Niyamath Parveez

One of the most innovative new products in recent years has been netbooks and notebooks, which have opened up the world of computing and the internet to so many more people. Whether these products have been bought to act as a cheap second computer, to use whilst on the move or to take advantage of the great low pricing, the huge level of demand for both of these products has taken some suppliers by surprise and looks set to continue to soar. Some firms are laying on overtime or requiring their workers to improve their productivity but some firms realize that outsourcing can provide the simple solution for all their netbook or notebook demands.

Asustek Computer are just one such firm which has had to increase their production levels to ensure they have enough products available on the market place and in stores. Gossip and speculation has been building that the firm are close to signing a contract with Quanta Computer or Compal Electronics in order to remain competitive. So far, Asustek have been quick to deny these stories but it appears that there is no smoke without fire and that a deal will be announced soon.
There are many obvious benefits of using outsourcing and whilst most people will consider the cost savings first of all, there are many other ways a firm will benefit from taking the outsourcing option. Being able to meet any demand for their product by hiring external firms and their workers to meet the increased demand is just one such method and this is where Asustek hope to benefit from any forthcoming deals. Working with other respected firms should make it easier to maintain the level of quality expected by consumers, which is very important to any firm that undertakes outsourcing as a solution to their production needs.

If the outsourced work is of a much lower standard or quality than what is generally expected from the firm, it could seriously damage their reputation. Given the harsh levels of competition that exist nowadays, it is vital to remain as competitive as possible but using substandard suppliers will ruin any benefit that may be obtained from a lower labor cost. There will inevitably be terms and conditions included in the contract stating that quality must be maintained so the firm should be covered with regards to the money they have spent but maybe not with their reputation.

As more and more consumers demand netbook products, the rise for these mini computers is only going to rise and it seems inevitable that new markets are going to open up very quickly. This means the main players in the industry are going to be under a lot of pressure in the near future to meet the demand which could open up many avenues for smaller firms to get on side with outsourcing and assist with the production of these products. Any small firm that can prove they are able to meet the quality expected from the big suppliers could find themselves in a great position to safeguard their economic future for many years to come.

One of the things that outsourcing manages to do is create paths and diversion along a production line that can cause problems, at times. Ideally, the outsourced work will blend seamlessly into the internal production line but like so many things in life, the perfect way is not so easily achieved. Whilst it can be easy to automatically lay the blame on the outsourcing partner, there are many issues where differences can arise and it is better to settle these before working extensively.

The excuse of outsourcing issues causing a delay has allegedly been cited by Boeing with regards their 787 Dreamliner project. This programme has used a large amount of outsourcing work during its building and it seems as though not everything has gone to plan. Although a company like Boeing would be looking for suppliers who could offer a low price for the work being carried out, it’s not always as simple as that.

The quality of the work has to be a serious factor in any outsourcing business agreement and a deal that does not insist on this is likely to end in regret. If the agreement specifically states that a certain standard or product or service must be maintained then both parties can enter into the deal with a greater degree of confidence. Similarly, the exact same can be said about deadlines.

Meeting deadlines is the backbone of many industries and firms who regularly fail to meet deadlines will inevitably lose custom and business, as well as any reputation they may have once had. With so much relying upon the final product being delivered when it said it would be, deadlines are crucial. Many modern business deals include penalty clauses which are liable to the partner who causes the deadline to be missed.

However, sometimes it is not always the fault of the firm who are further down the supply chain. If incorrect or poor orders are given from above, then it is hard to see how a firm could provide good service. There is a saying that a chain is only as strong as its weakest link and if poor communication and dialogue causes errors in the production line, it is better to look at the causes for this.

With regards to Boeing and their 787 project, bad decisions by management, poor leadership and negligent planning are all being cited as reasons for the delay and all of these are as valid as the outsourcing project not working as it was intended.

This means that whilst an outsourcing agreement can sometimes cause problems and issues, it is not always correct to blame the outsourcing work, although it is certainly easy to do so. Boeing are probably very happy to make their displeasure with the outsourcing work very clear but it may well be that many of their own internal issues are to blame as much as nay partner. Outsourcing can be a cheap solution or a great quick fix but it shouldn’t be the first place to turn to when things go wrong and a scapegoat is needed.

