Niyamath Parveez

Although outsourcing is an absolutely fantastic tool that can bring so much benefit to a company, it can also have some down points. The fact that majority of the work is going to be out-with the control or study of your firm for large periods of time can cause problems. Who knows what is going on in certain levels of production and it may be that the standards that your firm would hope for are not being maintained. There are obviously going to be contractual elements and considerations which will hopefully take these issues into account but that may not be enough to prevent great damage or loss of face to your firm.

One firm that knows all about this situation is Microsoft Corp, who have been embarrassed on a number of occasions. The company has a very profile and have also been keen users of outsourcing in order to make the best of their time and money. Usually, it has gone very well and the outsourcing for all parties has brought a great deal of success to Microsoft. However, there have been occasions when it has not gone well and as Microsoft have a huge brand image, any mistake is shown up all around the world. This causes a great deal of discomfort and can affect the share price. There are certain things that a firm will always work hard to not damage and the share price is one of them.

The first insight into all not being well with Microsoft came when there was a problem with a Windows 7 USB/DVD Download Tool. It turns that part of the tool had elements of an open source licence in it. The use of this work violated the terms and conditions of the licence. It was placed into the finished product by an outsourcing firm, which means that Microsoft weren’t really responsible for what happened. However, Microsoft are ultimately responsible and the company has been left embarrassed by it, with Peter Galli saying;

"While we had contracted with a third party to create the tool, we share responsibility as we did not catch it as part of our code review process."

Galli is the open source community manager at the Platform Strategy Group within the company.

To have it happen once is embarrassing, twice, it becomes a major issue. This is exactly what has happened to Microsoft and this time it revolves around Juku. Juku was released in China and it an application very much like Twitter. The problem with Juku is that it featured an awful lot of code taken directly from Plurk, a software startup program. Plurk were naturally unhappy with this and made a complaint about the lifting of “code, design and UI elements” of their product.

Microsoft were once again quick to apologise and once again, quick to lay the blame on an outsourcing firm.

"We are obviously very disappointed, but we assume responsibility for this situation. We apologize to Plurk and we will be reaching out to them directly to explain what happened and the steps we have taken to resolve the situation.
In the wake of this incident, Microsoft and our MSN China joint venture will be taking a look at our practices around applications code provided by third-party vendors."

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.

With the World Wide Web providing new solutions and areas of growth for firms everywhere around the world, it makes sense that firms would want to be able to make the very best use of their time and money on the web. The problem comes in the fact that a whole host of firms may not have a clue where to start with constructing a website or how best to promote online. A bad website or poorly constructed internet site can have an extremely negative effect on a business and sometimes it is better to have no website than have one that is poor. Ideally, it is best to have a high quality web-site that will appeal to customers and attract a great number of potential new clients but of course, that is the dream for every company or organization.
The issue of web design is clearly an important factor many companies. The offer of a free template design on a hosted server will sound attractive to many companies working on a tight budget but this may be very costly in the long run. These hosted sites are invariably of a poorer quality than a specifically made site and may also be prone to more downtime. Even the fact that the domain name of the site is likely to incorporate the hosting company will make it very unattractive as a marketing tool and overall, these sites are not worth it, even though they are free of charge for any firm. Therefore, a firm needs to consider web design from a different angle, they need to look outside of their company and entrust their faith and expertise in another firm to create the site that will have customers flocking to their site in droves.
Efficient and effective web designing is demanding, both financially and economically. There can be a huge strain placed on a firm to undertake a strong level of research about their industry and their local region. If this is foreign to the general working practices of the firm, it may result in bad outcome but again, using the services of an outsourcing firm should bring dividends. An outsourced web design company may well have undertake prior work in that field or local area, which may allow them to start their work on a much quicker basis, without the need to start from scratch. This prior knowledge, coupled to the expertise they have developed in actually constructing websites makes them a natural choice for any organization that needs a credible website.
Knowing your own limitations is sometimes as important as being aware of your strengths and skills and minimizing your deficiencies is where a good company can become a great company. With the margins being so tight between success and failure, profit and loss, outsourcing web designing could be the key to unlock your firm’s true potential and see you guarantee a long term future. This is what managers need to be looking for as these are exactly what the margins that will make or break in the year ahead.

Of all the business activities that a firm can undertake, data entry can be one of the most time consuming but also one of the biggest draws on finite resources. It is imperative that the firm is able to utilize the skills of a staff member who has fast typing skills. However, it does not matter if the person is extremely quick at typing the data, they need to be correct as well. If data is incorrect or can’t be relied upon, it is useless and this is why it is a huge drain on resources. Traditionally, many firms have turned to temping agencies to supply them with staff members who have a known pedigree and track record in data entry but even this method has been usurped by outsourcing capabilities. Yes, if data inputting is becoming a drain on your firm, it may be time to consider the benefits that outsourcing can bring to enable you to gain the benefits.

