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.
Monday, December 31, 2007
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.
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