Outsourcing

Some of my IT friends expressed their fear regarding to the impact of the recent economical recessions over Indian economy and particularly outsourcing industry. They have view of negative impacts but I posses some converse view as I believe that a recession is actually a great time to start a new venture. Take advantage of the lack of froth now, when talent is available, resources are cheap, and you can hear yourself. In fact whenever there’s a downturn people outsource more, not less. Organizations want to take costs out wherever they can.

What happens to the host countries where outsourced work is going?

Such countries show the downing trends in growth of salary, cost of living, real estate prices etc. These all make cheaper the outsourcing services for offshore companies for instance from US, UK etc. Additionally Recent currency rate further elevate profit margin for offshore companies.

Fundamentally the outsource market is strong and it will not change due to this financial crisis. Western companies are started viewing India as a strategic place to not only outsource higher-value research work, product design etc, but also to sell their own products and services. In the long-term once the dust settles in the US financial market, Indian IT and BPO companies will be in good position to attract more outsource work from the US businesses.

Recent trends of Indian outsourcing industry suggests a strategic shift from low cost services to higher valued KPO like services. This kind of trend will continue and Indian outsourcing industry will add new dimensions to the outsourcing market.

Now a day Indian offshore software and web development companies shows their smartness in dealing the recent recessions. They kept their expenses as such and higher the working time of their staff, higher the quality of out put and reduce the out put time.

Among such high quality services offering companies Perception System is one. The portfolio of Perception System depicts a reliable out put with reasonable prices.

There is a huge demand for IT professionals in the global market these days and the number of IT jobs is increasing by the day. The number of positions and levels in the IT industry are also increasing and it not a convenient option to hire a permanent employee for every field as they may not be useful at all times. The services of these professionals are never required on a daily basis and they may require to just sit idle in an organization for most of the time. This is an expensive option for the organization and the IT professional too does not manage to achieve career growth in such a situation. IT jobs today may require support on long term or short term basis depending on the process.

In order to improve the productivity of an organization the most important factor is handling the managing clients which include Linux, Windows etc for workstations, which can help to provide efficient and perfect solutions and software for the organization. These services however may be required for a short period only. Outsourcing these professionals seems to be the perfect solution for organizations today as this helps to save on time and cost and help the organization to grow.

Outsourcing IT professionals can help reduce the major shortage and helps them to provide solutions to a number of IT jobs in the market. Outsourcing also helps IT professionals to grow independently and achieve career growth which is very important and beneficial to them. IT professionals who are outsourced can prove solutions to a number of technical issues in various departments and help to improve the functioning at an organization.

Outsourcing IT jobs can provide faster solutions; help to check the necessary security solutions, anti viruses and can also secure systems. These outsourced IT jobs can include handling the network services, security, centralized network, offer efficient data backup and recovery process which is very important for an organization which helps the organization to grow. Outsourcing IT jobs has become a trend with most organizations as this can prove to be very beneficial to all the parties and help the organization to achieve the much required growth and success.

Surging business

Virtually unheard 10 years ago, the term “outsourcing” has emerged as a phenomenon in the business of the present day world. It has become the backbone of Indian service sectors. In the last fiscal India earned $6.7 billion by providing services in software, technology and manufacturing outsourcing.

Now the BPO companies have turned their eyes on legal outsourcing. According to a study by the US-based Forester Research, the current annual value of legal outsourcing which is worth $80 million can rise up to $4 billion and can produce 79,000 jobs in India by 2015. National Association of Software and Service Companies (NASSCOM) also projected that Legal Processing Outsourcing providers (LPOs) in India will soon rise up to $3-4 billion. This heralds the opening of new vistas for law professionals whose number is increasing incessantly.

According to Forrester Research report, “The benefit of the outsourcing companies in the US would translate into a cost saving of about 10-12 per cent. The potential of the Indian resources to absorb the increasing demand in legal outsourcing is because India enjoys the economic advantages of the wage difference and less perks and overheads.”

