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Profit through outsourcing - An ebook on best practices by Karmick Solutions


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A presentation on how outsourcing can help a business owner to increase ROI.

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  • Ask Datatech is an experienced, professional administrative back office services Provider Company located in Ahmadabad, India. We are the preeminent supplier of outsourcing and offshore back office services including offline and online Data Entry, Data Capture, Data Processing, Data Conversion, Image Scanning, OCR and Indexing, Forms Processing, Web and Internet Research, Accounting and Bookkeeping Services.
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Profit through outsourcing - An ebook on best practices by Karmick Solutions

  1. 1. CHAPTER 1 INTRODUCTION What is Outsourcing? Why do we outsource? CHAPTER 2 ACTIVITIES, WHICH CAN BE OUTSOURCED CHAPTER 3 SELECTING THE PROPER OUTSOURCING PARTNER CHAPTER 4 MANAGING OUTSOURCING Before you begin with outsourcing… Communication Requirement Managing Diverse projects Developing Relationships
  3. 3. INTRODUCTION “If you deprive yourself of outsourcing and your competitors do not, you’re putting yourself out of business.” Lee Kuan Yew What is Outsourcing? Outsourcing can be defined as a process of subcontracting to a third party provider. In simple words outsourcing means hiring a person or a company to perform a particular action. It is generally believed that actions outsourced are non-core to the organization. For instance an insurance firm might outsource their landscaping and janitorial functions to a third party because these aspects are not strategic to the primary business. Outsourcing has been in the industry for quite sometime. In the recent past, it has been noted that companies across the world have begun to employ outsourcing model even for narrow functions like billing, payroll and data entry. The outsourcing agencies usually are very well equipped and can offer specialized facilities, trained personnel and cost effective functioning. Outsourcing has been in the industry for quite sometime. In the recent past, it has been noted that companies across the world have begun to employ outsourcing model even for narrow functions like billing, payroll and data entry. The outsourcing agencies usually are very well equipped and can offer specialized facilities, trained personnel and cost effective functioning. The late 20th century saw the emergence of offshore outsourcing to achieve strategic and competitive advantage. The 21st century saw Internet making the world smaller and reduced the hassles of cross border business. Now even the medium and small sized business enterprises can avail outsourcing services. On a different note,
  4. 4. Outsourcing has been prevalent since time immemorial. If we take a close look at our everyday life, we will realize some of the most important work related to our domestic life is regularly outsourced by us. Activities related to plumbing, carpentry, housekeeping and a lot more are regularly being outsourced by us. Thus outsourcing is one of the primary business processes that lead to specialization by proper division of labor. Why do we outsource? Outsourcing is considered to be one of the most crucial business decisions. Thus it is essential to have a proper evaluation of your needs before going for outsourcing. The reasons for which you might intend to outsource can be any of these: You have more work and less resources. You lack experience or skills for performing a particular task and you are not very comfortable with the idea of your client talking to a competitor. You lack a framework of optimized process for carrying out a specific assignment. An outsourcing agency can do the same work more effectively and efficiently. You intend to maximize revenue by cost cutting. You wish to make your business dynamic by changing fixed expenses to variable expense. You are working towards development of the core competencies of your business and building future business strategies as a result of which you want all the auxiliary tasks to be outsourced. You are planning diversification of your business but meanwhile want your existing stream of business and profit intact.
