Merits and Demerits of BPO outsourcing

Benefits of outsourcing

The benefits of outsourcing is built by a source, "Outsourcing saves money, outsourcing frees valuable staff resources outsourcing increase business efficiency, outsourcing facilitates the reallocation of resources, business process outsourcing is still new, devolved budgets is a challenge and outsourcing can reduce technical flexibility."

The main advantage of outsourcing is that it lowers costs considerably. An example of such a benefit received by a business will be that of Ford Motors. Ford has lowered its costs by producing a new car simply to replace its workers with machines. These machines can work faster than a team of people and hence, this increases the productivity of the company.

Together with the productivity, Ford also insists that quality must also be improved by using machines instead of humans. "Today these workers are replaced by machines because they are cheaper in the long run, produce better products, or a combination of the two (the firm tries to raise the quality to cost ratio, the quality is defined by consumers, and discharged resources "

It has also been reported from this source, as economists have been known to say that the only incentive for a company to employ machines over people is that the quality and the cost ratio increases. If it does not increase and is almost the same as it would not be motivated to replace workers with machines.

The ability to save money, depending on their size and ability of the outsourcing team. It may also depend on the processes that are outsourced, but in the overall sense, the cost is considered to be lowered when outsourcing is done by a company."Professor Drezner reports that for every dollar spent on outsourcing to India, the United States reaps between $ 1.12 and $ 1.14 in dividends. Drezner also points out that large software companies like Microsoft and Oracle have increased outsourcing and used savings investment and higher domestic wages. "

Another benefit of outsourcing is that it gives the company the results should be distributed and concentrated management. It helps the company to give accurate and timely management of the company's processes rather than the company manage all the processes by itself. This would lead more towards mismanagement."In a recent Accenture survey of more than 800 health, manufacturing, retail and travel executives in the U.S. and Europe, 86% said outsourcing gives them more control over their performance on a number of critical areas, the most important is the ability to plan"

"One of the major advantages of outsourcing is flexibility - it can be much easier to cut back on a vendor than an employee. (Think of how you would feel if you had to tell an employee who is dependent on her job to you need only half her time now.) Another advantage is that you do not need to become expert in a particular area - you can rely on outsourced business to become an expert. "

The reasons for outsourcing, an Information Technology department had been discussed in the paper above, but the benefits were not mentioned. Some of the reasons for this are as follows: "better cost control, better service, personnel, equipment and software tools, and the customer can focus on core business competencies."

Disadvantages of outsourcing

Together with the professionals of outsourcing, there are some drawbacks associated with the term. Outsourcing is not beneficial in all cases and situations. In some situations, outsourcing may be more dangerous to the organization rather than an advantage. This is why the pros and cons must be weighed before the decision to outsource is made.

"A disadvantage of outsourcing is that you put a part of your business in someone else's hands. You have to ask yourself whether you can trust them if you think they will be in the company, and if they can adapt your growing / changing needs. "

It had been discussed above, the external means to provide another outside firm with the reins of leadership for this function. This could be a difficult decision for the organization, and must be done tactfully and with full cost-benefit analysis. It's a tough decision to make whether the organization can afford to outsource or not.There have been some companies that have stood the risk of fraud in the organization of the outsourcing team. "Outright fraud is also a problem. In 2005, Intel discovered and fired 250 Indian employees after they falsified their expense reports. Firings followed by Intel's internal Business Practice Excellence program of expenditure requirements."

Another problem with outsourcing is that of quality. Quality is an attribute that can only be achieved if expectations of a customer are met fully and satisfactorily. It is an important point that6 are considered when producing a product or service to custoemr or any other organization to keep the name of the recognized as a serious one."Criticisms of outsourcing from the public and media sometimes tend to focus on the lackluster customer service and technical support provided by either local workers who are not actually employees of the company or the foreign workers who try to communicate with Americans in broken or incomprehensible English language. "

The above quotation shows that the company must ensure that the outsourcing team is working should be enough for either suppliers or customers should be ignored in any way. Value chain of the organization should be streamlined and have barriers.

Why should outsourcing be done?

Outsourcing is done for situations where the organization believes that it can not handle alone.There may be situations where a company may be unable to create a special budget for a project, and neither allocate resources to this project. In this case the solution is outsourcing the project.

A major reason for outsourcing is done is that when an organization faces a major challenge with an uncooperative Information Technology department. If the organization's management is able to convince and persuade the department to deliver on time, the organization needs to outsource.

"CEO and / or CFO will be" held hostage "by a non-responsive IT department. Compared to its competitors, it is not in line with technological changes. High storage costs. Great staff. IT budget is not predictable or manageable. IT organization has a great understanding of business objectives, critical success factors and / or bottom line. IT organization does not provide industry best practices, processes and / or services to internal / external customers. "(Outsourcing Law)

When not to outsource?

A time when outsourcing does not seem like a possible solution is when the problem relates to technical support. Technical support is a big task for an organization, and it has a great significance. Technical support is one thing that must remain in control of the organization and not the outsourcing company. Technical support makes an important contribution to achieving competitive advantage.

"You have to look at the overall importance of providing quality technical support. When you talk about capacity and how much you sell, you should look not only at the technical possibilities, but also your customer service capabilities. If you sell in your technical abilities, but your technical support capacity, you can help ruin. Outsourcing technical support is certainly a possibility, but it is not something we would do "

The reason for the technical support should not be outsourced is because tech support is the main interface within the organization who interact with customers. A company needs to keep that control in his own hands, so that the client can recognize the organization rather than outsourcing.

An example of an organization that has achieved this advantage is that AT & T. "Although the wait is often long when you get a member of the technical support staff, you generally in capable hands. Other calls for AT & T Worldnet have shown that people on the line are well trained and well. They know their product and they know what they are doing. The technical support staff is to build brand loyalty. "

Conclusion

"Outsourcing can be a very complex and complicated undertaking. Every facet of the exercise must be carefully considered and appropriately implemented. There is not much room for error if full value is achieved." Therefore, to make it, there are certain guidelines to be followed up by an organization to decide whether to outsource a particular process or not.