have been outsourcing one or two of its operation to outsourcing providers from developing countries like India, China, Philippines and Eastern Europe. Today, outsourcing has evolved from simple manufacturing or administrative tasks to more complex and diversified fields such as Information Technology (IT) Outsourcing, Software Development Outsourcing, Application Development Outsourcing, and Business Process Outsourcing, just to name a few.

Let’s take IT outsourcing for example.  A company may choose to outsource one or all of its IT operations, depending on its needs.  It may assign its software development to outsourcing, while its internal IT department concentrates on other initiatives.

Meanwhile, through business process outsourcing, a business may farm out some of its business functions such as accounting, desktop support, web development, application maintenance, and other tasks related to processing. 

Other options in outsourcing involve the outsourcing provider’s geographical location.  It may be local on-site, offsite, near shore and off shore delivery.  Local on-site delivery means the outsourcing provider and the client company collaborates as one organization and directly interacts with each other through-out the whole project.  In contrast, offsite delivery means the staff and equipment are provided through regional development centers. 

Near shore delivery operates through development centers in countries like Canada and Mexico for the United States to prevent international risks. Whereas, offshore delivery means the workforce is located to a different country like India, China, Russia, and Philippines which produces highly-skilled employees at a much lower rate.

Generally, outsourcing involves these four phases: 

• Analysis and planning.  The tasks required, the client’s expectations, the procedures involved – these are all deliberated between the client company and the outsourcing provider.  Here, they both sign a Statement of Work (SOW) which discusses the services that will be provided and a Service Level Agreement (SLA) which stipulates the rules of engagement.

• Transition.  This is where the transfer of operations takes place.  If a staff provision engagement is agreed, the outsourcer operates with its own staff.  On the other hand, if a staff assumption engagement is agreed, the client’s IT staff is reassigned as employees of the outsourcing provider.  Transition period usually lasts from 12 to 16 weeks until the outsourcer assumes full responsibility of the operation. 

• Operations.  This phase is where the actual tasks stated on the Statement of Work (SOW) are implemented.  The client also designates its own in-house personnel to monitor and regulate the performances of the outsourcing team.

• Transition out.  This is the conclusion or the final phase of the outsourcing engagement.  The outsourcing provider surrenders its appointed operations back to the client company.  

Truly, outsourcing has opened doors for companies and businesses alike to save significant amounts of their resources, get access to superior and high-quality skills in their respective area of expertise, enhance the capabilities of the company’s internal IT organization and allow their internal management to focus more in enhancing customer satisfaction tactics and strategic operations. 

In order to be successful however, outsourcing should be correctly executed. For instance, before deciding to outsource a function, a company needs to be sure that IT outsourcing is indeed the solution to the problem.  Furthermore, a company should be very careful in deciding which of its functions will greatly benefit from outsourcing.

Finding the right outsourcing partner is also crucial especially in outsourcing information technology. IT outsourcing entails a long-term connection and disengaging from such connection prematurely due to discontent in the outsourcer’s services can be very damaging for the business. Therefore, careful evaluation and extensive research must be conducted in considering a prospective outsourcer. The client company must remember that more than the cost-cutting factors, the outsourcer’s capabilities, experience, expertise, and reputation should be primarily considered. The outsourcer’s location, culture, and its communication abilities must also be guaranteed. 

As for the client, it is responsible to monitor, and regulate its outsourced functions regularly and continuously for throughout the agreed period of operation. Building a strong and collaborative relationship with your outsourcing provider will help you reap the best benefits that outsourcing can give.

About the Author
Liz Roberts is a successful internet marketer and has been using outsourcing to fuel her everyday online marketing business. In her recent years in the arena of online marketing, she was able to build a competent team of outsourced webmasters performing link building strategies and creating web templates.
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