Nature of work

In the beginning the works which are being outsourced to India are “of secretarial nature and includes patent drafting, legal research, contract review and monitoring,” says Mr. Ravi Shankar S. of 21 st Century Law Firm. But it is set to expand with the enlarging knowledge of Indians regarding the foreign laws. Experts are hoping to receive high-end sophisticated contracts, which require a strong legal base of international standards.

Challenge ahead

The most important challenge to the newly-born sector is the need for Indian lawyers to pass US Bar exams, conflict of interest rules and data security. According to Mr. Ravi Shankar, “As far as qualifications of Indian lawyers regarding handling of foreign legal jobs are concerned, it should be pointed out that the nature of jobs at the lower level is almost the same. So no special qualification is needed to handle them.”

But notwithstanding the optimism prevalent in the legal business, there are a plenty of hurdles which can hamper the growth of this sector. For example the Indian Advocates Act, which deals with the professional conduct of lawyers, does not support work for other countries. Even, in specific laws governing companies and trade in securities, which hugely differ from one country to another, may constrain LPOs to paralegal and secretarial work.

But on the bright side, certain branches of law, which are of a global nature, like Intellectual Property laws (patents and trademarks) can give Legal Process Outsourcing Providers (LPOs) a fillip in their endeavour.

An Indian lawyer can be as good as his American counterpart in US Federal laws if properly trained in US law. What is required of an attorney, either Indian or American, is not that he should be aware of all laws and regulations but that he should be ready to acquire that knowledge.

Rush to grab the opportunity

It is the effect of this optimism that not only established BPO companies but also several legal firms have thrown themselves open to this lucrative opportunity. In fact, American conglomerate, General Electric, was one of the first to set up its captive BPO Gecis in India, which included LPO. Other technology companies, too, farmed out work to their Indian captive units.

Khaitan & Co, a leading law firm from Kolkata has already started an LPO by floating a new company ‘Neoworth’ and engaged 10 US-enrolled lawyers.

There is a strong political opposition in the US against outsourcing as it may affect the livelihood of US attorneys and may also serve as a roadblock. Despite of that feeling, legal firms are more than willing to outsource their jobs to India. That’s because like other BPO activities, Indian lawyers come cheap. An associate lawyer in the US comes with a $225 per hour tag in the first year. By the eighth year, it goes up to $450 an hour. In India, the rates are barely 10 per cent to 15 per cent of that. Moreover, with the time lag between India and the US and the UK, the turnaround time is 24 hours.

Dictionary.com defines outsourcing as “a practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally”. The term which has been generally associated with the automobile industry was popularized during the past decade by the computer or IT industry. But when it is the health industry in question, how does outsourcing work there? What is outsourced and how?

If you are thinking it’s the drug manufacturing that is outsourced, you are wrong. Nor is it the bookkeeping that is outsourced. What is outsourced is the patient himself or rather he chooses to have his treatment done offshore. The driving cause is the high cost of health care in his home country. Or in certain other cases, the long waits before he can get the needed treatment.

So, medical outsourcing or offshore medical which is also commonly known as medical tourism is the practice of seeking health care abroad. But, who provides these outsourcing services?

There are lots of offshore health care providers in the form of hospitals and clinics participating in this business. Some of them can be found on the other side of the border while others may be a few oceans across. Examples include those in India, Singapore, Thailand, Mexico, Turkey, Panama, Costa Rica, Brazil, Argentina, Belgium, and so on. Some of them give excellent service – even superior to what you can get at home using the latest technology and by world-renowned surgeons – while others may not be as great. To show their commitment towards top quality, many providers also have international accreditations like JCI, JACHO, ISO, etc. Some have strategic alliances with well-known US health care providers like Cleveland Clinic, Harvard Medical International and Johns Hopkins.

International health care providers are able to provide you with high quality treatment at an affordable cost mainly because of low labor cost, low administrative cost, low malpractice cost and low living cost in their country. That’s the same reason why IT companies started outsourcing.

