Outsourcing is the process of obtaining goods and services from another company, subject to a proper contract or service agreement. It is a very popular process for the delivery of products and services in various industries, including the IT and software industries. The concept of outsourcing has been around for several decades: It originated during the 70s in the manufacturing sector when many industrial enterprises tried to increase their efficiency by hiring other companies to complete auxiliary tasks. For many years, outsourcing was mainly about reducing the cost of operations. Nevertheless, with the advent of globalization, it is also about gaining access to global talent and expertise that is hardly accessible locally.
Nowadays, the scope of outsourcing has expanded significantly: It is possible to outsource a wider range of services than in the past, including sales, IT management, software development, manufacturing, shipping, logistics and administrative support services. Moreover, a longer list of outsourcing options is available, including companies specializing in different processes and services, as well as companies operating in different countries all around the globe. India remains one of the most popular countries where services are outsourced, yet there are also competent providers in many other countries including for example Eastern European countries, China, Brazil, and Taiwan. With so many outsourcing options at hand, companies wishing to outsource services can have hard times selecting the best provider.
The selection of the best outsourcing enterprise is based on a combination of the following criteria:
In most cases, more than one of the above factors are considered in the outsourcing selection process. In this direction, companies employ scoring techniques towards weighting the different factors in the final decision. Specifically, companies prioritize the importance of the various criteria by assigning relative weights to them. The latter can be used to score, evaluate, and shortlist candidate outsourcing providers. Companies can then opt to interview and evaluate more thoroughly the top three shortlisted vendors prior to taking their final decision.
Along with this scoring process, the following best practices must be considered:
Overall, the selection of the right outsourcing partner can be a challenging and time-consuming task. However, it is a key prerequisite for the success of the outsourcing process. Specifically, the selection of a proper outsourcing enterprise maximizes the cost-benefit ratio of the outsourcing process, while minimizing any relevant risks. Earlier paragraphs provided some guidelines for evaluating alternative outsourcing providers. These are to be used as a basis for establishing a proven and responsible evaluation process that considers the peculiar needs of an enterprise. Enterprises can always add more selection criteria while factoring the already presented ones in different ways.
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