Elliott company

Derek Elliott – How to test the Business value of Outsourcing

Press Release   •   Nov 13, 2010 13:08 EST

All too often organizations jump into outsourcing a component of their business without fully understanding what their action will mean to the company on a large basis. Thus, testing and examining a company from the inside out is the only true way to decide if outsourcing is the correct approach for reducing costs.

Systems thinking vs. cheap vendor outsourcing:
When organizations that are not familiar with outsourcing initially consider the idea of sending work outside of the company the first thought that usually enters their minds is to outsource to a cheap vendor. While this is the basic idea of outsourcing, this is a dangerous way to approach outsourcing and a very sub-optimal step given that cutting costs upfront is not worthwhile if later the organization suffers as whole as a result of the move.

The systems thinking outsourcing involves looking at the business value of outsourcing and deciding if there is a better way to outsource that will allow every component of the company to benefit. Goals that should identify before an outsourcing vendor is chosen include flexibility, quality, market time, change, and competitive advantage. Systems thinking outsourcing also mean that the entire company is scrutinized thoroughly across every channel, not just one department such as the customer support area.

Optimizing business value with outsourcing along the value chain:
This is the difficult approach to outsourcing given that fact that within a single organization there are generally many different departments that each consider themselves a key component of the company. Thus, employees within these sectors will be resistant towards offering suggestions and inputs or helping assimilate outsources with their trade.
For e.g. SKG Technologies is the company when you are looking to outsource Search Engine Marketing

Objective of business value outsourcing:
It is important to keep in mind that at the root of any outsourcing attempt is a fundamental goal. When it comes to business value the goal should be finding added value for the company and a more cost effective organization team than the one that is currently in place. Additionally, for maximum benefits the outsourcing vendor should be known for its continual innovations and forward movement in the business world so that your company continues to benefit from its new relationship.

Lower the risks with careful study of outsourcing vendor as well as your organization:
The move to choose an outsourcing vendor should be low risk when compared with the benefits that are gained with the new partnership. In order to properly ascertain that this is the result, a company needs to perform thorough research of the outsourcing vendor it is considering hiring. Among the questions that need to be answered are if the company has experience, an adequate reputation, and if they are able to respond to your organization’s needs in the proper timely manner. A company that offers a trial period is often an excellent choice since they are ready to stand behind their commitment.

Finally, in the case that an outsourcing agreement fails, an organization should search for an outsourcing vendor that will cover the cost of moving the tasks they took on back in house. If a decision is made to switch outsourcing vendors then they would be responsible for promptly transferring all data and related activities to the new vendor.