3 Steps to Outsourcing


A successful offshore outsourcing strategy can help provide benefits and cost-savings for your enterprise. To name a few, there can be improvements to processes, expansion of talent pools, cost containment, improved concentration on important business functions and lowered time-to-market.

However, the inherent risks in an unsuccessful outsourcing project can compromise all of the inevitable benefits. How can you minimize those risks? First and foremost, never expect a miracle to happen; second, make informed decisions. If you’re planning for an offshore strategy for the first time with, say, Philippine outsourcers, there are things to consider.

Here are some of those ways on how you can minimize the risks and maximize the opportunities for outsourcing success:

Define Clear Objectives

A successful outsourcing strategy starts with a clearly defined objectives and measurable goals. Objectives state the reasons for an offshore program, illuminate its business value, and provide a working framework. This last one helps in deciding which vendor to work with, which outsourcing model to use, and what needs to be outsourced.

In addition, your objectives will dictate the level of risk you should assume, and offer the context in which to evaluate how successful or unsuccessful your strategy is.

Set Realistic Expectations

After establishing all of your goals and objectives, you need to look into them once more to see that they’re realistic enough. Very few companies have been able to hand over the keys to their IT department without at least one realistic expectation and walk away successful.

Considering outsourcing as a long-term investment with considerable long-term benefits should help you set more realistic expectations. At the same time, don’t settle for less when it comes to outsourcing some of your business projects.

Counting the Costs

Just as important as setting realistic expectations is to check how much this will all cost you. With so much pressure from the management to cut back on costs by placing expensive skilled labor positions offshore, it’s easy to underestimate the true costs involved. The following hidden costs add to those of the actual work:

  • Choosing a Vendor: Expect this to take a couple of people for a couple of months
  • Transitioning Work and Business Processes: Knowledge transfer and loss, and process refinement
  • Attrition of Existing Workforce: Costs related with removing existing employees
  • Dealing with Cultural Differences: Cultural training is quite obvious: needing 40% rework because you thought “no” meant “yes” is hard to estimate

In addition, hidden costs can sometimes range from 15% to 60% of the outsourcing contract itself – sometimes even more. You can maximize these costs with careful management and with the right approach. However, you must account for them in the total cost of an offshore outsourcing strategy before boasting of the savings to the management.

These are just some of the things you may want to consider when you plan to hire a Philippine outsourcer to do some aspects of your job. It’s important that you plan for outsourcing carefully when you want it to help you and your business succeed in your chosen business niche.