CEBPs incorporate tools that expedite electronic communications such as phone calls, texts, reminders and emails. CEBPs achieve this greater efficiency by eliminating what is referred to as the “human latency” factor; the time that elapses while employees transition from one form of electronic communication to another while carrying out tasks related to various business processes.

Using CEBPs can result in greater productivity within a company as well as more effective collaboration between organizations. As noted in a report by Saurabh Sharma, senior analyst at research firm Ovum, “Mobility will drive demand for communications-enabled business process development to enable person-to-person interactions as well as application/business process-to-person and person-to-application/business process interactions.” The report also states, “The rapid proliferation of mobility solutions is creating complex integration issues that need new solutions.”

Whether such solutions can create greater efficiencies for your business is a question that deserves close consideration. If you think a CEBP solution would enhance your business model, carefully examine your current processes to see if there is room for improvement in terms of tighter communications within these any of these areas.

Phil Fersht of Horses for Sources noted that this is despite increased negative media attention that has been directed recently at the practice of outsourcing. The survey, which focused mainly on trends in business process outsourcing, as opposed to manufacturing outsourcing, polled nearly 400 buyer-side businesses.

As you can see in the chart below, most of these businesses are planning to increase their outsourcing in several areas. Businesses intending to decrease their use of outsourcing fall in the single digits percentage wise in any given category. In contrast, nearly four out of ten study participants plan to increase their outsourcing of application development and management, and close to one third are looking to increase outsourcing of their financing and accounting processes.

The study also analyzed the factors driving the decision to outsource and found, not surprisingly, cost savings, flexibility and standardization to be key reasons.

Clearly, outsourcing is not only here to stay, but will also be a vital strategy for many companies.

If you’ve decided to start outsourcing in order to save money and increase efficiency in your business, the next decision is where to begin.

Choosing the right processes to outsource is a very important part of a successful outsourcing strategy.

Start by doing a thorough analysis to assess your company’s core strengths. These are the activities that add value for your customers and/or set your company apart from the competition.

Harvard Professor Michael Porter introduced the model of the value chain in his 1985 book Competitive Advantage, in which he identified a typical company’s primary and support activities, as you can see in the diagram.

You can easily identify your company’s key strengths by thinking about which processes are directly related to creating and delivering your main products or services. Consider also, processes in which your company excels. These are the areas you will want to keep in house.

You might want to conduct a brainstorming session to help create a list of core competencies vs.  activities that could be better performed by an outside company.

You can break this down further by analyzing tasks within your core areas to identify those activities that do not add value or do not create a cost advantage.

Other factors to consider are whether handling a certain process in house would require a significant investment in equipment; also whether the activity carries risks that would be better handled by an outsourced provider.

Click here for a free business analysis and instant recommendations on which services will help you grow your business.

Working with service providers who are focused on delivering results for your company rather than simply performing set tasks can maximize the benefits you gain from these relationships.

The foundation for this begins with your service contract.

According to the book Vested Outsourcing: Five Rules That Will Transform Outsourcing, by Kate Vitasek, there are two basic pricing guidelines for vested outsourcing agreements:

1. The pricing model must balance risk and reward for both organizations. Your agreement should be structured in a way that ensures the service provider assumes risk only for decisions which are truly under their control.
2. The agreement should require your outsourced partners to deliver solutions, not to simply perform activities. A well constructed Vested Outsourcing agreement should provide incentive for the service provider to solve problems for your company.

You may choose to use a cost reimbursement contract, in which your company covers the costs incurred in providing the service, plus an agreed-upon profit, or a fixed-price contract, in which the outsourced provider’s price is decided upon in advance and is not subject to adjustments.

You can read about the pros and cons of each of these contract models, and learn additional details about Vested Outsourcing agreements in this article.

So you’ve done your research, gathered all the facts, and have concluded that outsourcing select functions will ultimately benefit your business and help it to grow.

At this point, perhaps influenced by a general belief that outsourcing has a negative effect on the economy, you may find yourself with lingering doubts about whether you’re taking the right step. While you don’t want to anguish unnecessarily over the outsourcing dilemma, as a responsible member of the business community, you naturally want to consider how your decision will impact others.

A recent article in CNN Money addressed this very issue. Quoting Jay Bryson, a global economist at Wells Fargo, the article brought out that while outsourcing might initially have a somewhat negative impact locally, it ultimately does more good than harm. “In the long run it makes things more efficient,” said Bryson.

Offshoring certain functions where it makes most sense allows companies to hire local talent to fill jobs in other departments such as sales and marketing. Often, these jobs actually pay more than the ones outsourced. A paper by the Centre for Economic Performance noted that outsourcing has ‘an indirect productivity effect,’ and that “the cost savings associated with employing immigrant and offshore labor increases the efficiency of the production process, thus raising the demand for native workers.”

The CNN article mentioned above also observed that outsourcing benefits the U.S. economy in yet another way; “Workers in foreign countries who get the manufacturing jobs… can then enter the developing middle class, which in turn increases demand for goods produced in the United States.”

