One of the Main Strategies and Purposes of an Organization Along with the Revenue Generation

Outsourcing- A Cost Controlled and Quality Assurance Service Providing Approach” Written By: Dr. Parimalendu Bandhyapadhya( ) Joydeep Chowdhury (Former Lecturer of B.B College, University of Burdwan)

One of the main strategies and purposes of an organization along with the revenue generation is to “Restrict the expenditure of production, services offering and maintenance for strategic growth, future fund gain and expansion of business to other profitable sector or geographically profit gaining location”. In today’s competitive market if any organization wants to survive, it should have to take the strategies of accruing firms and with in a frequent interval come up with a new technology according to market trend.

These all above factors require lots a bit investment to that particular sector. So organizations take the policies to pass the activities which are not directly related to organizational hierarchy to other firms. The benefit will be as follows:

1] If there would be any support unite inside organization, some permanent employee should have to be recruited and regular interval organization have to invest on that unite.

2] By this policy organization looks for less expensive firms through bids and especially less expensive geographical areas. For e.g. most of the support activities from U.S are streamlined to India.

3] Through this outsourcing organization can find out quality timely product support and services.

Merely organizational activities can be classified in following terms. These are as follows:

For e.g. “Daksh is one part of IBM(International Business Machine), is take care the outsourcing of technology, insurance, medical, production, finance, healthcare, marketing, sales, home appliance and knowledge management and many more part. Even “Daksh” which appear to one of the biggest outsourcing company in India, also take care the technological, sales, marketing and other supporting sectors of IBM itself. Why Outsourcing:

 Specialization /Core Competencies:  Cost Reduction & Increased Earnings  Human Resource Issues  Innovation/State of the Art Technology  Strategic Alignment  Customer Services  Shared Risks & Responsibilities

Organization strategies and policies for outsourcing:

The organization doesn’t want to outsource the activities which related with the building block of the organization. The reasons behind this are as:

A. These activities contain lots of information which are confidential for organization. For e.g. if organization is a private organization then financial data, client information, account information etc are most confidential information, outsourcing may breach and leak information.

B. Some activities such as marketing and sales doesn’t not like to be outsourced by many of the organization. Organization itself wants to concentrate more on customer inclusion and customer care part. Though sectors still believe on “Outsourcing of Promoting Sales”

C. Production support activities are outsourced by many organizations. For e.g. for development in any IT organization, organization may outsource Technology Support, Teaching Stuff, Maintenance and Platform support or Partial Module Development to other organization.

Note: The outsourcing always done by watching the Proposal, Consulting with RFP/RFI , Bid offering, Service Providing Experience, Service Deck provided and off course Service Agreement.

Activities that are Outsource Process to outsource task in offshore or middle shore:

The clients can channel their energies and resources to their enterprise and business development. The driving motive for outsourcing is to move from a mere cost-reduction solution to a value added one by synergizing technical and business road maps.

The process of offshore outsourcing starts from client’s need recognition and ends with the end of contract.

Getting Information about Service Provider: The primary goal of outsourcing is to gain business benefit by handing over a part of a business responsibility to someone who is expert at handling it. This stage of offshore/middle shore outsourcing process demands self-assessment. Generally, clients outsource activities that are of non-core and concentrate more on core activities.

Request For RFP(Request For Proposals) : RFP’s should clearly specify what are the requirements. Clearer a client is in his RFP’s, more prospects of him getting right kind of service providers. Client can create an environment of healthy competition to get better outsourcing options.

Request For RFI (Request for Information) :If client want to know more about the “Service Provider” then they ask for RFI. RFI contains service provider experience in specific sector, Detail Descriptions about Resources, Social Activities, Engagement Model they provides, Tie up, Partnership etc.

Examining the service provider: An RFP will make service providers to approach the concerned buyer with the required information. Buyer now needs to analyze all the answers and choose a handful of likely contenders. Here Client examines the “Global Delivery Model that Service Provider offered with financial characteristic.

Choosing a partner: The previous stage would help a buyer in focusing his attention on few prospective offers. Now, in this stage he chooses one from them and gives his final judgment. Security, Confidentiality and Ethics of the service provider can be one of the considerations, which outsourcers could analyze before finalizing their decision.

Finalizing Contract: A final shape is given to a decision. Contract is a legal agreement between a buyer and the service provider based on certain terms and conditional. It is in interest for both the outsourcers and the service providers to write a contract in the presence of learned legal personnel. A contract should be absolutely clear in all respects.

Measuring performance: Process of outsourcing also contains constant review of performance. Output is always measured on certain pre-decided benchmarks. Benchmarking standards and methodology should also be mentioned in the contract. Experts feel that a client should maintain a constant check on his service provider and derive means to make him accountable for output.

End of Contract: If all the steps are successfully implemented then the outsourcing deals gets better chance of bringing in success to buyers business. On successful completion of the project, the contract comes to an end.

Types of Outsourcing: Typically, there are two types of outsourced services, technology and business process. They each can be broken into the following areas.

Technology Services: Companies that utilize technology require sophisticated, quick-responding computer systems and software that are flexible enough to respond to the increasing capabilities of technology and the rapid changes in business models. Selecting the right technology partner is an integral part of many successful ventures. Technology Services covers Electronic Commerce ("eCommerce"), Infrastructure ("Networks"), Software ("Applications"), Telecommunications, Website Development & Hosting etc.

Business Process Outsourcing (BPO): With globalization, enterprises have been challenged to find the niches where they add the greatest economic value to the world's economy. As service providers witnessed this development, they began to create whole enterprises based on narrow business processes. Business Process Outsourcing further classified into Customer Relations Management, Equipment, Finance / Accounting, Human Resources, Logistics, Procurement / Supply Chain Management, Security etc.

Knowledge Process Outsourcing (KPO): Knowledge process outsourcing (KPO) is knowledge-related and information-related work is carried out by workers in a different company or by a subsidiary of the same organization, which may be in the same country or in an offshore location to save cost.

Conclusion:

Outsourcing not only reduces the production and maintenance cost of an organization but also provides better quality and good resource uses. Outsourcing may not bound to any geographical region, so to get outsourcing people comes to know the culture of outsourced region. This may leads to the development of nation and makes the country’s door open to enter in global market. For e.g. to get outsourcing from U.S, Indian community learnt “English language” and now India became one of the first ranked country which adopted English.

This also help to grow the world economy parallel, specially the economy of “Third World Countries” are boosting for outsourcing. In this way the “Outsourced Organizations” showing their”Social Responsibility”, and help them other to develop.

As “Outsource Organizations” are providing jobs and money, specially helping to make the economy strong. The “Third World” countries also opening the markets for them. It is reducing the distance between “Developed and Developing countries” and serving the purpose of both.

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