The origin of Outsourcing

The concept of outsourcing originated with Ross Perot when he established Electronic Data Systems in the year1962. EDS convey the following message to their potential clients,

“You are familiar with designing, manufacturing and selling furniture, but we're familiar with managing information technology. We can sell you the information technology you need, and you pay us monthly for the service with a minimum commitment of two to ten years.”

Basic Elements of BPO

Outsourcing in the present times is termed as a “strategic management option” instead of a way just used to cut costs. It enables an organization or company to attain its business objectives through applying factors such as operational excellence and an edge in the market place. Today, there not a single company exists which does have one or more of its services outsourced so that it can pay more attention to its core competencies. The power of outsourcing as a significant business tool of unique versatility and flexibility is undoubted. The main reason why most of the companies employ the strategy of outsourcing is that their resources need to be more focused on core business functions and consequently the non-core functions need to be outsourced.
Outsourcing is the fundamental process that provides a company with the right combination of people, processes and technology to operate effectively in the Global market place without burdening its time and budget. This is the most crucial reason for the increase in the number of companies who are interested in outsourcing their activities to various offshore locations. There are two key factors that should be observed while looking for a reliable outsourcing provider, they are:

-Quality
-Price

Tips To Make an Outsourcing Project Successful

The results of outsourcing if seen as a whole have both been positive and negative for organizations. There results depend on the important factors such as:
-How the contract between the outsourcer and vendor is structured
-The efficient management of the customer and vendor relationship
-The measurement of the end results
If all the above points are kept in view while deciding to outsource, outsourcing can prove to be fruitful for both the outsourcers their potential customers. Industrialists and business men are always in search for methods to accomplish their business objectives by investing less amount of money. For such people, a best solution is to outsource their work to skilled but cost-effective third party service providers. To make outsourcing projects successful the following tips should be followed:

-Conduct a thorough research to find the best Vendor for the project

The easiest way to find outsourcing companies is to try search engines or relative online directories. But there lies a possibility that cheaters would also be there. Hours should be spent while conducting extensive research to find the best vendor.

-The scope and the schedule for the project should be clearly defined

The scope and schedule for the project should be clearly identified in order to avoid any misconceptions regarding the deadline and limits of the project which would have a negative impact on the successful and timely completion of the project. The requirements of the project should be defined without any ambiguities by the outsourcer. The service providers require accurate, complete information to present the outsourcer with realistic proposals and to quote a reasonable price. The outsourcer must be precise regarding the deliverables the outsourcer expects the vendor to provide. The vendors must be provided complete information about what exactly the outsourcer wants to be delivered with and the method in which the outsourcer requires to be followed while doing the work. The outsourcer should clearly state the schedule of the project as it could have a great influence on the project cost.

-The service provider should be evaluated thoroughly

The outsourcer should question the service provide with ease while evaluating his proposal. The selection of an appropriate vendor to whom the project should be outsourced is similar to the experience of hiring a full-time employee. The outsourcer should make a check on the references of the vendor and contact the other clients who have been served him.

-Search for specific experience

In normal situations the service provider selected by the outsourcer will posses specific expertise similar to the type of the project the outsourcer is undertaking. For instance, if an outsourcer requires a business plan for opening a retail store, the best results can be obtained if the vendor hired would have certified experience in the same sector.

-The Selection of the Vendor must be not be based only on the factor of price

Low price seems to tempt to select a certain vendor but this method should not be adopted for selection. The buyers who have gone through the experience of outsourcing many projects and evaluating hundreds of proposals almost always support that the highest-priced and lowest-priced bid consideration for selecting a vendor should be not be given importance at all.

-Begin with a Small project

When working with a new vendor for the first time the outsourcer should begin with a relatively small project. This would be beneficial in terms of providing the outsourcer with a view of the vendor’s capabilities.

-Converse about the ownership of the end work or result

The outsourcer and vendor should negotiate clearly over the ownership of the end result, work or product and its components (Top 10 Tips for Outsourcing Success).