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Tips To Make Business Process Outsourcing Profitable

Jun 25, 2008
Business process outsourcing has recently become much more of a pronounced trend and is evident in a wide range of companies of all sizes. The reasons for turning to the use of outsourced services vary greatly from one company to another. Some businesses are looking to achieve economies of scale, while other organizations would like to access things, such as a complete technology infrastructure, without having to build their own.

For other companies, their primary motivation in utilizing process outsourcing is to attain quick access to specific expertise and use the experiences and strengths of the company that is providing the outsourced projects and services. This allows each company involved in a large-scale outsourcing project to focus on their own strengths and capabilities, while outsourcing their weaknesses to another company that excels in that particular function. Many times, unique business alliances form using this strategy and sometimes a pair of companies will outsource various services to one another.

There is no lack of examples of the ways in which companies have made use of business process outsourcing over the years. A vary common example is corporations making use of travel agencies to take care of all the details of their business travel needs. Relying on travel agencies not only puts the burden of the details on the agency, but often results in savings because of the expertise and connections that these agencies have in procuring the best prices on business travel.

Another common example is the outsourced handling of employee benefits and payroll services, and is also very common when it comes to accounting functions. In the midst of the internet boom, many such outsourcing service providers developed packages specifically designed to meet the needs of the start-up internet companies.

Strategic sourcing, procurement, information technologies, inventory management, marketing and advertising, logistics, distribution, customer service through outsourced call centers, and subcontracted manufacturing functions are just a few of the additional business processes that are outsourced on a regular basis by many organizations. Often companies will start by outsourcing just one function, but find the practice to be so beneficial that they expand to outsource additional functions as they experience growth or as part of an expansion strategy.

When arranging for strategic business process outsourcing, finding the right outsourcing partners is of paramount importance. The companies that provide various outsourcing services must be able to effectively demonstrate that they have the required expertise and methodology in place. They should also have a strong positive reputation and should be willing to provide references that can attest to their capabilities.

In addition, it is a prudent practice to look for the value-added services that are offered in conjunction with the outsourcing services. For example, in situations when a company wishes to outsource inventory management, or are looking for a company to manage supplier networks for them, outsourcing the entire process involved can be invaluable for smooth project management from beginning to end.

Another aspect that should be remembered is that an organization cannot improve what is not measured. In order for business process outsourcing to be viable, strict guidelines must be put into place in the outsourcing contract, in terms of expected service delivery and performance levels.
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