OUTSOURCING RESOURCE

2006-12-15T07:57:00.000-08:00

Employees can benefit from outsourcing, poll says

Poll finds people often improve their positions after their job is outsourced

By Scarlet Pruitt, IDG News Service

Although a company's move to outsourcing can sometimes strike fear in employees who see their jobs as endangered, if done right workers may find that the process provides them with an opportunity to advance their careers and hone their skills, according to the findings of a poll out this week.

The poll, conducted in Europe and commissioned by IT services company LogicaCMG, examined the opinions of 200 employees in large organizations before, during, and after their positions were outsourced. While a majority of those surveyed, 84 percent, felt apprehensive at the prospect of having their positions outsourced, around 70 percent said that they were more satisfied with the new roles they were given following the transition.

"There is a lot of confusion surrounding outsourcing, when in fact people often improve their positions and get to work for a specialist operation," said LogicaCMG management consultant Paul Dunn.

Outsourcing is often confused with offshoring, Dunn said, which involves moving jobs to lower-cost markets such as India, while outsourcing involves a company's decision to move a particular operation or function out-of-house. When companies outsource, European regulations stipulate that affected employees retain the same conditions they had in their previous positions, Dunn said.

While remuneration packages, benefits and retraining are important in helping employees through the transition, early and open communication from employers about the decision is the crucial factor in easing employee fears, Dunn said.

"A lot of the transition is about perception and to do the process right, communication is key," he said. Dunn suggested telling employees as much as possible about the process, how it will effect them and how their roles will change as soon as the decision is made.

Another important factor is inclusion and making sure that companies offer workers the opportunity to voice their opinions and concerns, Dunn said. Participation by work councils and representative bodies can be particularly helpful in moving employees through the transition and giving them a channel for their feedback, the research found. In fact, 82 percent of those surveyed said that representative bodies played a crucial role in the process.

If companies fail to communicate outsourcing changes, they may risk losing employees, the poll found, with 29 percent of those surveyed saying they would seriously consider changing jobs if the process wasn't managed effectively.

But if done right, the research indicated that outsourcing isn't as threatening as it may sound. Some 91 percent of those polled said that their initial fears were at least in part unfounded, while 49 percent said that they saw outsourcing as an opportunity to improve their skills.

Outsourcing isn't always viewed as a threat, however, as different countries have varying views on the practice. The U.S. seems to have the most open and commercial view toward outsourcing, while traditionally protectionist countries like China view it with much more trepidation, Dunn said. In Europe, where the poll was conducted, the perception appears to be in between, with the U.K. leaning toward the U.S. view, he added.

Still, no matter where employees are located, it appears from the poll that outsourcing can be a positive experience for employees if there is clear communication about the change. "Uncertainty needs to be eliminated as soon as possible," Dunn said.

The LogicaCMG poll was conducted across a range of sectors and employee positions in the U.K., Netherlands, France, and Germany by marketing research company Coleman Parkes.

2006-12-15T07:27:00.000-08:00

How Can Outsourcing Benefit Your Business?

By Michael Russell

When a business has a job to handle, they frequently take advantage of the benefits of outsourcing. What is outsourcing? Outsourcing is when a company or a business hires another company or freelancer to complete work for them. Outsourcing is a way to get the job done quickly and effectively, especially if you don't have the manpower to do it yourself. So, what other advantages can be derived from outsourcing?

One of its biggest benefits is, of course, the ability to save significant amounts of money. When a business hires a freelancer or several freelancers to do a job they can get the most competitive rates for getting the job completed. Instead of having to hire a full task force of employees, a business can send out tasks to freelancers that are capable of doing the job at a lower price. This means there is no need for employee insurance as a freelancer is responsible for themselves. No Workers Compensation insurance and no social security payments for the person sending out the work means less money spent on labor overall.

Freelancers typically charge less than one would have to pay a regular employee. Thus, companies can save significant money by outsourcing urgent work. Moreover, when the work is being handled by freelancers, business owners are freed up to handle all aspects of running a business.

Professional companies can be hired to handle email communications, call center communication, customer service, order processing and more. With so many aspects being handled at a less expensive rate, businesses can benefit from saving money and saving money means an increase in the bottom line. Moreover, professional companies are trained to give businesses the best services available and they are willing to maintain a business' privacy at all costs.

What other kinds of work will professional companies and freelancers handle for businesses? There are freelancers that will handle medical billing and transcriptions, web graphic creation and web design, janitorial functions, landscaping, if there is a need, there is an outsource that one can find to meet the demand, all at reasonable and competitive pricing. Data entry is another outsourced function, as is writing, web content, press releases, advertising, resumés, directory maintenance, link campaigning and more.