  5. 5. Quote: “The No. 1 advantage of outsourcing effectively is the ability to free your time to concentrate on more important aspects of business ownership.” ACTIVITIES, WHICH CAN BE OUTSOURCED Every business process can be outsourced. Select an outsourcing company and you will be amazed to find out that the work you want is getting done within a shorter time and at an amazingly affordable rate. In this section of the book we have focused primarily on the activities that are usually outsourced. Tasks Related to Corporate Identity Brochure Design Logo Design (Corel Draw/ Adobe Illustrator) Graphic Design Tasks Related to Web Designing: Interface Design (Adobe Photoshop/Adobe Dream weaver) CSS2, XHTML, HTML Markup coding Website maintenance Website Validation Testing
  6. 6. Tasks Related to Software Development/Web Development/E Commerce Coding (ASP.NET, VB.NET, C#, PHP etc.) Web Application testing Load Testing, Security Testing, Interface Design Software Requisite Specification E learning, Documentation, Help Tasks Related to Internet Marketing Content Development Keyword Research Website Analysis Link Building through article and directory submission, Press release distribution and Social MediaOptimization Brand Management PPC Management Media Management Blogging Press Release Writing
  7. 7. Quote: “The other part of outsourcing is this: it simply says where the work can be done outside better than it can be done inside, we should do it.” Alphonso Jackson SELECTING THE PROPER OUTSOURCING PARTNER Outsourcing will fetch lucrative results only if you select a proper partner. Entrepreneurs willing to outsource can either work with outsourcing agencies or individual freelancers. The choice of an outsourcing partner depends on the magnitude and the quality of the work you require. Budget also plays a very vital role in the selection of an outsourcing partner. Outsourcing partners can be either: Individual Freelancers Outsourcing companies Those who are willing to get one off tasks choose individual freelancers or small assignments get done within a short time span without making huge investment in relationship building. However, the biggest drawback of freelancers is that they cannot handle a huge amount of work. Moreover, quality might be an issue at a later stage. However, when you are availing services of an outsourcing company, be rest assured of fulfilling deadlines and excellent quality. Keep the following points in mind when you are selecting an individual freelancer for outsourcing a specific job:
  8. 8. Develop a brief about the project. Elaborately mention your selection criteria which includes experience level, budget and quality of work desired). Detail documentation of task and deliverable. If you want to follow some specific process, document it clearly in the brief. Log on to any of the free marketplaces like, or to proclaim your project. Begin interaction with the freelancers who have bidded for your project. Choosing an outsourcing agency? Follow these simple steps to get an outsourcing partner of your choice: An outsourcing agency is an excellent option but requires a more elaborate selection procedure. Collect a list of the good outsourcing agencies from Yahoo, Google and other top notch search engines, exhibitor’s list and trade bodies like Consulates, Chambers and Associations. Contact or write to the selected agencies Ask for the following details when you write to the potential outsourcing partners: 1. For how long are they involved in outsourcing business 2. A list of their core competencies 3. Successful Projects they have worked for 4. Pricing 5. Delivery model 6. Service Agreements
  9. 9. 7. Quality Check Procedure 8. Process of Hiring and rate of retention 9. Systems and Infrastructure 10. Mode of Communication 11. Fiscal Report of the last 3 years 12. Credit Reports 13. Affiliations / Certifications 14. Recognition or Goodwill 15. References It is essential to ask for a validation of financial statements and references. Once you receive the clarifications and validations from the outsourcing agencies then you need to shortlist 2-3 companies for allocating the work. This is a stage where you can ask for quotes from the selected bidders. Before sending details of any project to any of these companies, make sure you have a non- disclosure agreement signed by the agencies. After getting the quotes, you can finally select an outsourcing agency for your work. Follow these simple steps and see how outsourcing becomes easier and effective: Provide proper and detailed description of the project to the outsourcing partner. Never fail to state the business motive behind the project A Software Requirement Specification is very much needed. Get it done by your outsourcing agency for a fee. Draw up an agreement with mutual concurrence on payment terms, timelines, deliverables and acceptability tests Please take a note of the jurisdiction of the agreement. For instance if you are outsourcing any of the Commonwealth nations, then the law specifically designed for the member countries of Commonwealth is applicable
  10. 10. It is very essential to have some one technically sound to take care of the outsourcing operations. A person with techno- management skills is preferred for this position because he needs to have a good understanding of the operations involved in outsourcing. Excellent skills on documentation, feedback and sensibility for various cultures are an added advantage for a person holding this position. It is suggested that if possible the customer must visit the office of the service provider at least once to validate the details provided. Spending a few hours with the employees of the outsourcing agency will give you an idea about their capabilities.
  11. 11. “Outsourcing is increasingly recognized by businesses, universities and economists worldwide as a critical new management science. Not only are the latest developments in outsourcing helping companies to reduce costs, but they are spurring innovation and wealth creation at a time when we all really need it.” Michael Corbett MANAGING OUTSOURCING Before you begin with outsourcing keep the following things in mind: When you are starting off with an outsourcing project it is necessary to have realistic deadlines. No need to rush with an assignment with a steep deadline because that might lead to failure. It is necessary to set a target before proceeding with outsourcing. Make your outsourcing partner well aware of your expectations. Time, quality and cost are the 3 factors to be considered. Take a moderate stand on all the 3 factors taken into consideration for outsourcing. Avoid extremes and accept the most acceptable remedial, escalation and alternative methods Divide the assignment into phases for better execution and excellent results. Division makes an assignment manageable and mitigates the risks of outsourcing. Its better to negotiate about the ownership of the work beforehand.