Now the obvious question arises – how do you find the right provider for your needs? The answer is do research. There are lots of resources available – news, articles, blogs, forums, testimonials, etc. Many people find it useful to work with a health tourism facilitator or medical tourism facilitator like Healthbase (http://www.healthbase.com). They are specialized facilitators who carefully screen and partner with international healthcare providers that meet up to the high standards of patients from the US, the UK, Canada, etc. They also help patients with all the logistics involved in getting a surgery abroad.

There are a few other things that you will need to do for a successful experience in getting your surgery overseas. Getting into the details of all of them is beyond the scope of this article. Here are some of them: doing a thorough research on the surgery in question to establish your suitability for it as well as for medical tourism, getting to learn about your medical travel destination, arranging all your medical records and sending them to the international hospital, securing passport and visa, booking tickets, and more. You may want to start here: http://www.healthbase.com/resources/medical-tourism/medical-tourism-information.

Earlier, people would go abroad mostly for elective cosmetic procedures which were not covered by insurances. Today, people outsource their orthopedic procedures as well as cardiac surgeries as well as organ transplants. It’s not just individuals who are interested in this trend to save money. Medical outsourcing has also received attention from health insurance companies who have started offering overseas treatment plans to expand their customer base, and from employers who have included it as a benefit to their employees.

At the time of writing this article, neither Merriam Webster nor Dictionary.com had an entry for “medical outsourcing“. But given the speed with which the trend is spreading, pretty soon they will have to update their dictionaries.

The term offshore outsourcing is in the news for many reasons. There are many who favor it while the rest oppose it. Offshore outsourcing is a term that implies hiring expert professionals from an external specialty to complete former’s requirement in a different country generally away from the one where the actual products or services will be implemented.

Offshore outsourcing plays a major role in the software research and development field. With the ease of Internet connectivity across the globe, offshore software outsourcing is becoming very influential, these days. Offshore software outsourcing is a specialty that puts emphasis on overall delivery of eminence software designed and developed by talented professional developers at a reasonable cost from a foreign vendor.

One can find number of software development companies across the world, and Indian companies are standing out from its competition. India is full of talented minds for developing and maintaining almost all kinds of software needs. Various online freelancing platforms like eLance or oDesk are working as a catalyst for both the companies and the freelancers in getting projects from offshore countries.

Selecting between a professional software development company and an independent freelance developer is a difficult matter as it decides the success or failure of a particular project. For a small project, one can contact local freelancers who have limited workforce. But, for large projects, it is better to get in touch with established offshore established companies. Hiring a full team of qualified developers can help you to get the most applicable solution.

Quality and effective risk management are two integral parts of offshore outsourcing services. Make sure you check everything before hiring a specialty.

When it comes to provision of quality healthcare there are many associated activities that contribute to the process. Medical transcription is one such activity that plays an important part in ensuring provision of quality care and strengthening the bottom-line of the healthcare facility. It is important for the healthcare facility to ensure that the record creation process is efficient and cost effective, without diluting focus on the core business. Outsourcing is an easy fix to make it efficient and cost effective.

Outsourcing can help the healthcare facility increasing productivity.

Productivity has simply been defined as the positive outcome of quality output plus quantity output divided by quality input plus quantity input.

How does outsourcing help healthcare facilities increase productivity?

Increasing productivity of healthcare professionals: Getting the process of record creation by an outside vendor helps enhance the productivity of healthcare professionals in the following areas:

Allowing them optimum use of their time by retaining familiar and flexible modes of dictation
Helping with the decision making process about patients’ treatment plans, by providing them with accurate and timely patient records

Increasing productivity of support staff: Getting the process of record creation by an outside vendor helps enhance the productivity of support staff like nurses and technicians by providing them with a system to keep track of work in progress, powerful archives for tracing old records and facilities like remote printing & faxing

Increasing productivity of administrative staff: Getting the process of record creation by an outside vendor helps reduce the burden of the administrative staff by allowing them to focus all resources like space, utilities and other resources on the core business of the healthcare facility instead of on associated activities like medical transcription

Increasing productivity of Information technology (IT) staff: Obtaining this service from an outside source can help reduce the burden on the IT staff, by providing software and tools to facilitate upload of dictation, download of files and distribution of patient records to the relevant healthcare professionals

Increasing productivity of management staff: The burden of the management staff towards activities like recruitment, training and coordination of are eased

In conclusion it is obvious that outsourcing increases the quality and quantity of output, increased productivity resulting in provision of quality care, decreasing direct & indirect costs of transcription and quickening the receivables process. To get the desired increase in productivity by outsourcing medical transcription, care has to be taken to evaluate the service provider on the following criteria:

Accuracy: Needs to be above 99%

Turnaround time: Needs to be within 24 hours

Price: Needs to be reasonable and fair

Security: Has to cover all aspects, including technology, infrastructure, people and processes.