It is easy to pick up a newspaper, magazine or pamphlet and read that outsourcing is the new solution to all the ills and problems that can beset a company but is it really right for you? You may think that the size of your firm may preclude you from using outsourcing effectively but it is fair to say that companies of all sizes could benefit. It makes sense that the larger firms who utilize these services will be listed in the news as they are likely to have the big sums of figures or going to have the biggest impact on employment but this is not the only way that outsourcing affects people. In fact, if you are a small firm, the benefits from using this type of business plan could be extremely advantageous.

Consider the implications of training up a member of staff in a new computer system or style of working. The cost of the training course has to be considered but there are also many other subsidiary costs that will arise from a member of staff undertaking training courses. Time spent learning new skills is time away from their main task and if they are traditionally busy, it can easily lead to a backlog of work building up. This is probably the main reason why a great number of small firms are unable to offer their staff the amount of training courses they would like to. A businessman is likely to understand the benefits of having a skilled and informed workforce but if training them up leads to work being mislaid or left behind, it is obvious why training doesn’t happen in smaller firms.

If the training would be of great benefit in the long term, it is vital to make some allowance for it but if there is a short term gain to this training method, it may be facilitated by outsourcing work. Whether the outsourced work is existing work to free up some time of the staff members of the work that the staff member would be trained up in, the benefits of looking out with the company for assistance can make a huge difference between the well beings of a firm.

There are a whole host of areas where outsourcing can play a big part in the success of a firm and it goes far beyond the call center approach to outsourcing that some people naturally think of. Administration duties are one of the growing areas for firms to take on board an outsourcing supplier and this may even lead to a more efficient use of the administration tasks of the firm. Even though it is likely that a firm will be comfortable with their own methods, using an external agent for this work may introduce a number of newer features that could greatly improve the way of working. An outsourcing supplier is likely to have a greater wealth of experience when it comes to working and they may have developed short cuts or an improved approach.

A multi-national firm losing 120 jobs is never going to get much publicity due to the overall size of the company but the individual impact this can have on the people involved is obviously huge. Not only the people who directly lose their jobs but their families and shop-keepers in the local community will also suffer from a knock-on effect and it has to be remembered that there is always a very human aspect of redundancies, even at a very high level of corporation. However, if a small to medium sized business loses 120 staff, it is a major issue and can have extremely damaging effects on a whole host of people.

This is the situation for Digital River Inc, a company who has developed in the e-commerce age and who have provided services and online retail outlets for Microsoft and Symantec. You would think that working with firms with the caliber and reputation of these two would be able to keep people happy but no, not in the current climate. The 120 jobs that have been lost at Digital River Inc amounts to just under ten percent of the companies entire work force, so it is easy to see how much of an issue this. Think about your work place and try to imagine the impact losing about 10% of everyone who worked there would be. The rest of the people may be breathing a sigh of relief because even though the jobs are gone, the work is going to be outsourced, meaning the company will be able to keep operating. This is callous and although the staff members still employed will have sympathy with the colleagues who have lost their job, they will no doubt be breathing a sigh of relief at the fact that they will be able to keep their post. This news also had a positive impact on the share price of the company, which rose a total of seven per cent after this announcement was made.
The outsourced work is expected to be moved to Tennessee, where Sitel, a major outsourcing provider, will take control over the customer contact facilities such as telephone calls and e-mail enquiries. This move will begin in September and will enable Digital River Inc to offer a more tailored and experienced communication service to their customers. Buying in experience and expertise is one of the most important factors in the decision to outsource work.

Another positive benefit that will come from this decision to outsource work is the fact that the firm is looking to employ around 80 people in their Eden Prairie offices, which should give a boost to the economy in that region. These jobs will be involved in making products and services in the consumer electronic industry as well as manufacturing software for medium to small companies and even games and B2B marketing opportunities. This is a wide spread of jobs being created in the one location and the firm is determined that the spread of work will be of great benefit in the long run.