An article in The Wall Street Journal (Feb 11, written by Jackie Range) referred to a study by consultants McKinsey & Co. and Nasscom, the Indian tech and outsourcing industry group. The study found that, on average, company back offices -- or "captives," as they are called in the outsourcing industry -- were less efficient than companies run by outsourcing firms that specialize in the business.
The costs for some types of back office work was 30% higher. The survey also found that the higher costs did not lead to lower staff turnover or better-quality work.
A few years ago, it made sense to set up units in India and shift the work there. Costs were cut by about 45% motivating companies such as Goldman Sachs and J.P. Morgan Chase to set up back offices and employ thousands of workers. The times are changing.
After the initial period where benefits were substantial, office space jumped and salaries began to rise. In addition, staff turnover increased and companies had to spend money on recruiting and training.
While India remains a low cost destination, other locations are looking attractive, including Vietnam and Colombia. Our company GO Global is always looking for new low cost offshore locations where there is a ready supply of qualified workers with skills in accounting and data processing.
Particularly in recessionary times, our main goal is to help our clients prosper by keeping costs low on non-core business processes and keeping quality high.
Wednesday, February 13, 2008
Friday, January 18, 2008
Outsourcing in Recession Times
From the looks of things, we are going to have a struggling economy in 2008 at best, and a full-blown recession at worst. Financial prognosticators are still mixed on whether or not to call the slowdown a recession, but if this isn't a recession, then I don't know what is. People are strung out on credit card debt and having trouble paying their bills on time. The equity in their houses has diminished and they can no longer draw upon that to shore them up. Their investment portfolios are not generating any supplemental income, either, as the stock market keeps plummeting.
Meanwhile, prices are rising everywhere we shop, including the supermarket. Eating out has become a major extravagance. On the up side, we can get a good deal on a new car and cheap upgrades on our cell phones. There are great sales on clothing, but we buy more than we need. Well, I could go on and on.
Companies in every sector at every level are making plans to lay off employees. How can outsourcing help hold the bottom line? Many business processes that have been done internally can be outsourced, which can save business owners a substantial amount of money. Most outsourcing providers can perform business processes at about 50% of what it would normally cost to do the function internally.
Take accounting and data processing, for example, a typical administrative function in any business. Our company, GO Global, provides high-quality BPO services at a cost that can amount to a savings of 50% to 60%. Besides cost savings, outsourcing is part of a strategic business plan to create a more streamlined organization positioned for growth.
Other benefits are reductions in capital expenditures and fixed assets, an increase in control of operating costs, and improved speed of information and response time. Maybe we need to stop worrying so much about 2008 and look at the bigger picture. Isn't it time to institute change that will put your business in a growth mode for the next decade?
Meanwhile, prices are rising everywhere we shop, including the supermarket. Eating out has become a major extravagance. On the up side, we can get a good deal on a new car and cheap upgrades on our cell phones. There are great sales on clothing, but we buy more than we need. Well, I could go on and on.
Companies in every sector at every level are making plans to lay off employees. How can outsourcing help hold the bottom line? Many business processes that have been done internally can be outsourced, which can save business owners a substantial amount of money. Most outsourcing providers can perform business processes at about 50% of what it would normally cost to do the function internally.
Take accounting and data processing, for example, a typical administrative function in any business. Our company, GO Global, provides high-quality BPO services at a cost that can amount to a savings of 50% to 60%. Besides cost savings, outsourcing is part of a strategic business plan to create a more streamlined organization positioned for growth.
Other benefits are reductions in capital expenditures and fixed assets, an increase in control of operating costs, and improved speed of information and response time. Maybe we need to stop worrying so much about 2008 and look at the bigger picture. Isn't it time to institute change that will put your business in a growth mode for the next decade?
Friday, January 11, 2008
A Strategic Guide to Outsourcing
Good morning,
Small and medium-sized businesses can benefit from the new book we are publishing, The Phoenix Paradigm, Redesigning Your Business for the 21st Century. The book is all about how to outsource your non-core business functions, such as accounting and data entry.
Outsourcing has become one of the most predominant business models of our times. If it is properly implemented, outsourcing can become an incredibly cost-effective business management tool that can streamline your organization and make it more efficient and productive.
