Outsourcing has been one of the most popular business terms in the past few years – and for a good reason. Most companies that have multi-mullion dollar investments have considered outsourcing some of their basic services to other countries so that they can save millions of dollars a year on some of their functions.
Outsourcing is basically an act of hiring someone else to do some of the tasks in your company. But instead of hiring someone locally, you outsource which means you have to get someone from other countries wherein labor is a lot cheaper there. By doing this, you are saving a considerable amount of funds a year. This type of business transaction is very popular in highly developed countries.
Instead of hiring someone locally wherein they would have to pay more than $10.00 an hour plus benefits for their services, a company could hire someone from a developing country and pay the employee less. Even though a company spends millions of dollars in infrastructure, their ROI could be in only one year. Because of the differences in currency and cost of living, employees in other countries will also benefit from the job opportunity with great pay.
Realizing Local Problem
Unfortunately, outsourcing could have adverse effects locally. Since jobs are being outsourced, local employment can significantly go down. A classic example of outsourcing to local employment is the outsourcing of call centers or customer service lines. The company could outsource their customer service to other countries instead of hiring locally. They might even close down their customer service department since they have to save significant funds for other purposes.
Aside from challenges to the local employment, companies who consider outsourcing are also risking some of their resources outside the country. Although they can save a lot of resources by outsourcing, they are also placing their resources in dangerous situation. Security could be a problem in some areas. This is not only placing the resources in danger but also some of your personnel in danger. Although you are outsourcing some of the functions, you still need to have local representation in other countries.
Managing while Outsourcing
There are two challenges that you have to face when your company opts to outsource – dealing with new employees and using the latest technological advantage for managing.
When you outsource, you are changing some of the employees to work for your company. Instead of local employment, you are now working with an employee in another country. Although you can still practice some of your leadership skills, you might need to make some changes on your leadership practices. More often than not, you should make some changes since the culture in another country is different. Conflicts could arise if you do not make some changes in your leadership as soon as possible.
Another challenge for business leaders during outsourcing is the aggressive use of technology. Outsourcing became possible because of technological advances on communication. You do not have to spend thousands of dollars in phone calls a month if you wanted to call internationally. Through VOIP, you should be able to talk to someone on the other side of the world for hours without having to spend anything. You should know how to harness technology if you wanted to manage even though you are thousands of miles apart.
Local Travel Required
One of the well known perks when the company undergoes changes for outsourcing is traveling to other countries. That means you will be able to work in other countries for quite sometime. But managing in other countries could be challenging if you do not know the local custom. It is always a well known fact in managing to consider individual members. That means you have to learn more about your new employees. This needs more work since you are in a different country with different culture and totally different values.
Outsourcing is one of the few business practices a company could consider to ensure profits without spending. Managers have to research a lot before they could become successful managers during outsourcing. You should be able to get in touch with your employees fast with the help of technology. However, traveling to the site is also essential to ensure proper operations.