Every thing you do is fraught with risks. More so when you are running a business. Definitely so when you have outsourced some of the operations of your business. Take cognizance of this fact. The key to mitigating the risks associated with outsourcing is to first, identify those risks before taking the decision to outsource. The risks should be examined closely and their effects on your business should be assessed and quantified. This should be factored into the revenues of your business before you take the decision.

If it is imperative that the tasks identified are outsourced, then take the initiative to prepare a back-up plan to take care of any contingency.

Let us have a look at some of the problems with outsourced jobs.

* Locational issues - When an outsourced job is done offshore, there are issues to consider like the local language spoken, laws of the country, restrictions in trade, political regime ruling the country, issues of cultural differences and most importantly, difference in time zones. The areas to where the jobs are outsourced should not be disaster prone zones. Earthquakes, typhoons and other natural disasters can play havoc with your business when you have outsourced jobs to such locations.

* Issues with infrastructure - Almost all the big businesses have off-shore operations. With threats of terrorism looming large, break-up in communication lines is one vital issue which should be recognized. Before deciding to outsource, take into consideration, the availability of communications and power facilities in the off-shore zones. It is imperative that connectivity has to assured 24/7 for 365 days of the year.

* Service provider related issues - When locating a service provider, it is vital to check the background and experience. It would be best to go slow initially. Observe the service provider's capacity to deliver, quality control and time management. Expectations from the service provider have to be clearly communicated. Once a task is outsourced, it does not mean 'out of sight, out of mind'. An element of control has to be maintained to check if expectations are met. Feed back to the service provider is essential to keep the tasks outsourced, on course.

* Human Resources related issues - People make a company. The Human Resources available with a company have to be kept in mind when tasks are outsourced. It pays to keep your eyes and ears open. Reports of high turnover will derail the execution of your outsourced tasks.

* Security related issues - With reports in the newspapers of frauds and leakages of information, it is necessary that contracts are drawn up to include damages in case of lapses in security. Performance guaranteed contracts are one way to deal with this issue.

There are countries like India and China where much of the work is being outsourced to. Companies which have outsourced to these countries are aware of the problems and the associated risks when doing business in these countries.

Risks are normal and it would be best to take preventive measures to avoid risks. Close monitoring and clear communication would go a long way in preventing problems with outsourced jobs.

By Christy Taylor

Simply put, Business Process Outsourcing is getting another company to handle some of your activities for a payment. The concept made its way into the corporate world in the 1980s. Initially, payroll functions were handed out for outsourcing. Then companies included the management of employee benefits for outsourcing. It is now common place for Call Center operations, Finance and Administration functions, Accounting, Customer Service related activities and Human Resources related activities to be outsourced. Presently, activities of a company which are considered as 'non-core' to the running of the business come under the gamut of activities which can be outsourced.

Business Process Outsourcing allows companies to invest their surplus manpower, time and money, freed by the process of outsourcing, in carrying out core business functions. This helps companies to grow fast, as precious resources are not tied up in non-productive activities. It is easier to identify jobs which can be outsourced. In the process of outsourcing non-core activities, a business becomes efficient and productive. It is seen that Business Process Outsourcing frees up capital of a business, which otherwise is tied up in carrying out non-core activities. This capital can be redeployed in the business.

At this juncture, it should be understood that Business Process Outsourcing and IT Outsourcing are different. The former involves outsourcing of activities which are not the core activities of the business. Development and management of applications, Data Center Management, quality control and testing are some of the activities which come under the umbrella of IT Outsourcing. These IT related activities can be handled by service providers or IT companies.

Outsourcing contracts normally run for a long period of time and involve huge amounts of money as contractual payment. Transfers of persons working in the company on the outsourced activities to the service provider can also happen. Some of the companies which have made a name for themselves in Business Process Outsourcing are Cap Gemini, Indian companies like Wipro, TCS and Infosys, and Companies like Accenture and IBM in the USA.

A number of the Business Process Outsourcing companies are based offshore. This means that the company doing the outsourced jobs for you, carries out these jobs in another country. India, China, Russian and Malaysia are some such offshore countries where Business Process Outsourcing companies are facing boom time. Business Processing Outsourcing companies are also synonymous with Information Technology enabled services or ITES. Knowledge Process Outsourcing (KPO) is the latest concept in the business world. Those jobs which need education, knowledge and skill to be handled can be handed over to KPOs.

Some of the problems in the field of Business Process Outsourcing are the increasing reports of information on customers and internal processes of companies being sold in the open market by employees of the service providers. This creates security risks and has detrimental effects on the company which has outsourced.

With the growth in outsourcing activities, there is also a growing resentment in the USA and UK (countries which have done the maximum outsourcing) against the loss of white-collar jobs in these countries. These issues have to be sorted out along with the risks associated with Business Process Outsourcing.

By Christy Taylor

'Outsource' has become a buzzword in the business world, globally. Slow growth in economies is forcing businesses to outsource, in an effort to bring down costs. However, bringing down costs is not the only objective of outsourcing. When you outsource there are two immediate benefits that are gained. The first one is cost savings and the second but more significant gain, is the freeing up of precious human resources and tied-up capital to concentrate on core competencies. Further, when you outsource you are open to enhancing operational efficiency. You get the opportunity to get the best in the business in terms of skills and experience.

The decision to outsource is easy. But to make the choice on which tasks to outsource is the tough one. You obviously cannot outsource tasks that have a direct bearing on the business and its bottom line. The decision should be guided by the nature of your business.

Picking out the tasks best suitable for outsourcing and assessing those tasks which will optimize your revenues is the hardest part of the decision. All tasks are not suitable candidates. Before you enter into an agreement to outsource, determine which tasks could be outsourced. The criterion for helping you make the decision include the magnitude of the task, the skill sets required, available resources and the investment required.

When you outsource, it gives you the opportunity to evaluate whether the performance on the task outsourced is better inside or outside the organization. There are many organizations that require their in-house departments to bid for tasks along with the service providers from outside. Through this process, efficiency can be assessed and suitable remedial measures taken.

While outsourcing is one option to achieve focus and strategize your business, it cannot be said that it always delivers. It needs to be remembered that when you outsource, you may create a competitor and you also lose the ability to learn and innovate. A business is responsible for all actions before outsourcing. However, when such actions are transferred to the service provider, the business may lose initiative. Therefore it is imperative that the business closely monitors the performance of the service provider and communicates the needs of the business in clear-cut terms. The increasing incidents of frauds and lapses in security in outsourced activities are a cause for concern. There have to be checks at various points to ensure that these things do not happen.

Quality cannot be at the cost of bringing down costs. The old adage 'Penny wise Pound Foolish' would apply. If quality of a product or a service that is outsourced is compromised, it will have direct bearing on the business. Customers who are the mainstay of any business will walk away to your nearest competitor who can give them value for money. So when you outsource, do not turn lax and expect the service provider to deliver all the time. It pays to be cautious.

There is an increasingly divided opinion of the benefits of outsourcing. However, the decision to outsource should be carefully made and viewed with the right perspective.