Technology: Needs to be easy to use and provide maximum benefits.

Outsourcing is a concept that has emerged recently. Though the term was familiar from the last century itself, it became more and more popular in the recent years. Today, we are outsourcing many of our tasks to the people in the developing countries. They do it efficiently and send it back to us.

Let’s see the how the process of outsourcing works. If you have to outsource all or some amount of your work, these are the steps that have to be followed.

1. First make an estimate an amount of the work that you have to outsource.

2. Finding out the best company to outsource is the next step. This is the most important in the process. Your company has to be reliable and must have a proven track record of providing excellent services.

3. Make a search for the company’s profiles before you select the company. If your work is not of millions of dollars, you will find it difficult to request quotes from companies for your work.

4. The best solution for this is to find out the best one from the internet. This is very easy. You have a lot of companies that you can choose from if you make a little search.

5. After you find out the company to outsource, now the next important thing is to give them a detailed description of what needs to be outsourced.

6. Fix the deadline and you may have your work done at less than 60% of the actual cost.

Call centers, despite all their economic and financial benefits (both for the companies outsourcing the work and for the countries it is outsourced to), have one major drawback. The drawback is that there will always be a cultural rift between the call center executive and the person calling. You can teach a call center executive how to sound like an American or Englishman, what kind of food they like, some of the cities and places of interest but you can’t teach how to intrinsically be an American or Englishman. The tradeoff foreign corporations make for the immense savings that outsourcing brings is a culturally disconnect. If, at the end of the day, corporations are truly committed to providing quality customer service, this is an issue they must iron out. The best way that foreign corporations can balance this concern out with their desire to cut costs is to outsource technical support to eastern countries in Europe.

Two countries in particular stand out as great opportunities for companies that want to outsource their operations to countries that are less culturally disconnected then those in Asia like India and Malaysia. One of them is the landlocked country of Hungary. Hungary, during the Cold War, was heavily influenced by the Soviet Union and its economic policies. When the Communist government in the Soviet Union dissolved and Hungary became a democracy it readily embraced free market capitalism. Outsourced technical support operations in Hungary are not as cheap as they are in other countries in the world and they definitely cannot compete with the cost of labor in countries like India. However, Hungary’s advantage is its education. Hungary prides itself on having one of Europe’s best education systems. It is little wonder that Hungary has produced thirteen Nobel Prize winners and that Hungarians hold thousands of important patents for innovations we use every day. More importantly for foreign corporations, shifting operations to Hungary can reduce their operational costs by 25%. The deficit between the money they could save by shifting operations to Asian countries is compensated for by the fact that Hungarians can give specialized, highly technical customer care without a cultural disconnect. In this area, the BPO markets of India, the Philippines and Malaysia (among others) simply cannot compete effectively. Hungary also has excellent telecommunications infrastructure supported by a vibrant IT industry. Already several foreign companies ranging from General Electric to Bosch have set up operations in Hungary, both voice and back-end data.

Poland is another east block, formerly Communist country that has vast potential for outsourcing technical support. The call center industry in Poland is relatively young having been around only since 1999. The Polish BPO industry, culturally, is well suited to serve the needs of major European countries like Germany not only in voice operations but also in data entry and back-end data processing operations. Like Hungary, Poland has a highly educated populace. There is already a large domestic call center market and, therefore, the Polish are well accustomed to technical support making them ideal candidates for international outsourcing of technical support operations.