The motivation to outsource is quite simple -- reducing costs, access to a strong labor pool, and adding value and efficiency. We believe that the small and mid-market enterprise sector is ready for outsourcing and we want to show them how to do it.
Look for more posts on our new book on outsourcing, The Phoenix Paradigm. The phoenix bird rose from the ashes and so can you.
Arlene Hauben
Director of Marketing
Global Outsourcing, Inc.
Small and medium-sized businesses can benefit from the new book we are publishing, The Phoenix Paradigm, Redesigning Your Business for the 21st Century. The book is all about how to outsource your non-core business functions, such as accounting and data entry.
Outsourcing has become one of the most predominant business models of our times. If it is properly implemented, outsourcing can become an incredibly cost-effective business management tool that can streamline your organization and make it more efficient and productive.
The motivation to outsource is quite simple -- reducing costs, access to a strong labor pool, and adding value and efficiency. We believe that the small and mid-market enterprise sector is ready for outsourcing and we want to show them how to do it.
Look for more posts on our new book on outsourcing, The Phoenix Paradigm. The phoenix bird rose from the ashes and so can you.
Arlene Hauben
Director of Marketing
Global Outsourcing, Inc.
Monday, December 31, 2007
BPO to increase in 2008
We foresee a rise in BPO in the year ahead, due to the cutbacks in US business operations. The credit crisis will drag on and weigh on profits. Business owners will be forced to cut back and lay off workers.
GO Global has a BPO center in Guatemala, an outsourcing destination that is becoming recognized, as India becomes more expensive to work. Our goal is to help small and medium-sized companies reduce costs and streamline organization.
Accounting and data entry are reasonably simple to outsource and through our Panoply Pro system, we implement the shift within three months.
We wish everyone a Happy and Prosperous New Year. May 2008 bring peace and good health for all the good people in the world.
GO Global has a BPO center in Guatemala, an outsourcing destination that is becoming recognized, as India becomes more expensive to work. Our goal is to help small and medium-sized companies reduce costs and streamline organization.
Accounting and data entry are reasonably simple to outsource and through our Panoply Pro system, we implement the shift within three months.
We wish everyone a Happy and Prosperous New Year. May 2008 bring peace and good health for all the good people in the world.
Friday, December 14, 2007
Building Company Value through Outsourcing
Outsourcing certain business functions is a way to reduce overhead by shifting work to a lower cost location. Beyond the significant cost savings that outsourcing brings, the CEO is relieved of some of the burdens of operating the business, which often means concentrating on administering and managing employees. With newly available capital from the cost savings and freed up time, the CEO can focus on expanding the core business. For that reason, outsourcing has become more about unleashing the potential of your business and creating value.
When we talk about value, what does that mean? Although it is subjective and means something different in every situation, value usually has to do with improvement. For example, a house that is not properly maintained and periodically upgraded will lose some of its value. Conversely, fresh paint and upgrades, such as a new kitchen or bathroom, will add value and increase the worth of the house. In a similar way, businesses are worth more when processes are improved and business expands.
Outsourcing, when successfully implemented, can result in the following improvements:
• Error reductions
• Attenuation of staffing problems
• Better flow of information
• Innovation and inventiveness
• Better concentration on process
• Freeing up employees for higher-value activities (such as R&D and marketing)
• Steady growth in earnings
• Increased profitability
Outsourcing any process to a service provider, however, takes some doing. Just as in the case of a kitchen renovation, the owner and contractor have to work together to achieve the desired effect. Success requires discussions and decision-making, and taking action together to make the right changes.
A best practice to ensure productive communication is to create mechanisms to facilitate an open exchange of information and constructive feedback. This may be in the form of weekly meetings, conference calls, or detailed emails. There should also be measurement tools that record the process and differences in perception. For a successful outcome, all parties involved must commit to certain best practices and measures that will prevent failure.
5 Common Pitfalls and Preventive Measures
Pitfall #1: Lack of a partnership approach.
In a 2004 study by OutsourcingCenter on the predictors for outsourcing success, a trusted partnership approach was the greatest predictor of success. A collaborative environment that includes mutual trust and respect is essential to achieving the overall strategic objectives.
