New economic regime has made outsourcing very popular. In this system companies hand over the non-core activities to other companies so that it can center its activities on primary operations. By shedding the non-core activities the companies try to increase their profitability. The operations that are normally outsourced are data operations, customer service and IT related activities.
Mostly big companies opt for outsourcing to earn huge savings. The savings occur due to cheap labor cost in BPO companies located in developing countries like China and India. Outsourcing is fast emerging as a business model which is being replicated by all major companies.
Outsourcing has many benefits, savings in cost being one of them. Outsourcing also helps the companies in concentrating on core competencies. But the system has its flip sides also. The cost competence can only translate to profitability if the products satisfy quality standards. The temptation of outsourcing at lower costs often flops when inadequate service is rendered.
In some extreme cases, the outsourced company comprehends the inadequacy of its BPO partner in the midway. Various legal issues have to be dealt with to abruptly end the contract. For short term contracts the company waits till the contract terminates. But for long term projects other vital issues can further complicate the process. So it is important to team up with reputable companies to get the desired standard of output.
Low price alone cannot be the only factor depending on which such outsourcing decisions should be taken. To avoid unforeseen events the past record of the company should be considered. It is also pertinent to know every detail of the company before getting into any deal.
Often companies are charmed by lower rates and small players in the market manage to grab contracts. But in this age of competition it is crucial to have thorough knowledge about the partners to evade any possibility of sloppy product which in turn may mar the reputation of the outsourced company.
The criteria for selecting outsourcing partners
o Reputation in the market
o Track record of the company
o Knowing vital information about the outsourcing company
Companies with good reputation and standing are the first choice of big companies as partners. It is much comfortable to get into contracts with such companies. But it is also essential to inspect the background of prospective outsourcing companies so that quality glitches can be avoided.
Such background checking is extremely important. Before getting into partnership with any outsourcing company it is essential to check whether the objectives are mutually aligned or not. Then only the projects will be successful.