Outsourcing in Times of Uncertainty

  • April 8, 2011
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Is said to be one of the best tools dealing with change in uncertain periods of time. Outsourcing enables companies to be more nimble when it seems the business scenario shifts. Eventually, economic hard, difficult times oftentimes stresses firms with “stranded costs

Outsourcing also lowers costs, a key consideration throughout economic declines when businesses are getting anxious to systematize their operations to save money. Outsourcing makes fixed costs into variable costs. The concern of the head count or the facilities is relocated to the vendor’s balance sheet. Then the consumer can now move its cost base into investments that are circumscribed, determinable and reliable.

This shift improves the buyer’s corporate balance sheet. When in bad times, the switch enables the company’s overall financial ranks to look much better. In good times, however, the step to variable costs puts the company’s financial picture in better condition, making the company more appealing to its capital investors who must supply them the needed capital for growth.

Outsourcing also offers high-priced expertise those companies that are not able to afford when sales are quite held back. Outsourcing picks up the supervision of such functions that are non-core and hands it out to the pool of experts.

Process expertise gets crucial when the time of business constriction or expansion comes. Throughout the unproductive stage of the business cycle, firms are driven to be strapped for cash and therefore must invest in their own core operations to maintain its competitiveness. During a development, establishments will not be able to win the so-called talent war. The insufficiency of seasoned workers bannered the headlines some years ago.

Outsourcing enables you to access other people’s money to go on investing in such non-core functions to accomplish the desired extent of economies. The outsourcing salesman will then go on to spend in that kind of process even when your internal cash to do so gets limited. Advanced use of modernized technology enables outsourcing consumers to gain an advantage when it comes to unit price efficiencies as a result of the vendor having consolidated other customers’ capacity with yours.

At last, outsourcing hands out some risk from the consumer to the vendor. On the personnel front, consumers need not have to invest valuable capital hiring and training employees only to have to let them fired when it turns bad.

When uncertainty comes, companies need to make their risk, need to cut their costs, resystemize their balance sheets and should still have flexibility. Outsourcing makes all those things possible.

FLYING HIGH
Offshore advisory firm claims Philippines an emerging outsource center Now you can definitely consider the Philippines a candidate to the list of offshore outsourcing destinations in the world. Neo IT, a known offshore advisory firm, reports that the Philippines now ranks second to India as a global sourcing provider in BPO (business process outsourcing) and the call center industry.

Neo IT on Monday released a white paper entitled, “Outsourcing to the Philippines: Metro Manila and Beyond,” a paper which eventually explains the degree of maturity of Manila and other developing Filipino cities becoming known as BPO and information technology outsourcing centers.

Labor costs here in the Philippines levels about 10 to 15 percent above the rates in India, notes Eugene Kublanov, Vice President of corporate development at Neo IT.

Despite this, the total cost of having business, in some cases, may have to be lower in the Philippines, he added. For example, the employee attrition rate in the Philippines is relatively lower than India’s, stated Kublanov..

“Constantly having to recruit and hire and train that whole process gets very expensive,” he said.

IBM is among the top ranked outsourcing vendors with operations in the Philippines. The company has made the metropolis of Manila a center for their business process outsourcing operations.
Accenture and Electronic Data Systems Corp. also have occupancies in the Philippines, Kublanov said.

In addition to this, most India-based outsource firms particularly BPO and call center outsourcers now have established shops here in the Philippines as a modification play, Kublanov said. Those vendors are desiring to get hold of the Philippine resources amidst a very much toughening labor market in India. But though human resources are accessible, physical infrastructure may not be.

While the Manila metropolitan area is fairly mature in that field, other small developing cities are eventually in the race and are catching up as they nearly build state-of-the-art facilities with the suitable IT and telecommunications resources, Kublanov said.

http://www.thechannelinsider.com/article2/0,1895,1880707,00.asp

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