FAQs
The benefits of IT outsourcing include cost reduction, increased talent pool, focus on core competencies, increased productivity, custom solutions, and managed risks. The disadvantages may include issues with confidentiality, compliances, control over operations, hidden expenses, and technology outdating. The key to successful IT Support Outsourcing is to choose a verified, experienced, reliable outsourcing partner to mitigate maximum risks.
Information Technology functions within your company used to develop or run business process services, infrastructure, and service/help desk support, are included in outsourced IT functions. These may also include network monitoring, tuning, and troubleshooting, virus/threat protection and security, web and app development, storage and data recovery, installation and set-up services, and many more. You may also employ a Managed Service Provider to supervise your IT infrastructure for you.
IT support services usually include all tools, functions, and issues related to networking, website, and technological or computing devices. They help with the upkeep of your business functions, remote or onsite; while maintaining digital security compliances. An IT services company may offer different tiers of support, depending on which IT services are needed for your organization.
Typically the high level steps that an outsourcer and company go through during an implementation are as follows:
- A Premier consultant speaks to the company to understand the process;
- A flow chart is made so that planning can start using visual diagrams in order to understand the process, review it for optimization by integrating the process and using technology;
- Process Documentation;
- System Requirements;
- Staffing Configuration;
- Training/Testing;
- Parallel Processes;
- Roll Out; and
- Analyze/Adjust.
Depending on the actual processes being outsourced this take anywhere from 8 to 12 weeks. In cases where simple functions such as AR/AP, data entry, or customer service are being outsourced, training could be as short as two (2) weeks and staffing levels could be cut very quickly.
Each company has different business objectives, product sets, costs and processing environments. Thus, each company is different and must go through a systematic process of evaluation to establish if it could benefit from outsourcing. Premier’s consultants are experienced in guiding companies through this process and can assist companies in determining the best route to take, i.e. retain processing in-house or outsource. Here are some questions that company needs to ask itself:
- Is management under pressure to reduce costs of doing business? Has management achieved any recent cost savings through re-engineering its processes?
- Does the company have standardization processes? Is the company looking for greater control and visibility over business functions and further improvement in their processes?
- Has the company reviewed its business model for scalability and determined whether integrating their operation with an outsourcing outfit to achieve end-to-end will achieve greater rewards?
- Is technology being used to improve the processes, mining of data for analytics, and discernment of whether analyzing the data will improve the company’s bottom line?
- Is the company using technology and automation to reduce reliance on manual labor and is it customizing its processes to tailor operations to suit their product needs?
- Does the company have in-house talent to excel in the areas of Finance, Human Resources, IT, Supply Chain Management, Sales and Marketing, Shared Services and Data Analytics to conduct business in its industry?
- Does the company have pockets of labor with 10 or more FTEs, performing non-core, repetitive, replicable, and/or trainable processes?
- And finally, has the company spoken to a Premier consultant to see what is possible? To achieve what at first glance may be seemingly impossible?
The functions that have been successfully outsourced by companies include:
Finance, Human Resources, IT, Supply Chain Management, Sales and Marketing, Shared Services and Data Analytics. Additionally, other functions can be outsourced when companies lack in-house talent, or the cost to acquire such special talent becomes very expensive in the geographies in which they operate.
It all depends on the processes and the business that is outsourced. At the very high end of the complex and high-talent requirement transaction process, the savings could well be in the 200% range. Typically customers see a remarkable 50-70% savings on the variable expenditures of their companies. In addition, outsourcing allows a company to focus on its core business and expand it through improving the in-house processes that it chooses to retain.
The geographies being outsourced to are rapidly expanding. Traditional outsourcing destinations, such as India and the Philippines, are being challenged by new emerging markets such as Pakistan and China. These new locations are providing new high quality labor, at lower rates, with lower attrition rates then some of the early adopting countries. The link below provides the information on the countries taking part in outsourcing, and their respective cost indices. Premier operates in two of the best locations in terms of cost and resource skills.
Outsourcing is an established phenomenon through which companies have achieved cost savings, standardization of their processes, greater control and visibility over business functions and the end-to-end processes, and greater scalability. However, outsourcing is now maturing and companies want to deploy technology and automation to reduce reliance on manual labor; customize their processes and tailor their operations to suit their product and customer needs; and to seamlessly integrate their operations with their outsourcing company. Companies are also outsourcing certain functions for which they do not have in-house talent.
- Below are some statistics on outsourced jobs and management thinking:
- In 2013, about 2.6 million US jobs were outsourced
- Total number of US jobs outsourced offshore in 2013 was 2,637,239
- Percentage of CFOs surveyed who said their firm was currently offshore outsourcing – 36%
- Percentage of CFOs who favored India for outsourcing – 26%
- Percentage of CFOs who favored China for outsourcing – 18%
- Offshore Outsourcing By Sector (Percent of Companies)
- Manufacturing – 53%
- IT Services – 43%
- R&D – 38%
- Distribution – 26 %
- Call or Help Centers – 12%
- Reasons Why Companies Outsource
- Reduce or control costs – 44%
- Gain access to IT resources unavailable internally – 34%
- Free up internal resources – 31%
- Improve business or customer focus – 28%
- Accelerate company reorganization / transformation – 22%
- Accelerate project – 15%
- Gain access to management expertise unavailable internally – 15%
- Reduce time to market – 9%