Outsourcing has become an extremely popular method for a business to reduce its labor costs without compromising its quality levels.

Being able to offer up business contracts for the data inputting work, usually to an offshore supplier, will see the firm receive the work for a much reduced cost. However, as already pointed out, low cost is not necessarily the most important thing. Using this method should enable the firm to work with a supplier they can rely on. This guaranteed quality brings peace of mind to a supplier and is a major reason why the work would be outsourced. The outsourcing firm may decide that they do not wish to send the work to a foreign country but there are still plenty of great opportunities to find an outsourcing supplier within your own country borders. This may result in a slightly higher cost but it may prevent any cultural differences occurring.

There are so many different methods of outsourcing that is inevitable that each firm will experience a need to use these services. For instance, payroll and HR systems may require a lot of data entry, perhaps relating to time-keeping, and this could be enhanced by utilizing a data-entry specialist. When it comes to employees, there is nothing more important than their wages so it makes perfect sense for a firm to keep their employees happy. Outsourcing this work may be invaluable if it guarantees that no hitches or slip-ups occur in the payroll process.

It is also very important for a firm to ensure that their customers are happy and nothing infuriates them more than having incorrect data stored about them. It can be very easy to make mistakes for non experienced data entry operators and this can lead to problems for any company. Therefore, utilizing the services of an outsourcing data entry operator should give a better chance of providing correct and up to date data. There is no such thing as guaranteed success when it comes to inputting but it is more likely that an outsourced data inputting professional will be successful, which brings its own benefits.

Facts and figures can be presented or represented to prove anything and the best way to find out the truth in a situation is to look behind the main figures. This is not to say that companies or firms are being deliberately deceitful in their actions or reporting or figures but there can be many different ways to release statements or presentations. A company who has a number of goals and aims may need to present figures for one issue but these may not be relevant to their entire output or workload. This can be seen when examining a firm’s revenue, and considering the current financial climate, it is vitally important for companies to understand, how and where they are making any revenues.

Not every company is able to offer good news about their financial status at the moment but Tata Consultancy Services, an Indian based software Services Company was able to do just that recently. They announced that their revenues had risen by 12% during the first quarter of 2009. There has to be consideration given over to other factors to take in the full picture but one thing of great interest is the fact that financial services made up for just under 50% of the entire revenue earned by the firm. This means that the company is largely dependent on the financial sector which could cause problems if there was to be a change in the market. However, given that it is predicted that more banks and similar companies will be turning towards outsourcing to get through the current financial situation, it is likely to be a booming industry for some time to come. This means that Tata Consultancy Services should be able to keep their revenue levels high.

It is obvious that many banking firms are badly hit at the moment due to the current financial crisis that is engulfing the world and it makes perfect sense to see many of them looking to cut costs in anyway that they can. One of the best ways to reduce labor costs is to turn to an outsourcing firm for assistance and the benefits that can come from offshore outsourcing is not only restricted to financial benefit. Given that Tata Consultancy Services are working on behalf a great number of customers and clients; they are able to pick up a lot of experience and expertise, which ensures they can offer a great service to their customers. The reduced labor costs is one thing but if the service was terrible, the end users would not be slow in telling the firm and they may take their business elsewhere. This means that an outsourcing firm needs to provide quality at a cheaper cost and the results for the first quarter of the year suggests that Tata Consultancy Services are managing to do just that, especially in the difficult financial times we are experiencing.

The route of outsourcing is not something that every firm can benefit from but the results that have been obtained by Tata Consultancy Services indicates that providing an outsourcing service can be a great way to give your revenue a boost.

Local governments and public bodies are in a no win situation for some decisions they have to make. Tax payers money and getting the most efficient use from it is extremely important and the public would be up in arms if they thought their money was being wasted. Unfortunately, one way that a public service or non departmental governing body can reduce costs is to examine outsourcing as a way of lowering their labor costs. The people who are strongly opposed to the inefficient use of tax payer’s money should be delighted about the savings that this move will bring but of course, as there is liable to be a local loss of employment arising from outsourcing, there is public outcry. This means that whatever decisions a council or government makes, some parties will take great discomfort and displeasure from it.

This situation is perfectly explained by examining the issues facing the Transit Board in North County at the moment who are struggling to offer a bus service for the income it brings in. There should be a duty placed on bodies like this to ensure a public transport provision is offered to the local community but if the current method is not suitable, then alternative methods should be explored. This is the thinking behind the Board’s decision to look for tenders from firms who are willing to provide an outsourcing service to run their buses. The Board’s way of thinking can be seen that they cannot afford to run the service in its current form but by choosing a different method of providing the service, they will be able to ensure a transit system is provided for the local community. It is certainly not ideal but it is a better alternative than the Transit Board pulling out all conveyance vehicles from the area.

