Niyamath Parveez

Just when people thought the global economy was getting back on track, it appears to be at great risk again. In the past decade or so, Dubai and the surrounding regions has been viewed as one of the most prosperous places in the world and where the money men were choosing to base themselves. The dreams of building the tallest buildings was supposed to show the entire world that the Gulf region was the centre of the new financial world but things have went wrong since the heady days. The economic crisis has affected everyone in some shape or form but for those who were reliant on credit or had money tied up in a number of areas, it has all turned very sour very quickly indeed.

The economic downturn in the Gulf region has forced all companies and firms to re-examine their operating costs and all of the wage implications throughout their company. No doubt they look to India and see the economic progress that has been made in that nation through utilising outsourcing. Outsourcing has greatly changed the way that the business world operates and has provided firms with a better chance of lowering their labor costs. Considering the economic impact that labor cost has on a firm, being able to significantly reduce these costs has to be a major consideration. In fact, for some firms, it has become their top priority, causing it to be the major concern for everyone within the company, from top to bottom. Everyone has the potential to be affected by outsourcing decisions, which means that everyone needs to have an awareness of them. Even in the once mighty Dubai, outsourcing hangs over firms like a dark spectre.

Ironically, one of the things that may prevent some companies and firms from outsourcing in the manner they would like to is a lack of money. Yes, even though outsourcing is intended to bring economic benefit and aid a firm in their financial operations, it is not something that is free to set up. There are a number of costs related to the setting up of outsourcing deals that are non negotiable. Firms need to undertake a proper level of research to ensure that the firm they are going to work in conjunction with can be trusted. It would be very bad business practice to set up a partnership or supply chain relationship with a firm that hadn’t been properly examined. The exact same can be said about outsourcing deals. A firm that fails to properly investigate the background and history of any potential partners is paving the way for a bad working relationship to develop.

This means that some firms will have to soldier on in the meantime but if a company is able to look to the long term, outsourcing is a tremendous solution. There is a great deal of hope that the problems in Dubai and the surrounding regions are temporary and that many firms will bounce back. Setting up outsourcing contracts may provide the temporary release to allow firms to reorganise themselves into better shape, allowing for long term growth and sustainability.

Looking to outsource is an option that many firms are looking to do but where to start? For a large firm, there may be a number of departments within the company that can be outsourced and this means that the decision about outsourcing needs to focus first internally. Not every department or workload is a great fit for outsourcing and some areas within the business may be core strength. If a company has core strength or something which stands them apart from their competitors, it would be very silly to lose that easily. This is why outsourcing decisions need to be based around value as well as cost.

After the decision is made about which department to outsource, the decision then comes about who to work with? The internet is likely to provide some clues but when choosing a supplier, is it likely a firm would pick any supplier from the internet? No, there is likely to be a great level of research and in-depth study carried out to ensure that the best solution is found. This is the same sort of thinking that should be used when deciding an outsourcing partner. Making sure that outsourcing is seen as an important factor will go a long way in finding the best fit.

It is fair to say that India has developed a great reputation in recent years for providing outsourcing work and many companies will instinctively go there. This may seem like a great idea but again, there needs to be a level of thought about this to ensure the best choice is made. Just because an outsourcing firm is based in India does not mean that they will be any good, so the actual firm itself has to be examined. It may well be that firms outside of India will be able to undercut the price.

This is because so many nations have seen the positive effect that outsourcing has had on the Indian economy and they naturally want in on the action. This has led to these companies and countries using the same tactics as India used to undercut Western nations. However, now it is India that is being undercut and the cycle of market forces spins again. This was inevitable and the smart Indian firms will have seen this coming and attempted to provide some form of insurance against it. The established firms will be able to offer experience and wisdom, which will hopefully provide value for money as opposed to just the lowest price.

All of these factors need to be weighed up before any semblance of outsourcing decision can be made. When a firm just wants to reduce their labor costs, it may seem like a lot of hard work but there is no point in taking the easy option when so much is at stake. Companies would not put their business at risk with other deals or supplying contracts, so outsourcing should not be an exception to this rule. If you want the best outsourcing solution, you need to do some research first.