It simply makes sense; strategies that create growth for your business will ultimately benefit the local as well as the global economy.

China may become the new outsourcing leader, according to recent reports.

Mike Corbett, chairman of the International Association of Outsourcing Professionals, said that China is catching up rapidly because it combines the development of offshore business with the support of a rapidly growing domestic market.

China’s outsourcing industry could double in volume by 2016, with innovation rather than low costs being the leading driving force.  “China’s outsourcing market will be among the world’s top three in the next five years along with the United States and Europe, and customers from the technology, automobile, logistics and healthcare sectors will be the key drivers of development,” reports Wei Tian of China Daily.

Costs of outsourcing in China currently fall between 20 to 30 percent lower than in India, but the gap is expected to close eventually.

Corbett believes this will actually be a good thing for China’s outsourcing industry, “because the real competition will eventually come down to business models, talent and technologies, which would trigger an ‘explosion’ of innovation in the economy.”

This could also effectively silence complaints that companies using off-shoring are merely seeking cheap labor at the expense of domestic jobs.

by Arlette Measures

The increased use of offshore service providers by U.S. businesses is largely due to the potential cost savings that can be realized by leveraging the highly qualified, but lower cost labor force available in many foreign countries.

As with any sound business decision, however, companies who use offshore providers should not take advantage of the benefits before weighing potential risks. “Country risk” is a term that refers to social, economic and political conditions and events in a foreign country that can adversely affect the ability of an offshore provider to meet the level of service you require.

Before embarking on an off-shoring relationship, take the time to conduct a risk assessment and exercise due diligence in the vendor selection process. Consider factors such as the vendor’s financial condition, insurance coverage, business recovery plans and testing, data security procedures, and compliance with relevant laws and regulations.

To effectively manage country risk, you will need to gather and evaluate information concerning a foreign government’s policies, including those addressing information access, as well as local social, economic, political, and legal conditions.

Make sure your agreement includes provisions to protect your business. Also, establish monitoring and oversight procedures to ensure the success of the relationship.

by Arlette Measures

According to Everest Research Institute, “Outsourcing is moving from a point solution for a few situations to a common business practice.”

Increasingly, businesses are using the services of several outsourced providers to perform a range of vital functions.

In one study by Vantage Partners, at least 15 percent of the total outsourcing contract value was determined to be at risk if outsourcing partnerships are not managed well. Clearly, a supportive partnership between your business and its service providers requires effective relationship management. Conversely, spending inordinate time and resources  monitoring multiple outsourced relationships will significantly reduce the benefits you can expect from outsourcing.

In the book, Multisourcing, analysts from research firm Gartner tell us that successful outsourcing is built on “a network of relationships, not transactions,” and that outsourcing governance is the most important factor in determining the success of an outsourcing engagement.

Many companies, however, have yet to implement a formal sourcing strategy that includes suitable outsourcing governance mechanisms. Working with an outsourced relationship management service can be the ideal solution to this problem.

Companies with limited needs and few providers may choose to work with an individual, whether in-house or outsourced, but businesses that need to manage several outsourced providers may want to look at companies that provide ORM services. A future article will provide tips for choosing an outsourced ORM service provider.

If you’ve been considering outsourcing some of your key business functions, you might want to check out the insights from an extensive survey by Pricewaterhouse Coopers.

The survey, which included small, medium and large companies, found that 87 percent said their outsourcing experience delivered the results they had hoped for.

The companies had outsourced a wide range of business processes, from IT and HR to accounting, procurement and call center services.

The latter three markets have recently experienced substantial growth and are projected to continue expanding as more companies realize the advantages of outsourcing these services.

Outlined below are a few important factors to consider if you think outsourcing may benefit your company:

Advantages of Using Internal Resources

• To retain skilled staff who are attuned to company needs.
• To benefit from employees’ exclusive insight into a project.
• To maintain control over resource and personnel assets.

Benefits of Using External Resources

• To leverage technology, skills, and expertise not available in-house.
• To enhance business processes and facilitate organizational transformation.
• To provide needed short term services without incurring additional ongoing costs.
• To focus internal resources on core strategic plans and projects.

Cost savings was the main reason most businesses gave for outsourcing, when questioned in a recent survey.

Other factors, such as gaining access to talent, the higher level of expertise that comes with specialized services, and increased business model flexibility, were also cited.

Many business owners  believe outsourcing to be a key factor in improved customer relations, the development of new products or services, market segment expansion, and geographic expansion.

There are some undeniable drawbacks to outsourcing; many companies still hold values that favor the use of in-house employees. Others said they lack skilled management for outsourcing, and some felt the need to conduct an in-house cleaning before outsourcing certain functions.

Despite these challenges,  91 percent of companies surveyed said they would use outsourced services again.

Most companies that outsource prefer to contract with providers who specialize, since most of these have developed a high level of competency in their area of expertise. In fact, outsourcing trends show that providers are continuing to define their services down to precise functions that can be carried out in optimized locations around the globe.

The overall conclusion is that outsourcing is a firmly established business strategy that continues to evolve and mature, while delivering value beyond the initial cost savings.