Of course, this move has been criticized by some quarters with six bus drivers making a frenzied opposition to these proposals. As they rightly point out, for the lower wages that the outsourcing firm will be offering, there is next to no chance of the currently highly skilled staff being able to be kept on or for the staff to justify the wage cut. This is extremely unfortunate and the loss of experience and skill from the workplace is a very unfortunate side effect from outsourcing. It is always hoped that the level of expertise brought in by outsourcing will be enough to counter the people who have left but on occasions, it is not.

The potential job losses will cause a lot of difficulties in gaining full public approval but the fact that the same body has managed to undertake similar outsourcing practices on a number of its other lines, without any noticeable loss of quality or service, should be enough to convince the Board that this is a move worth taking. It is true to say that outsourcing will cause a great number of issues and conflicts for a firm and the emotive nature of the move can be never be discounted easily.

The fact of the matter is, a number of years ago, a great number of firms wouldn’t have given the concept of outsourcing a second thought. When the market was booming and things were on the up, there can be a tendency to take an eye off the bottom line and bask in the upward trend of the market. Sure, the profits but they could have been greater and at times, vanity projects led to companies keeping a hold of all their tasks and duties as opposed to considering outsourcing to get further financial benefits. Now that the market has changed rapidly, firms are desperate to grab whatever they can, which places the outsourcing firms in a stronger position and may see the original firm left with a deal that is just enough to satisfy them but nothing more. As so many firms are looking to outsource their work and save money on labor costs, there is an inevitable movement in the supply and demand relationship which gives more of the power to the firm providing the outsourcing. The current credit crunch means that an outsourcing firm can’t be totally flippant with regards to obtaining work so they haven’t achieved full power but in these tricky times, the outsourcing firm has the chance to get the better end of the deal.

This means that the firms who took a risk and moved into outsourcing when the market was vibrant are now reaping the benefits of being an early mover. They have managed to build up reputations and relationships and these go a long way to convincing further potential clients that they are the right people to be working with. Of course, there is always evolution in this industry, there is even revolution with the onset of aspects such as cloud computing and this may allow new entrants to the market to gain a lot of headway and income but by and large, the firms who have proven their skills in the outsourcing area will find themselves in a tremendous position to bring in a lot of work.

There is always a pressure for the outsourcing firm to move with the times though and a reputation can be lost very easily and this is particularly relevant in one of the most important outsourcing markets, IT. The IT industry has greatly benefited from outsourcing both local and offshore as firms have not only reduced their costs but have managed to vastly improve their skills and knowledge base by hiring experts who have experience of working with many different firms and systems. This makes it easier for these representatives to keep abreast of the latest developments in IT which will bring a greater degree of benefit to the customers and end users. An IT outsourcing supplier would be advised to re-channel a large amount of profits in training for their staff and ensuring they keep up to date with the latest developments. This redistribution of profits should be considered as an investment to give the firm a better chance of obtaining outsourcing work in the future.

One of the key factors in using an outsourcing firm is the fact that as well as the employees, they can bring a great number of services, products and infrastructure benefits to the agreement as well. In cash strapped times, this ability is something that greatly appeals to the firm looking to outsource. This can be seen in a recent example in Chandigarh where the Chandigarh Transport Undertaking (CTU) look set to outsource their labor requirements.

As well as the staffing issues that come with it, part of the tendering list has raised the issue of the outsourcing firm replacing the buses that are currently being used. A new fleet of vehicles will greatly improve the service offered by the CTU and should be of benefit to the commuters and passengers who use the service on a regular basis. It is quite probably that the current regime would not have the money to fully restock their bus fleet but by making it part of the outsourcing arrangement, it is a service that can be rolled out sooner than you would expect.

Whilst this news is expected to be welcomed by the public of the local region, the trade union group for the CTU is up in arms and has voiced their displeasure about this outsourcing move. It is very clear to see why trade unions are opposed to outsourcing as it means a loss of jobs for their members but more importantly for the people who run it, a loss of power for themselves. In many countries where trade unions still have a lot of power and are capable of causing great difficulties for a firm, there has been an acceptance that utilizing outsourcing can provide great assistance in diluting the power of trade unions. Trade union members are clearly opposed to any such action but with the current financial crisis facing the world, firms are looking to cut back on all costs and using outsourcing can help them on many levels.

With bus driver and conductors roles being placed under the spotlight by this decision to outsource the staffing of the CTU, there is no doubt that there is a lot of jobs at stake. With 100 new buses looking to be introduced in the near future, this accounts up to 200 new staff members but with part-time, shift work and contractual obligations, it is likely that a total of 250 people will be hired by the firm who wins the outsourcing contract.

