Realistic Cost Reduction
Asian countries have been the preferred as offshore locations for various business outsourcing services because of the great differences in labor costs and standard of living in these nations. In fact, labor costs are much lower as compared with the Western countries’ offer. Apart from labor cost reduction, subcontractors also allow the client company to be free from the burden of investing in infrastructure and technology.As a result, many organizations have saved from both facilities and labor expenses, thus, business entities have reduced their overhead costs while maintaining the same level of output or support.
Flexibility on Labor ForceOutsourcing allows employment that has seasonal demands. When the company needs workforce, they can hire workers and release them right after the project is done.
Hiring of highly qualified staff can be at times very challenging, as well as the training process can be very expensive.This aims to meet the required expertise for the posts, especially for those temporary positions; however, this process definitely cost an investment. Actually, third-party outsourcers have labor pool of highly skilled workers who qualify because of education in their respective chosen fields.Even though subcontracting has proven to be effective, getting the support of a provider is always associated with significant risks that must be realized and addressed since some products or functions of the client’s business will eventually be managed and run by the third party. So, considering the following factors will bring an advantage before engaging in this transaction:
- Sufficient delivery capability
- Level of providers’ experience
It is important to be partnered with experienced and reputable outsourcing companies, which can be proven by their credibility and trustworthiness). So, looking into their work portfolio, market reputation, expertise, and reliability must be conducted to establish their competitiveness.
- Relevant and positive references
Checking with the former (and current) customers about the performance of the prospective provider can empower you in making a better decision. This will help in having a clearer picture of customer satisfaction, specifically on the company and its products.
Another key factor that should be taken into consideration is the reliability of the technology infrastructure in the prospective destination. This is because weak performance of the telecommunications and data networks can cause unexpected failures in computer network system that can eventually mess up the operation and performance of the business.There are four types of business outsourcing services:
- Professional Services from third-party support include accounting, legal, purchasing, information technology support, and other specialized tasks.
- Manufacturing. These are industry-specific.
- Process specific.