In 1989, industries began formally identifying outsourcing as a business strategy. During the 1990s, companies started focusing more on cost-cutting methods. To achieve this goal, they started outsourcing those functions that are essential to run the company but are not directly related to their core business. Initially, they outsourced maintenance, security, internal mail distribution, data processing, human resources, and accounting.

The Incentive behind Outsourcing

Organizations want to decrease and control operating expenses by focusing on their core business. Furthermore, they can gain access to world-class abilities and free their internal resources for other tasks by outsourcing. If some of their functions are consuming considerable time or are running out of control, they outsource such functions. The internal resources of organizations are inadequate for completion of all activities. They want to share risks with other companies.

The main incentive was headcount or cost reduction when outsourcing had just begun. In the contemporary age, the prime driver is to implement the core value-adding tasks internally by optimum usage of own core competencies. This is possible by outsourcing the non-core competencies to service companies.

Major Activities in a Successful Outsourcing Plan

The host company must have a correct understanding of its goals and objectives. There should be a feasible strategic vision and plan. Then, the host company must select a proper vendor. It must draft a properly structured contract. Both companies should display proactive management of the relationship. The individuals and groups in either company should engage in open communication. The senior executives must support outsourcing and be actively involved. The relevant authorities must pay due attention to personnel issues. Moreover, both companies must ensure justification of short-term financial gain.

Host companies in the United Kingdom generally accost Pearl Lemon Outsourcing when they embark on an outsourcing journey. This outsourcing company in Bradford ensures results by making the right decisions about managing your business.

Steps in an outsourcing process

The first step is ‘program initiation.’ It includes discussions about the ideas and opinions about the aims and scope of the program. The other conversations are about the final outcome of the program and the implementation phases of the program. This phase ends with documenting all such ideas and goals as a ‘draft contract.’

The second stage is ‘service implementation.’ It consists of several actions. Companies define the transition project and allocate staff for it. Then, they define the Service-level Agreement (SLA) and service reporting. Implementation and handing over the service is the next action. During this handover phase, the service provider ensures continuity of service, the absence of a drop in the service quality, and adherence to timelines. 

In the third stage, companies hold negotiations to alter the ‘draft contract’ and generate the ‘final contract.’

The last stage is the formal close-down. During the outsourcing process, a lot of data needs to be filed for future reference. The members of both companies record the decisions taken and the impact of these decisions to generate new situations.

Author

Sumit is a Tech and Gadget freak and loves writing about Android and iOS, his favourite past time is playing video games.

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