There has been a lot of talk about outsourcing – from good to bad to evil, US has started to penalize the firms which outsource their work (by imposing additional taxes) US claims that outsourcing to developed countries leads to unemployment in their country. This article looks at ‘what exactly is outsourcing’ Does it really help the customers and the parent companies Further, does it encourage unemployment in the parent country.
Simply put outsourcing implies passing out some of the in house work to outside agencies for execution. The reasons for doing this can be many Following are some of the more publicized reasons for resorting to outsourcing include the following
- The third party agency delivers the work of the same quality in less cost(price)
- The Outsourcing strategy does not require the company to take up resources on a regular basis and yet it enables it to take care of fluctuations in work load
- The Outsourcing of secondary tasks (non critical work) permits the parent company to focus on major /key issues
There are as many unsuccessful instances of failed outsourcing initiatives as there are success stories. Let us look at the key critical components of outsourcing and try and list the causative factors that lead to its success. Following are some of the more important elements of outsourcing
- Project Management
- Defects Prevention
- User Requirements
These are briefly discussed below.
Project management requires that the project is adequately staffed with the requisite skill sets it has been provided with the necessary aids and tools and the infrastructure. Further, the work environ encourages productivity and the project team gets the proper guidance as and when it may be required.
The work environ assumes existence of efficient work processes – processes which may encourage team work, motivation and efficient grievances and conflict resolution processes. Further the work processes assume that well established and laid down monitoring processes are present.
Communication assumes a very significant role in all outsourcing environ. The customer is made to feel that he is in total charge and is monitoring the projects in a virtual environ. He not only gets the formal progress reports but is also on top of the informal reporting and has a complete pulse of the work environ. The technology supports this environ and facilitates audio and visual contacts in a regular manner.
Defects prevention processes assume that efficient quality systems are in place These systems assume – both in letter and spirit quality is a way of life – it is built in the deliverable rather than controlled from the outside The project organization supports this framework – and the quality function becomes an integral part of the project organization.
User requirements freezing is and important component and really forms the first stage of any effort infact confirmation of the user requirements is usually considered an ongoing process and is the real reason for continuous customer reports and periodic customer meetings and updates.
Typically the success of most outsourcing projects can be assessed in terms of the success of these elements – and corrective actions during the currency of any engagement revolves around correcting any of these elements.