Outsourcing involves contracting professional services from outside companies to meet business needs. Small businesses outsource for cost reduction, avoiding capital costs, and accessing resources. Modern outsourcing is a business strategy that allows focusing on core competencies and technology. Common outsourced services include call centers, which are often located in developing countries like India, the Philippines, and China. Outsourcing provides benefits like improved customer service and cost savings but also risks like security threats and loss of control over dependent vendors.

1. Prepared By:

2. What is Outsourcing
 OutsourcingOutsourcing
– Contracting with outside professional servicesContracting with outside professional services
to meet specific business needsto meet specific business needs..
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3. 2013 IO Marketing – Proprietary and Confidential
Reasons for small
business outsourcing
 Traditional role - reaction to problemTraditional role - reaction to problem
– Reduction and control of costsReduction and control of costs
– Avoid large capital investment costsAvoid large capital investment costs
– Insufficient resources availableInsufficient resources available
 Modern role – business strategyModern role – business strategy
– Allows company to focus on their coreAllows company to focus on their core
competenciescompetencies
– Keeping up with cutting-edge technologyKeeping up with cutting-edge technology
– Creating value for the organization and itsCreating value for the organization and its
customerscustomers
– Building partnershipsBuilding partnerships

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Where are they outsourcing to?
 Outsourcing can be farmed out to a varietyOutsourcing can be farmed out to a variety
of places, but you will find more often thanof places, but you will find more often than
not, to developing countries on the rise.not, to developing countries on the rise.
– Bangalore, India (Call centers)Bangalore, India (Call centers)
– The PhilippinesThe Philippines
– Saudi ArabiaSaudi Arabia
– ChinaChina
– Eastern EuropeEastern Europe
– CanadaCanada

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Outsourcing Processes
 Once a company has decided to outsourceOnce a company has decided to outsource
certain business functions, it shouldcertain business functions, it should
consider the following:consider the following:
– What services to outsource.What services to outsource.
– Which outsourcing firm provides theseWhich outsourcing firm provides these
services.services.
– Evaluate top candidates.Evaluate top candidates.
– Checklist.Checklist.

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Benefits
 Improved Service to the CustomerImproved Service to the Customer
– Outsourced companies can receive techOutsourced companies can receive tech
support 24/7, with a smaller budget.support 24/7, with a smaller budget.
– Outsourcing companies generally useOutsourcing companies generally use
standardized equipment and methods.standardized equipment and methods.
 Saves time and money for the customer.Saves time and money for the customer.
– When tasks are outsourced, it allows a companyWhen tasks are outsourced, it allows a company
to concentrate on its core competency.to concentrate on its core competency.

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Difficulties
 Threats to security and confidentialityThreats to security and confidentiality
– Sensitive information such as payroll, medicalSensitive information such as payroll, medical
records and banking/mortgage records.records and banking/mortgage records.
– Hidden costs to outsourcingHidden costs to outsourcing
 This includes the contract between companies, as wellThis includes the contract between companies, as well
as legal costs incurred.as legal costs incurred.
– Loss of possible strategic asset or skillLoss of possible strategic asset or skill
 Could it have been used to create a competitiveCould it have been used to create a competitive
advantage over your competitors?advantage over your competitors?
– Loss of control, and dependence on anLoss of control, and dependence on an
outsourcing vendoroutsourcing vendor

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Outsourcing occurs at a rate of betweenOutsourcing occurs at a rate of between
2 and 3%2 and 3%
Outsourcing Fact

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Is Outsourcing a Good Thing?
 Some Americans don't believe that offshore outsourcing isSome Americans don't believe that offshore outsourcing is
bad for this country. They seem to be convinced that we canbad for this country. They seem to be convinced that we can
be strengthened as a nation if we are forced to compete in thebe strengthened as a nation if we are forced to compete in the
global economy.global economy.
 Stimulates trade and creates a stronger economy in the U.S.Stimulates trade and creates a stronger economy in the U.S.
and more jobs in the long runand more jobs in the long run
 A way to get the job done for less money by:A way to get the job done for less money by:
– reducing and controlling company operating costsreducing and controlling company operating costs
– freeing up internal company resources for more important purposesfreeing up internal company resources for more important purposes
-improving the company focus and resultant productivity-improving the company focus and resultant productivity
 U.S. businesses need to stay competitiveU.S. businesses need to stay competitive

10. 2013 IO Marketing – Proprietary and Confidential
Is Outsourcing a Good Thing?
 Some Americans don't believe that offshore outsourcing isSome Americans don't believe that offshore outsourcing is
bad for this country. They seem to be convinced that we canbad for this country. They seem to be convinced that we can
be strengthened as a nation if we are forced to compete in thebe strengthened as a nation if we are forced to compete in the
global economy.global economy.
 Stimulates trade and creates a stronger economy in the U.S.Stimulates trade and creates a stronger economy in the U.S.
and more jobs in the long runand more jobs in the long run
 A way to get the job done for less money by:A way to get the job done for less money by:
– reducing and controlling company operating costsreducing and controlling company operating costs
– freeing up internal company resources for more important purposesfreeing up internal company resources for more important purposes
-improving the company focus and resultant productivity-improving the company focus and resultant productivity
 U.S. businesses need to stay competitiveU.S. businesses need to stay competitive