Previous

Page - 3

Perhaps the most positive thing about outsourcing is its ability to save money. This will, of course, depend on the size of your company and what specific tasks you outsource, but in general, in terms of money saving. For example: my company outsources the IT services (help
desk, computer support and maintenance), and we pay significantly less than we pay for a full-time IT person to give us the same level of support. We also outsource our book-keeping and office administration, with similar savings. As we grow, we'll continue to re-evaluate these decisions - it may be that the business case for the IT outsourcing remains good as we grow but that we might eventually hire someone to off-load other work from our current people, and since we would be paying them anyway, we could get them to do the book-keeping as well.

There are some definite advantages to outsourcing. Contract work is often cheaper - especially if you opt for offshore development. You hire people only for specific tasks. You can keep adjusting the size of your team to fit your current needs and budget.

Outsourcing creates shareholder value by reducing commitments to fixed and working capital. Secondly, outsourcing helps a company focus on its core business, creating a competitive advantage within its industry. Other advantages include gaining access to best-of-class capital accelerating the benefits of re-engineering.

When to Outsource?

As part of outsourcing, many companies are debating when to outsource their management support tools as well. This is a complex question that must consider the competitive advantage which a tool may provide. The company must also account for how ready the market is to support such a tool in an outsourcing model. The final direction should not solely be question of cost saving, but must consider the benefits and the strategic position of the company in the marketplace.

Next

* Contributed by: -
Sheeba Rehman,
Sr. Lecturer - Management,
IMS, Noida.
Article posted on November 2, 2008.