One of the most sensitive issues in the offshore and leased staff industry today, is the security of information between vendor and client. In the online business where information is passed back and forth, how can you keep it under lock and key?

Vendor and client should look into their own capabilities to keep the traffic of information smooth and safe. The big picture shows that while offshore service providers have a grip on internal security practices, information may leak out when clients don’t do their job well. We’ve heard of so many cases involving intellectual property right infringement. These issues may not pose great risks to the outsourcing vendor, but the lines between vendor and client must be clearly defined.

1. Check on your vendor’s track record. Offshore outsourcing requires data sharing and transfer to the offshore partner’s location. It also requires offshore personnel to use and work on the same information. You can’t allow vital information to leak out in the process. You don’t have to wait for this scenario. Check the vendor’s credentials and industry record. Choose the one that has built up a strong and reliable image, according to its peers and competitors. Particularly, your investigation should cover the vendor’s IP assets, security policies, and business relations with other vendors.

2. Set up your own foolproof security software. When data is shared and trafficked online, it’s prone to hacking, theft, leaks, and virus. Stop this by setting up your own safety software or take advantage of security software such as Secure FTP, VPN, Encryption, among others. This way the electronic transfer of vital information goes harm-free. Your client should be doing the same.

3. Test security facility.While vendor and client’s security software may be in place, their personnel may not be aware of it. Somewhere along the way a personnel may unknowingly leak important data. This exposes your company to unpredictable damage. So before inking a deal with your offshore partner, gauge your client’s security infrastructure: Pay particular attention to location, office buildings, Internet service provider, power supply, IT personnel, among others.

4. Keep confidential data to yourself. You don’t have to share everything with your offshore client. There are certain limits to shared business information. Have a data control system in place to allow sharing of only the needed data. By all means do not allow unauthorized use of vital business information. From their end, you vendor or client should follow legal industry practices.

5. Train personnel on safe data storage. Business and company data should be stored, but in a way that everyone is held accountable for it. The offshore team should be trained how to keep that data safe so they don’t end up leaking or misusing it. This is more evident in the personnel’s handling of intellectual property. The offshore service provider and the client should decide which data should be kept for local use and which work should be outsourced.

6. Check on the offshore personnel. Nothing suspicious here: For all intents and purposes, you should know how many people will use and work on your data. Set limits to the flow of the information among and between the personnel by tracking down their access to it. If your offshore and leased team works with a subcontractor, all the more you should get involved in data safeguarding.

Security issues aren’t limited to vendor and client. Remember that the world hasn’t been the same after September 11, 2001. You don’t need to call in the CIA for that.

Did you milk your own cow, squeeze your own orange juice and gather your own eggs this morning? For the vast majority of us I would safely bet that the answer is no. When we bought those items at the store, we were effectively outsourcing those functions to someone else. The term “outsourcing” has gotten a negative connotation lately and in most cases it is completely unmerited. I am not going to discuss off-shore outsourcing or discuss the moral/ethical aspects. What I will discuss and am actively promoting is local outsourcing. I want to help you decide when it makes sense to do the job internally or hire someone else to do it for you.

Why Outsource?

The first question to start with is: “Why consider outsourcing anything?” The simple answer is, in most cases you get a better quality result for lower total cost. I doubt there is a business person out there that would take exception to anything that is better AND cheaper. The other major benefit is that it takes one more time consuming function off your to do list. This frees you up to concentrate on your core business. By removing such a task, your company becomes more productive and hence (should be) more profitable. The second question is: “What should I consider outsourcing?” The top job functions that are typically outsourced are financial, technical and functions that are labor intensive. This article is generally targeted at the small privately held business, so I will not deal with things like Call Centers, Software Development or Research and Development. However, most small businesses, even companies with only a single person performing all functions, can benefit from some form of local outsourcing.

