10 Factors to Consider for Outsourcing Decisions

businessmen confused about a decision

Both big and small companies resort to outsourcing their business functions. Either they choose to outsource most of their functions or just a handful of them so that they can focus on core business aspects. 

In both cases, they need to take into consideration some key factors, which will ultimately help them take the informed decision. Let’s take a look at some of the factors to consider for taking outsourcing decisions for your business.

1) Cost Savings

When you talk in pure business terms, outsourcing needs to improve your business bottom lines through reduced operational costs. If you don’t see this happening anywhere in the near future, chances are that you’ll end up spending more than you end up saving.

You don’t need to be an expert analyst to figure out where you’re heading. All you’ve to see is whether outsourcing will help you reduce a significant amount of your capital in hiring employee and equipment. At the same time, you will also need to maintain a balance between the quality and quantity of the services provided by the outsourced employees/firm.

For instance, if you outsource accounting, you need to see if carrying out this function is taking up more resources and costs as compared to outsourcing it.

2) The Pricing

We already discussed how cost-cuttings by hiring talent in a low price tag is one of the most common factors why companies outsource. You’ll get several vendors offering their resources at a competitive price.

However, instead of going for the cheapest vendor, compare and find out what are you going to get from other vendors as well.

For instance, some vendors will also offer customer support at no extra charge, which is a great deal in itself. Just remember that although price is an important factor, it should not be the ONLY factor that helps you zero-in on a vendor.

3) The Resources and Technology

Technology and resources are two considerations that are essential when you choose to outsource.

Ask the vendor about the tools and technologies they are going to use for your project and how capable are they of handling all your outsourcing needs?

What about the resources? Are they well trained for the assignments?

Does the vendor have an office with up-to-date systems and can handle the most rigorous of the outsourcing functions?

Answers to questions like these will lead the way to select the apt vendor who has the best resources and updated technology for seamless handling of your business functions.

4) The Ability To Meet Deadlines

Timeliness in outsourcing is as important as the costs. For instance, if a vendor fails to toe the deadlines, it can lead to major bottlenecks. That alone will nullify any cost-saving benefits that you had anticipated while hiring them.

You need to ensure that the vendor adheres to the promised quality and timeliness. One of the ways to do this is by making all your queries beforehand.

If you find that the vendor has little quality control measures or does not have any backup plan should they miss a deadline, it is better not to hire them in the first place.

5) Minimal Supervision

When you hire an outsourcing vendor to work on your business requirements, it’s a given that they are going to take care of everything from the scratch.

There should be no room for sloppy or shoddy work and they should be able to produce the results. 

Choosing a responsible vendor who will be in charge of the projects is a must-have so that you only need to supervise them minimally and let them take it from there.

This will give you more time to focus on your core business functionalities.

6) Limit The Liabilities

More often than not, there are certain functional areas that can build up liabilities for a business. This eats up time and money, which can be spent elsewhere.

You can cleverly outsource certain functions to reduce the liabilities an extent.

7) Trustworthiness

Before you sign on the dotted line, do make it a point to visit the vendor’s site. Apart from this, also research on the internet to find more about the firm, the infrastructure, safety practices and the team that works there.

This will help you assess the reliability of the service providers. If you have a reference who’ve worked with a vendor in the past, you can also ask them about the firm. This takes us to the next point.

8) Who’ll Lead The Team

You can’t just have blind faith in the outsourcing team even if you’re saving significantly by hiring them. Find out all that you can, including the team members who’ll be working on the projects and who’ll lead that team.

Learning these facts upfront will save you from several agonies at a later stage. Moreover, when you know that your business functions are in able hands, you’ll be at peace.

9) The Service Level Agreement

The SLA (Service Level Agreement) is one of the most crucial documents when we talk about outsourcing partnerships. At the time of creating the document, make it a point to ensure that every single detail is written clearly.

This will help you avoid you any kind of confusion or ambiguity especially about the quality of the services you’ll be getting.

It also makes sense to hire a lawyer especially to manage your outsourcing endeavor so that you don’t end up in any legal trouble.

10) Communication

Communication is the key whether you’re working onshore or with an offshore team. The vendors should be able to handle your queries and promptly reply without making you wait indefinitely.

Their communication skills need to be spot on without any space for cultural or other communication barriers. This ensures that they have clearly understood your requirements and can address any issue that may crop up.

Conclusion

These are some of the price and non-price factors that play an important role in helping you decide a vendor for your outsourcing projects. For more such insightful write-ups about outsourcing, keep a tab on this space. We’ll be back with more. Cheers!

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