Although many of the current workers will likely find employment with the new outsourcing firm, who will be keen to use their experience and skills to maintain a good standard of work, it is likely that the contract hours and overall terms of pay will be lower than what they were previously on. However, with the choice of reduced pay or no job at all, it is likely that most staff members will sign up for the outsourcing firm, which is an issue that causes discomfort and displeasure to the trade unions and general public.

Following on from the idea of who should be doing the outsourcing facility for a firm and whether there is benefit in looking for an external partner to supply this work, it is important to consider what the reasons for undertaking outsourcing are and how they will affect the outsourcing decision. There are many things to consider when looking finding a company to work alongside in order to gain the best level of benefits for all parties and no company should rush into any outsourcing decision. Having a strong level of preparation and consideration is vital for any firm that is serious about reducing their costs and obtaining the highest level of service possible.

This is why it is imperative for a firm to create a lengthy list of issues and matters that they need to address when looking for an outsourcing partner? What does the firm hope to achieve when outsourcing? Are there specific business functions of the business or indeed industry that are naturally suited to using outsourcing services? Are there any legislation issues or problems that would prevent a serious level of outsourcing taking place? All of these are the initial issues that a firm looking to outsource their work needs to consider and being aware of these matters will place them in a strong position to make the best choice with regards to their future.

The choice of the outsourcing firm to work with will vary for every firm and this is because of the needs and demands that every firm will place on their outsourcing partner. The Japanese model of Just-In-Time would make it nigh on impossible for the outsourcing work to be shipped halfway around the world as it thrived on having stock and supplies distributed exactly when they needed them and this necessitated a close geographical relationship. If your need is going to have many short term demands and a requirement to have instant gratification and delivery times, it is vital to choose a supplier who can promise this every time. If an outsourcing partner lets you down, you will be letting your customer down and in these harsh economic times, this is not something that many firms can contemplate too often.

The same thing can be said about the service industries which do not have as important a consideration made about their locality and this is shown in the huge amount of offshore outsourcing. The call center industry is possibly the best example of this situation but again, the level of customer support that is required by a firm may have an impact on the ability of an outsourcing firm to do the job satisfactorily. If the call center is expected to interact and engage with customers about local issues and things happening in the local region, external staff may be unaware of what is going on or may find it difficult to understand local slang or buzz-words. The offshore call center may provide cheaper wages for the staff but if they offer a service that appears remote and unwelcoming to customers, it may be of no great benefit to a firm.

This is why compiling a list of what a firm needs from an outsourcing supplier is vital before choosing who they should work with.

Given the amount of scandals and problems involving MPs at the House of Commons in the British parliament, it is no surprise that there are many claims for these politicians to clean up their act and sort out the problems that cover the British politicians. News that some people are cleaning up the houses of Parliament and are doing a great job will cheer up the residents of Britain but when they hear the story behind it, they may not be as happy as they originally thought they would be. Yes, there is a clean up going on at the scandal hit Houses of Parliament in London but the cleaning up is being undertaken by Mitie, a firm which provides a lot of outsourcing work to a number of major bodies, including Eurostar.

At the moment when virtually all firms are looking to cut back and save money wherever they can, the news that Mitie have announced a rise in their profits of nearly 12% indicates that it is possible to be a success in the current climate and that not everyone is struggling. This announcement is even further proof of the great level of benefits that can arise from outsourcing and the fact that outsourcing firms are able to buck the current trend. As clients look to reduce their own budgets and cut back on costs, a reputable outsourcing firm should be in a perfect position to step in and take over the operations of many of the services of a firm which should be of benefit to all parties.

The recent changes have led to many re-evaluating the way that they do business and this has led to a greater number of longer term contracts being offered to trustworthy companies. Many firms are deciding to forgo a number of cost savings and benefits that can come from changing suppliers and negotiating deals but in the current climate, this may not be the best tactic. There is a greater need to safeguard the longer term future of the company and this means that short term benefits many not be worth pursuing in order to obtain a long term benefit. With pre-tax profits of just under £76m, it is clear that there is some good to be had in the current financial climate and firms can find a way out of their financial problems. It is fair to say that the current economic climate is causing many people to struggle but there are ways to make money through outsourcing.

There may always be corruption and dirt in the Houses of Parliament when it comes to the lives of British politicians but with Mitie having a great level of success, it appears that the Houses of Parliament building is always going to look clean and sparkling, even if its inhabitants do not always manage to do so. What Mitie have also shown is that it is entirely possible to be a success even in these difficult times and by providing a strong outsourcing service, it is possible to give firms support and the ability to improve their financial status.