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Attention company owner: Before you jump on the outsourcing bandwagon, consider this

by , 09 July 2013
Outsourcing is based on using experts from outside your company to perform specific tasks that were once performed in-house, the Practical Guide to Human Resources Management explains. Essentially, you'll delegate non-core functions to an external company that specialises in providing a particular service, function or product. The external company then takes on the management of the outsourced function. If you're thinking of outsourcing some of your company's operations, consider these factors before choosing an outsource provider.

There's no denying that there are many benefits of outsourcing. These include lower costs, which can be achieved through lower wage costs, getting highly skilled workers to perform the task as well as getting experts in that particular activity.

While this is the case, it's crucial that when you choose your outsource provider, you have a checklist of criteria. Don't rely on guesswork. After all, the success of your outsourcing experience depends on the capabilities of your outsourcing partner. And that's why you should be thorough when choosing the right company to outsource all your jobs to.

Thinking of outsourcing? Here's what you must consider when you choose an outsource provider

The Practical Guide to Human Resources Management advises you define which performance criteria are important as these criteria become the basis for service level agreements (SLAs) in the contract.

Carry out and evaluate a thorough inquiry about the company's past performance, profiles of its key managers, including its technical people and the status of its clientele numbers, kind and length of association.

As most companies are judged according to their present stature, the weight of past performance can tip the balance on the weighing scale of options.

So when looking for an outsource provider you should expect the following:

  • Correctness in terms of how the work is to be done;
  • Completeness of all work done; and
  • Commitment to deadlines since you need a provider that'll delivers on time.

It's also important to identify the key technical and management issues in outsourcing. You should focus on:

  • The vision and mission of the company in evaluation;
  • Balance sheets of the previous years;
  • Client lists; and
  • Infrastructure.

In addition, when evaluating an outsource provider, you should:

#1: Examine the accounts that the potential outsource company has handled in the past. If you're a start-up company and the outsource provider has experience working with start-ups, this may be very beneficial to your company.

#2: Request the potential outsource provider to submit a detailed business proposal in which they emphasise exactly HOW the job will be done as well as clearly defining roles and responsibilities of all parties.

#3: Scrutinise the potential outsource company's expertise and business strategy as you are looking for a company that's focused on the activities you want to outsource as opposed to a 'will do all' approach.

#4: Ask potential providers if you'll be able to participate in the recruiting, hiring and training process for your team. Be wary of any potential provider that doesn't have a welcome mat out for client participation.

Keep in mind that you must balance the potential benefits of outsourcing with the potential pitfalls and develop programmes that manage the risks and achieve the intended rewards.

After all, you don't want to jump into an outsource relationship, only to learn later that you have selected the wrong partner, your internal processes are inadequate or your employees aren't prepared to support and manage the relationships with your outsource provider.

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