Prepared By:

What is Outsourcing

OutsourcingOutsourcing– Contracting with outside professional Contracting with outside professional

services to meet specific business needsservices to meet specific business needs..

2013 IO Marketing – Proprietary and Confidential

2013 IO Marketing – Proprietary and Confidential

Reasons for small business outsourcing

Traditional role - reaction to problemTraditional role - reaction to problem– Reduction and control of costsReduction and control of costs– Avoid large capital investment costs Avoid large capital investment costs – Insufficient resources available Insufficient resources available

Modern role – business strategyModern role – business strategy– Allows company to focus on their core Allows company to focus on their core

competenciescompetencies– Keeping up with cutting-edge technologyKeeping up with cutting-edge technology– Creating value for the organization and its Creating value for the organization and its

customers customers – Building partnershipsBuilding partnerships

2013 IO Marketing – Proprietary and Confidential

Where are they outsourcing to?

Outsourcing can be farmed out to a Outsourcing can be farmed out to a variety of places, but you will find variety of places, but you will find more often than not, to developing more often than not, to developing countries on the rise.countries on the rise.– Bangalore, India (Call centers)Bangalore, India (Call centers)– The PhilippinesThe Philippines– Saudi ArabiaSaudi Arabia– ChinaChina– Eastern Europe Eastern Europe – CanadaCanada

2013 IO Marketing – Proprietary and Confidential

Outsourcing Processes Once a company has decided to Once a company has decided to

outsource certain business functions, it outsource certain business functions, it should consider the following:should consider the following:– What services to outsource.What services to outsource.– Which outsourcing firm provides these Which outsourcing firm provides these

services.services.– Evaluate top candidates.Evaluate top candidates.– Checklist.Checklist.

2013 IO Marketing – Proprietary and Confidential

Benefits

Improved Service to the CustomerImproved Service to the Customer– Outsourced companies can receive tech Outsourced companies can receive tech

support 24/7, with a smaller budget.support 24/7, with a smaller budget.– Outsourcing companies generally use Outsourcing companies generally use

standardized equipment and methods.standardized equipment and methods. Saves time and money for the customer.Saves time and money for the customer.

– When tasks are outsourced, it allows a When tasks are outsourced, it allows a company to concentrate on its core company to concentrate on its core competency.competency.

2013 IO Marketing – Proprietary and Confidential

Difficulties

Threats to security and confidentialityThreats to security and confidentiality– Sensitive information such as payroll, Sensitive information such as payroll,

medical records and banking/mortgage medical records and banking/mortgage records.records.

– Hidden costs to outsourcingHidden costs to outsourcing This includes the contract between companies, as This includes the contract between companies, as

well as legal costs incurred.well as legal costs incurred.

– Loss of possible strategic asset or skillLoss of possible strategic asset or skill Could it have been used to create a competitive Could it have been used to create a competitive

advantage over your competitors?advantage over your competitors?

– Loss of control, and dependence on an Loss of control, and dependence on an outsourcing vendoroutsourcing vendor

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Outsourcing occurs at a rate of Outsourcing occurs at a rate of between 2 and 3% between 2 and 3%

Outsourcing Fact

2013 IO Marketing – Proprietary and Confidential

Is Outsourcing a Good Thing? Some Americans don't believe that offshore Some Americans don't believe that offshore

outsourcing is bad for this country. They seem to be outsourcing is bad for this country. They seem to be convinced that we can be strengthened as a nation if convinced that we can be strengthened as a nation if we are forced to compete in the global economy. we are forced to compete in the global economy.

Stimulates trade and creates a stronger economy in Stimulates trade and creates a stronger economy in the U.S. and more jobs in the long runthe U.S. and more jobs in the long run

A way to get the job done for less money by: A way to get the job done for less money by: – reducing and controlling company operating costsreducing and controlling company operating costs– freeing up internal company resources for more important freeing up internal company resources for more important

purposespurposes-improving the company focus and resultant productivity-improving the company focus and resultant productivity

U.S. businesses need to stay competitiveU.S. businesses need to stay competitive