Clearly, many businesses are on the path that leads to outsource resources. In using an outsource resource companies save money, time, and the hassles that may accompany the smaller practices of a business. This leaves the business owner free to keep an eye on the bigger problems - its overall management.

2006-12-15T06:23:00.000-08:00

Outsourcing's Benefits May Be More Than Monetary

An Accenture survey of American and European execs says the additional business controls generated by outsourcing are driving the trend to external providers.

By Keith Ferrell,
TechWeb News
InformationWeek

Outsourcing wedged its foot in the door as a cost-cutting measure, but it's increasingly viewed as a strategic planning and business outcomes tool, a consulting firm says. According to an Accenture survey of more than 800 executives in the United States and Europe, cost savings are still a key outsourcing benefit, but the additional business controls generated by outsourcing are driving the trend to external providers.

That increased control shows up almost immediately, Accenture said in releasing the survey Thursday, with 25% of respondents reporting first-day improvements in business processes.

"We found those levels of control increasing throughout the transition to outsourcing and stabilization periods," said John Rollins, Accenture's products operating group partner. "Over half had recorded perceptible improvements in the first six months of outsourcing."

The most frequently cited improvements included better ability to plan, higher levels of operational reliability, and more rapid implementation of new strategies and initiatives.

The trend toward deriving broader business benefits from outsourcing stems from both increased maturity and experience with the process and, the spread of outsourcing beyond IT departments, Rollins said.

While IT services continues to be the leading outsourced function, more companies are turning to outside sources for supply-chain operations, learning and training, human resources, accounting and financial services as well as customer relationship management. 43% of the executives surveyed have IT outsourcing arrangements in place.

Supply-chain management was seen as the most rapidly rising area for outsourcing, with 36% of the respondents undertaking it, followed by 31% initiating outside learning and training functions.

"The effect of moving outsourcing into multiple business process has brought a wider range of business experience and insight to bear," Rollins said.

The trend looks to be long-lasting, with more than 80% of the survey respondents expressing commitment to permanent outsourcing of at least one key business function. Only 14% viewed outsourcing as a temporary solution for key function operations.

The broader view of outsourcing benefits should be matched by broader, more flexible and more constantly monitored arrangements with outsourcers, the company said. Rather than traditional service-level agreements, Rollins recommended that negotiations and contracts with outsourcers include active governance measurements that extend throughout the life of the arrangement.

"Because the outsourcer is more involved with business outcomes," Rollins said, "it's important that both sides understand the alignment of outsourcer performance with business outcomes, and the approach needs to remain responsive as long as the outsourcing contract is in effect."

2006-04-08T22:59:00.000-07:00

The Benefits of Offshore Outsourcing

By Michael J. Miller

As more companies transfer programming and call- center jobs offshore, the topic of offshore outsourcing is raging throughout the information technology industry. I understand the frustration of workers whose jobs have moved and of customers who fail to get their technical-support questions answered. But the backlash may be overblown. One of the latest studies indicates that the trend may actually be creating more jobs. At least that's the conclusion of a recent study by Global Insight, sponsored by the Information Technology Association of America (ITAA).

Given our global economy, the globalization of the IT industry is inevitable. Most big IT companies do much of their business overseas and naturally want to have some of their employees in those markets. Lower wages in some countries are also a huge incentive to move operations, especially since high-speed communication removes many of the barriers to dealing with U.S.-based colleagues and customers.

I think that some of the criticism of offshore outsourcing is misplaced. According to the Global Insight study, from 1998 through 2003 offshore IT software and services spending increased from $2.5 billion to $10 billion; the figure could reach $31 billion by 2008. It also estimates that as of 2003 nearly 104,000 IT software and services jobs were displaced. The same study says that 372,000 IT jobs have been lost in this country since 2000, accounting for about 10 percent of the total number of such jobs in the U.S. The main reasons for the loss: the dot-com bust, the recession, and the growth in productivity.

Interestingly, Global Insight says that rather than reducing the number of jobs in the U.S., offshoring is lowering costs for everyone and actually creating jobs, thanks to a more efficient economy. It says that about 194,000 new jobs—both IT and non-IT—were created in 2003 thanks to offshore IT outsourcing, and by 2008 the number will reach over 589,000.

According to a study by Gartner, fewer than 5 percent of U.S. IT jobs have moved offshore. But analysts predict that by 2010 25 percent will be in developing countries. They urge companies to proceed carefully, as such moves could result in the loss of future talent, intellectual assets, and organizational performance.

Of course, the creation of new jobs isn't much consolation for people who have lost their jobs. Still, moving some jobs offshore seems inevitable. There is no good alternative.