Preventive measures for this pitfall start with a well-defined contract that pinpoints each aspect of the relationship. While strong open relationships are essential, the relationship must also be contractual, so everyone understands from bottom to top that there is a serious commitment to the outsourcing process.
Without a partnership approach and contract, the relationship will be more like an ordinary customer-vendor arrangement, in which the customer wants the best deal at the lowest cost and the vendor tries to get the most money. Under a partnership arrangement, both parties look out for each other's best interests and are motivated to perform beyond the scope of the contract.
Pitfall #2. Lack of Cultural Commitment.
Outsourcing must be a strategic commitment that comes from the top. Without cultural acceptance and buy-in of the outsourcing program, resistance will prevail and hinder the arrangement. Employees will hope that the outsourcing arrangement is a passing phase or an experiment not to be taken seriously.
The preventive measure for this pitfall begins with establishing a champion of the outsourcing program. The initiative must be formally announced to employees conveying the importance of the program and the gains to be achieved. The leaders must be able to convey the program in a positive light with the message that everyone will benefit through participation and cooperation. In other words, they are expected to get on the bandwagon. A best practice is to let employees know that they will be measured by the extent of their participation, and that it will be reflected in their compensation. Without such a dictum, many employees will resist change by being resentful and disruptive.
Pitfall #3. Lack of Effective Change Management in the Client Organization.
Linked to the commitment to the outsourcing initiative is the deployment of change management strategies. This is by far the biggest challenge to outsourcing success. Both provider and client must be able to adapt the environment to embrace continual implementation of best practices and innovative solutions. Effective change management requires a commitment to new processes and procedures and continuous improvement. Any lack of innovation or competitive edge could risk the optimization of value that can be achieved over time.
Pitfall #4. Lack of Effective Communication.
Miscommunications and/or the inability to communicate the processes can foil the outsourcing relationship and process. Preventive measures begin with open and honest communication at the outset as to the parties' mutual expectations. A best practice is to clearly define what "success" and "value" will be the outcome of the relationship and how they will be measured. The presence of effective communications also means that everyone is "in the loop" and there is a proactive sharing of information, which is crucial to establishing an atmosphere of flexibility and cooperation.
Pitfall #5. Client's Lack of Knowledge of its Processes.
Often a client organization does not have sufficient knowledge of its own processes. Before the client can undertake a smooth transition to outsourcing, the organization must review and understand the processes it wants to outsource. Without that knowledge, the expectations cannot be clearly articulated or contractually formalized.
First, the client and the provider must create a flow chart of the specific business processes, which may include such factors as inputs and outputs, interactions with customers, cycle times, and common errors. Second, the client organization must prevent micro-management of the provider. Bear in mind that one of the chief objectives of outsourcing is to bring renewed energies to developing core competencies, and that any micro-management of the outsourcer virtually defeats this primary purpose.
The client has to let go and acknowledge the provider as the process expert and let the provider do what it does best -- process improvement. By allowing this to happen, the parties will be able to institute the methodologies, tools, frameworks, flexibility, and mentalities that enable a partnership approach and the commitment to achieve real value.
Outsourcing certain business functions is a way to reduce overhead by shifting work to a lower cost location. Beyond the significant cost savings that outsourcing brings, the CEO is relieved of some of the burdens of operating the business, which often means concentrating on administering and managing employees. With newly available capital from the cost savings and freed up time, the CEO can focus on expanding the core business. For that reason, outsourcing has become more about unleashing the potential of your business and creating value.
When we talk about value, what does that mean? Although it is subjective and means something different in every situation, value usually has to do with improvement. For example, a house that is not properly maintained and periodically upgraded will lose some of its value. Conversely, fresh paint and upgrades, such as a new kitchen or bathroom, will add value and increase the worth of the house. In a similar way, businesses are worth more when processes are improved and business expands.
