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Outsourcing_and_Your_Business
| Outsourcing and Your Business
Outsourcing and Your Business
Outsourcing is an established way of doing business today,
allowing companies to maximize their budgets and resources — and
generate better products.
Also referred to as subcontracting, outsourcing simply means
acquiring a product or service rather than producing it
in-house. Outsourcing is suitable for just about any industry.
In the administrative field, for instance, a variety of
activities can easily be farmed out to a subcontractor,
including word processing, data entry, transcribing, research,
contact management and event planning.
Outsourcing is extremely common practice within human resource
(HR) departments. In fact, two-thirds of HR departments
outsource at least one activity, according to research by the
Bureau of National Affairs, Inc. and the Society for Human
Resource Management. The top five outsourced HR activities are
employee assistance/counseling, flexible spending account
administration, pre-retirement counseling, outplacement services
and pension/retirement plan administration.
Weighing the Outsourcing Option When deciding whether
outsourcing is a viable option, a company should consider all of
the issues involved. Should the projects be kept in-house
because they’re critical and employees need to know how to do
them themselves? Also, does the company have a sourcing plan,
staff members to oversee contracts or a philosophy that supports
the outsourcing initiative? If it does, outsourcing may be ideal
for your business. The bottom line is every business is
different and companies should carefully weigh the benefits of
outsourcing.
Benefits of Outsourcing Many companies that choose to outsource
do so because they don’t have or can’t attract the people skills
they need. Subcontracting gives them access to a much greater
pool of resources. It also enables companies to cut cost by 10
to 30 percent, depending on the industry. They can purchase
services on an as-needed basis, instead of maintaining a
full-time employee. This allows them to avoid paying
employee-related expenses such as salaries, unemployment taxes,
paid vacation and sick leave, insurance — which results in a
lower overhead.
In another aspect, outsourcing can help a company focus on its
core business, creating a competitive advantage within its
industry. Subcontracting also affords the business the chance to
get the best job possible from the people it hires. By using a
third party supplier, a company has more room to be critical of
the kind of services provided. If the work is done in-house,
company ties may interfere with the final product.
Outsourcing also offers a wide variety of other benefits,
including: •Faster setup of the function or service •Acquire
innovative ideas •Increase commitment and energy in non-core
areas •Improve credibility and image by associating with
superior providers •Greater flexibility and ability to define
the requisite service more readily •Less dependency upon
internal resources •Greater control of budget •Greater ability
to control delivery dates •Increase flexibility to meet changing
business conditions •Purchase of industry best practice
•Generate cash by transferring assets to the provider •Gain
market access and business opportunities through the supplier’s
network •Turn fixed costs into variable costs
About the author:
Copyright 2004, Kate Smalley Connecticut Secretary Freelance
Secretarial and Transcription Services
http://www.connecticutsecretary.com kms@connecticutsecretary.com
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