April 15, 2019
Part II: How are you going to outsource your business?
- Part II: How Are You Going to Outsource Your Business?
The details of how to outsource and the timing of doing it are going to be discussed from this point on.
After assessing your company’s needs and the status of your employees, you might already be convinced that outsourcing is the next best step for you. You may also have made a shortlist of potential BPO service providers to choose from once you begin implementing your plan.
Moreover, you may have made up your mind to hire an outsourcing consultant as well. This means that the only remaining step is to begin.
Below are ten tips on how to do it effectively.
Essential things to consider before you start outsourcing
1. Identify your initial budget or business capital – A necessary thing to do before you start outsourcing is to set a specific budget for it. You should not dive into the practice without even having an estimate of how much it would cost you to implement it.
Identifying your business capital allows you to know what your limits are when negotiating with potential vendors. Naturally, you would want to get the most reasonable price available as one of the primary objectives of outsourcing is cost-cutting.
Do not forget to ask your potential vendors about their pricing schemes. Take advantage of their available terms. Costs should be discussed during your meetings before the signing of the contract.
While the price is certainly not the ultimate factor, preparing a budget and sticking to it is still essential.
2. Check the political stability of the country – You may be surprised that looking at a country’s current political standing is included in this list.
The political stability or instability of the country where you will outsource is vital since it is directly linked to economic stability as well. In other words, the more reliable the government of a country is, the safer it is to invest in outsourcing there.
3. Set up your business expectations ahead of time – Establishing your business expectations before talking to a vendor is crucial because you want to be quite clear of the direction where you want to go before anyone else provides any inputs.
For example, as mentioned in the job outsourcing definition discussed above, outsourcing could also include offshoring. If this is the area you want to go, then determine that probability as early as possible. Do not forget to brief your team leaders about it before moving forward.
Moreover, allow yourself to not expect too much from your employees and the outsourcing service provider. Outsourcing is a process, and like all processes, it has a learning curve both for your team and the BPO group.
4. Know your business benchmark methodology and ratio calculations – This is another crucial thing to consider to appreciate what does BPO do.
It is important to note that not all service providers are created the same. This is especially true in terms of their capacity to cover all your outsourcing needs. Some are the right size to cover all your bases. Others are perhaps too big for your startup that they may eventually sub-contract you to a smaller provider.
There is this thing called “Potential Return on Time Invested” or PROTI. This should be a consideration when negotiating with a potential outsourcer. In fact, the best outsourcing firms make use of this concept.
5. Get ready to act up against talent dilution – This is a potential issue in any outsourcing country. You must be well aware of this and make a plan on how to manage it.
For example, there are more than a million BPO employees in the Philippines right now. According to reports, around a quarter of a million people are being employed in the outsourcing industry of the country each year.
With that level of influx, there will come a time when the level of talent available would become thinner. As mentioned in the definition of outsourcing jobs, you would want a third party to help you improve your business with high-level talent and not with mediocre ones.
Again, having your own set of standards and preparing your expectations ahead of time would help mitigate this problem.
6. Ensure that communication avenues are at bay – Check if the outsourcer has enough technical proficiency to cater to the needs of your business. This is crucial especially if you consider how an IT company works.
Prompt and precise communication is needed when managing information. A single delay or unsent data could cause a lot of trouble for the organization and its clients.
One tip on how to outsource IT services: Make sure the outsourcer has the right equipment and systems in place to implement smooth communication in all areas of the job.
7. Check for the infrastructure problems and issues in the site – This one is related to the previous number. Another potential problem that could come when outsourcing is the capacity of the outsourcer’s office or building for continuous service.
Visit and check their existing infrastructure. In the same example above regarding IT firms, several uninterruptible power supply (UPS) or generators should be in place to ensure continuous power.
Considering what the work of IT companies is, your chosen outsourcer should also have a backup internet service provider in case their main one shuts down.
8. Prepare a reputation management for your handlers – Create a team that would handle not only the reputation of your own company but also that of your chosen outsourcer.
Many customers do not know anything about outsourcing. Most of the time, they unknowingly equate the service they get from your outsourcers with your brand.
This is why it is important to manage reputation, especially in today’s social media age. It is so easy for anything to go viral, and for people to believe it, even without having the correct source.
With the high attrition rate correlated with outsourcing, it is highly possible for a former employee to say something bad about a BPO company after working there. Someone has to handle these for your own company and the outsourcer you are working with.
9. Study and consider the attrition level of the account – This tip is related to the previous number as well. As mentioned before, attrition level is usually high for outsourcing. This high turnover rate could cause preventable troubles when adequately managed.
When you look at the meaning of outsourcing company tasks, it is clear that the practice involves a third party. It should also be apparent to the public that the high attrition of your outsourcer if that is the case, is not in any way related to how you run your own company.
You can also always check your chosen provider’s actual attrition level before hiring them.
10. Prepare and scheme your plan about the pricing value – Again, as mentioned in the “what is job outsourcing” part of this paper, one of the main purposes of outsourcing is to generate savings by lowering labor costs.
You need to negotiate a reasonable price with a potential outsourcer that would be a win-win situation for both sides. Coming up with the appropriate price would require you to study the flow of your business’ finances. Then, plan about the pricing value according to your findings.