Outsourcing, when successfully implemented, can result in the following improvements:
• Error reductions
• Attenuation of staffing problems
• Better flow of information
• Innovation and inventiveness
• Better concentration on process
• Freeing up employees for higher-value activities (such as R&D and marketing)
• Steady growth in earnings
• Increased profitability
Outsourcing any process to a service provider, however, takes some doing. Just as in the case of a kitchen renovation, the owner and contractor have to work together to achieve the desired effect. Success requires discussions and decision-making, and taking action together to make the right changes.
A best practice to ensure productive communication is to create mechanisms to facilitate an open exchange of information and constructive feedback. This may be in the form of weekly meetings, conference calls, or detailed emails. There should also be measurement tools that record the process and differences in perception. For a successful outcome, all parties involved must commit to certain best practices and measures that will prevent failure.
5 Common Pitfalls and Preventive Measures
Pitfall #1: Lack of a partnership approach.
In a 2004 study by OutsourcingCenter on the predictors for outsourcing success, a trusted partnership approach was the greatest predictor of success. A collaborative environment that includes mutual trust and respect is essential to achieving the overall strategic objectives.
Preventive measures for this pitfall start with a well-defined contract that pinpoints each aspect of the relationship. While strong open relationships are essential, the relationship must also be contractual, so everyone understands from bottom to top that there is a serious commitment to the outsourcing process.
Without a partnership approach and contract, the relationship will be more like an ordinary customer-vendor arrangement, in which the customer wants the best deal at the lowest cost and the vendor tries to get the most money. Under a partnership arrangement, both parties look out for each other's best interests and are motivated to perform beyond the scope of the contract.
Pitfall #2. Lack of Cultural Commitment.
Outsourcing must be a strategic commitment that comes from the top. Without cultural acceptance and buy-in of the outsourcing program, resistance will prevail and hinder the arrangement. Employees will hope that the outsourcing arrangement is a passing phase or an experiment not to be taken seriously.
The preventive measure for this pitfall begins with establishing a champion of the outsourcing program. The initiative must be formally announced to employees conveying the importance of the program and the gains to be achieved. The leaders must be able to convey the program in a positive light with the message that everyone will benefit through participation and cooperation. In other words, they are expected to get on the bandwagon. A best practice is to let employees know that they will be measured by the extent of their participation, and that it will be reflected in their compensation. Without such a dictum, many employees will resist change by being resentful and disruptive.
Pitfall #3. Lack of Effective Change Management in the Client Organization.
Linked to the commitment to the outsourcing initiative is the deployment of change management strategies. This is by far the biggest challenge to outsourcing success. Both provider and client must be able to adapt the environment to embrace continual implementation of best practices and innovative solutions. Effective change management requires a commitment to new processes and procedures and continuous improvement. Any lack of innovation or competitive edge could risk the optimization of value that can be achieved over time.
Pitfall #4. Lack of Effective Communication.
Miscommunications and/or the inability to communicate the processes can foil the outsourcing relationship and process. Preventive measures begin with open and honest communication at the outset as to the parties' mutual expectations. A best practice is to clearly define what "success" and "value" will be the outcome of the relationship and how they will be measured. The presence of effective communications also means that everyone is "in the loop" and there is a proactive sharing of information, which is crucial to establishing an atmosphere of flexibility and cooperation.
Pitfall #5. Client's Lack of Knowledge of its Processes.
Often a client organization does not have sufficient knowledge of its own processes. Before the client can undertake a smooth transition to outsourcing, the organization must review and understand the processes it wants to outsource. Without that knowledge, the expectations cannot be clearly articulated or contractually formalized.
First, the client and the provider must create a flow chart of the specific business processes, which may include such factors as inputs and outputs, interactions with customers, cycle times, and common errors. Second, the client organization must prevent micro-management of the provider. Bear in mind that one of the chief objectives of outsourcing is to bring renewed energies to developing core competencies, and that any micro-management of the outsourcer virtually defeats this primary purpose.
The client has to let go and acknowledge the provider as the process expert and let the provider do what it does best -- process improvement. By allowing this to happen, the parties will be able to institute the methodologies, tools, frameworks, flexibility, and mentalities that enable a partnership approach and the commitment to achieve real value.
Thursday, November 29, 2007
Smaller Companies Profit from Outsourcing
While business process outsourcing (BPO) has become commonplace among large corporations, an increasing number of small and medium-sized companies are appreciating the benefits of contracting out routine office functions. One good place to start outsourcing is the accounting function.
