Prime Advantage has invited industry experts to share insights on achieving manufacturing and business success. In this post, Jason Dasher of Commercial Truck Financing discusses how to contract out certain job functions for a competitive advantage.
New data from the 2016 Global Outsourcing Survey by Deloitte, a multinational professional services firm, reveals that 45% of organizations use outsourcing to solve capacity issues. In addition, 29% and 28% of businesses use outsourcing to boost global scalability and access intellectual capital respectively. In most cases, businesses outsource non-core back-office tasks that are repetitive and time consuming. Examples of such tasks include data entry, creating blog posts, creating whiteboard videos, gathering market data, social media monitoring, and preparing slides for use in presentations. Some of the key considerations when outsourcing backend tasks include:
Look for an outsourcing company located in a country or region that has a vibrant outsourcing industry. For instance, India has a robust IT outsourcing industry that boasts of globally renowned companies such as Infosys (provides information technology and business consulting services). On the other hand, most companies in the west outsource manufacturing to China where labor is cheaper and scaling up/down fast is easy. In fact, Apple's mobile devices and wearables are manufactured in China.
Look for an outsourcing company that has in-depth understanding of your industry. This is particularly important when outsourcing tasks such as marketing, social media monitoring, and sales-related activities (sales acquisition and qualification). Since it may be difficult to verify the expertise an outsourcing company that is located thousands of miles away, seek recommendations from industry peers and experts. Additionally, get references and work portfolios from the vendors you intend to engage. This will enable you to select an outsourcing vendor with sufficient expertise.
Intellectual property (IP) ownership
If you have to outsource work that involves proprietary knowhow and technology, go for an outsourcing firm that offers intellectual property protection. This is particularly important when outsourcing software-related tasks such as developing mobile and PC applications for your business. In this case, the outsourcing vendor should be willing to sign a confidentiality or non-disclosure agreement (NDA). However, it is important to note that the terms and conditions of a NDA generally vary depending on the nature and type of proprietary technology. As such, you should hire a lawyer with experience in IP to prepare the relevant legal agreements.
Most companies outsource tasks to cut operating costs, the New York Times reports. Major business costs include operational, capital, and labor costs. With that in mind, you should look for an outsourcing vendor that offers competitively priced services and can give you a detailed breakdown of costs. At the same time, shop around and compare costs from different outsourcing vendors.
Search for a company that has earned quality certifications from reputable bodies such as the International Organization for Standardization (ISO). However, take note the ISO only develops internationally applicable standards, whereas independent bodies perform accreditation and certification tasks. In this case, certifying and accrediting bodies should follow CASCO standards and be affiliated to the International Accreditation Forum. Certification and accreditation are important because they guarantee that an outsourcing vendor is a legitimate business that follows internationally acceptable business practices.
Outsourcing can be beneficial because it enables companies to access intellectual capital, resolve scalability issues, and address capacity issues easily. To get the right outsourcing vendor, consider factors including industry expertise, location, intellectual property protection, cost and certification.