Let’s look at an example of a small manufacturing business with 5 people or less. In this type of scenario, the owner is probably the principle salesperson as well as the person that makes sure all the jobs are getting out on time and that the employees are paid. Now, what is a better use of his time, cutting checks and making collection calls, or focusing on selling more of his product? That’s a pretty easy question to answer isn’t it? In this case outsourcing his back office duties will make this company more profitable. Invoicing/billing, accounts payable, employee paycheck and tax preparations are functions that can easily be doled out to a local company. The best part about doing this is the fact that if you hire a CPA/financial company to perform those functions – they will be infinitely better at it, because that is all they do! When you can hire an expert to do a job cheaper and more efficiently than you can do it yourself plus it frees you up to increase your company’s sales, it would be foolish and short-sighted not to consider it.

Let’s look at one more example. A CPA firm with 35 employees needs IT help (even an outsourcing company can use outsourcing companies). They have 35 people in two locations; they have 5 servers and 1 IT person – that just gave his two weeks notice. This is the perfect opportunity to look at the benefits of outsourcing. Consider what they had before – one guy. What do they do when he gets sick, or takes a vacation? When do they send him out for training? Most people know that IT is an ever changing field, but most small companies never send their IT tech out for training to keep their skills sharp and up to date. My experience has confirmed that you can typically hire an MSP (Managed Service Provider) to manage your entire IT infrastructure slightly cheaper than you would pay the proper number of employees to do the same job. So the upfront costs may look pretty close. Let’s say you had one IT guy making $50K/Yr and the MSP is charging $4K/month. It looks like only a $2K savings per year, but you’re not looking at the whole picture. The cost of an employee is actually 1.5 to 2 times their salary when you figure in things like taxes, vacation and workman’s comp. So you can see that right up front, you will save significant money. The other major benefit is you will be hiring a staff of engineers with different specialties, so any problems that occur will be dealt with more efficiently. The way for MSPs to be profitable is to keep your systems up and running error free. The better they are at doing that, the more profitable they will be. IT support is like housekeeping (another good outsource function), you only notice it when it isn’t done. If you pay an MSP what you deem to be a fair amount a month and you never see them and you never have any down time – you have made a great investment.

When should I consider outsourcing?

When I talk to business owners about outsourcing I have them answer a few questions to help then narrow down what functions they can outsource, and here they are:

1. Is this job function a profit center or a cost center? In the case of the manufacturer – producing their product is a profit center, but A/R, A/P etc are areas that cost money but don’t produce money (collecting money generated by another dept. does not make it a profit center).

2. Can this job be done by one person? If the answer is yes and it can be outsourced then outsource it (unless it is a profit center). In the case of the CPA firm, one person can provide all the IT needs, but that is a bad spot to be in for both the company and the employee. The employee is probably over worked (and underpaid – if you listen to them) and has little time for vacation, training etc… The company on the other hand is entrusting all their important data to one person. What if they became too ill to work, or became disgruntled? Basic rule of thumb if you don’t need at least two people for a department, you shouldn’t have any (this applies to cost centers only when outsourcing is viable).

3. If the owner is performing one (or more) of these “cost center” functions, I ask; how many more money generating activities could you perform if you did not have to do this yourself?

4. And finally, if you can outsource a job and get it done better and cheaper than hiring a person, why would you want to hire a person internally?

So, in conclusion, outsourcing is not bad. We all do it everyday. When you outsource something you still provide all the same benefits to society as if you hired someone, plus your company is leaner, more efficient and more profitable. This will allow you to get more sales, grow your company and hire more people in your profit centers. By removing cost centers from your payroll, you help not only your company grow, but you also help the specialized company to grow, and that is a much better use of your money. Some small business owners like hiring people because it gives them a sense giving back to society, but when you outsource locally, you are still doing that, just not internally. One company using another local company helps in creating job security for all involved; it literally is a win/win.

One Caveat

Most companies look to outsourcing to save money. My primary reason for promoting this is that it allows the company to focus on their core business and grow as a result. The one thing I would caution against is choosing any outsource company based solely on price. My next article will deal with criteria for choosing an outsource company, but remember the old adage, “You get what you pay for.” If you look at three companies, and one is significantly cheaper than the others, try to find out why they are so cheap or is it that the others are over priced? Due diligence is required to make the right business decision, and realize that cheaper is not always the right business decision because even though these are cost centers, they are still essential to your business health.