Accounting data is easy to transfer and does not require complex interpretation, so outsourcing this essential business function offers attractive returns on low levels of risk. Small business owners who are serious about protecting and exceeding their profit margins are outsourcing to reduce in-house operation costs.
A decade ago, the rationale for BPO was strongly related to reduction in labor costs, but giant companies, such as GE, Microsoft, and Dell, demonstrated that there are wider benefits to be obtained. Today, CEOs are looking for improvements in processes and efficiencies, and topping the list of reasons is a gain in profitability.
If American businesses, small or large, do not achieve profitability, they will fail. A strong accounting system helps identify where the best pockets of profitability lie, so they can crack the code of the business game.
GO Global offers a complete range of accounting services for small and mid-sized companies. We are based in the U.S. and have a highly trained staff in Guatemala where we do the day-to-day data processing and accounting functions. Legal and accounting professionals in the U.S. review the information before and after it is processed. We help our clients identify information that will enable them to grow and become more valuable to their shareholders and stakeholders.
Visit GO Global at www.goglobalbpo.com or call 877-462-7680.
Accounting data is easy to transfer and does not require complex interpretation, so outsourcing this essential business function offers attractive returns on low levels of risk. Small business owners who are serious about protecting and exceeding their profit margins are outsourcing to reduce in-house operation costs.
A decade ago, the rationale for BPO was strongly related to reduction in labor costs, but giant companies, such as GE, Microsoft, and Dell, demonstrated that there are wider benefits to be obtained. Today, CEOs are looking for improvements in processes and efficiencies, and topping the list of reasons is a gain in profitability.
If American businesses, small or large, do not achieve profitability, they will fail. A strong accounting system helps identify where the best pockets of profitability lie, so they can crack the code of the business game.
GO Global offers a complete range of accounting services for small and mid-sized companies. We are based in the U.S. and have a highly trained staff in Guatemala where we do the day-to-day data processing and accounting functions. Legal and accounting professionals in the U.S. review the information before and after it is processed. We help our clients identify information that will enable them to grow and become more valuable to their shareholders and stakeholders.
Visit GO Global at www.goglobalbpo.com or call 877-462-7680.
Monday, October 8, 2007
To Outsource or Not to Outsource: That is the Question
Key Issues to Consider in any Strategic Decision to Outsource
1. Outsource business functions that do not have to be done internally so you can focus on your core competency and grow your business.
2. Outsource specialized skills, such as accounting or graphic design, that are necessary, but not core to your business; however, where you need technically skilled workers that cost a lot in the U.S.
3. Outsource rote tasks, such as data entry, that can be done by trained personnel more efficiently and more economically outside the U.S.
4. Outsource finance and accounting to a specialist in those areas. Many times a business can not find competently trained people in their geographic area to perform these functions, but other countries have many competently trained employees with those particular skill sets.
5. Outsource a portion of a certain function as a backup system and to spread risk.
6. Communicate regularly with your outsource provider.
7. Make sure that your outsource provider has security in place and backup systems.
8. Negotiate and select the right outsourcing model to achieve your business objectives. Not all outsourcing is the same! Not all models will achieve the intended results. Use a consultant to assist you if you are not sure!
1. Outsource business functions that do not have to be done internally so you can focus on your core competency and grow your business.
2. Outsource specialized skills, such as accounting or graphic design, that are necessary, but not core to your business; however, where you need technically skilled workers that cost a lot in the U.S.
3. Outsource rote tasks, such as data entry, that can be done by trained personnel more efficiently and more economically outside the U.S.
4. Outsource finance and accounting to a specialist in those areas. Many times a business can not find competently trained people in their geographic area to perform these functions, but other countries have many competently trained employees with those particular skill sets.
5. Outsource a portion of a certain function as a backup system and to spread risk.
6. Communicate regularly with your outsource provider.
7. Make sure that your outsource provider has security in place and backup systems.
8. Negotiate and select the right outsourcing model to achieve your business objectives. Not all outsourcing is the same! Not all models will achieve the intended results. Use a consultant to assist you if you are not sure!
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