  12. 12. Communication Requirements Face to Face communication Though it is believed that its preferable to go for a provider with a local presence but now technology has created new facilities by using which you can even hold face to face meting with your outsourcing partner sitting thousand miles away. This helps in diminishing cultural gaps and also exhibits the concern and seriousness your outsourcing partner have for your market. An onsite team is very much required for large-scale projects. A good offshore team is enough to provide you with a detailed analysis, feedback, and proper deployment. Coping with Cultural differences Once you begin working with your outsourcing agency, you have to understand that a cross-cultural relationship is also in the process of development. So, its better to know something about the culture of the people you are working with. This makes the process easier and you get the best work from your outsourcing agency. Stating the obvious Remember there are certain things, which are obvious for your in- house team. But keep on repeating the same things to the offshore members as much as possible. Over communication is necessary in outsourcing. Adding new expressions to your language There are certain expressions, which are common and natural for you but the person on the other side, might not be aware of it. So it’s necessary to enrich your vocabulary after knowing about the geographical location your outsourcing agency. Take a look at the following expressions if you are outsourcing in any of the English speaking nations: Use “ yeah” or “yep” for Yes Native Place for home town “On leave” for “on vacation”
  13. 13. Managing diverse projects Make sure that the requirements are properly understood Inadequate information collection and improper analysis is the primary reason for the failure of a project. Thus, it is essential to spend sometime for gathering information. Apart from the practical requirement, attention must be paid to technology framework, application security, presumed server load, and the user persona. This has to be applied prior to the beginning of the project; otherwise the assignment can go in a wrong direction. All workrequests must be send in writing Communication over the phone or through instant messaging services or in face-to-face meetings can be done. But it is suggested that all work requests must be send in writing via emails. This facilitate traceable documentation and will be of great help while evaluating the project to identify loopholes and communication gaps, implement change management and augment the overall performance of the process of outsourcing. The written documents prove very handy in case of any dispute. An initial call and regularcheck-ins are necessary. An initial meeting must be scheduled at the beginning of the project to communicate expectations, milestones and responsibilities. Weekly review meetings are the next step for making clarifications, checking progress and take corrective measures, which include permission, escalation, appeal for speeding up etc. Someone must be delegated for taking a note of the minutes of the meetings, which will then be circulated among the team members so that everyone is aware of the action points.
  14. 14. Thorough review of the workbefore delivering it to the client The fact is that the outsourcing agency is responsible for the deliverable. Thus it is very essential to check the work thoroughly before sending it across to the client. In the initial stages of outsourcing the work process might not be very smooth. With the passage of time, the work will get streamlined and situations will improve. It is very essential to have a support desk to report the feedback regularly. A support desk tool will help you understand the rate of improvement in terms of the quantity of tickets. On-time Escalation Escalating an issue on time is very important. If something is not going as per requirement and expectation, it must be brought to the notice of the project manager or the account manager. Good rapport with the top management of the company is preferred. If an issue is escalated timely, responsible managers can work out something and take corrective measures to resolve the issue in a mutually agreeable manner. Developing Relationships By now the readers must have realized the importance of time and efforts to establish a money-spinning outsourcing relationship. Experts believe that its good to have handful reliable partners compared to plenty of mediocre sub contractors. Develop good relationship with the partnering agencies and consider them as a part of your organization. Both ways feedbackat the completion of every project It takes time to develop an outsourcing relationship. Outsourcing relationship improves with the passage of time. As the cultural limitations, requirements, processes and capabilities are understood by both the partnering agencies, a good rapport is built. A critical dialogue at the end of every assignment is necessary. Inputs on the details about the working conditions, failures and successes involved in the project will help in improving the mutual relationship. This kind of inputs can actually help you enhance your in-house activities as well.
  15. 15. RegularCommunication of plans   Always keep your outsourcing partner well informed about the plan of action. Make them aware of the: Any downsizing or expansion plan.  Any new technology needed to be adopted.   Any new framework of quality process being considered. Any presumed decrease or increase in the volume of work.  This will help your partner to offer you with better service. Investment in partnership Investment can be done in a variety of ways in your outsourcing partnership. Some of the ways are mentioned beneath: Fly down to the offshore team for review meetings. Impart training to the team to enhance their domain knowledge and effectiveness. Try to get into a mutually agreed joint venture. Stick to flexibility. RiskManagement Outsourcing brings with it an extensive variety of risks as well. You need to be aware of certain things before outsourcing
  16. 16. Pay on complete delivery You must have a well-defined project plan with preset milestones. Try to stick to the following pointers while managing payments while outsourcing: Pay only 30% of the total project cost upfront. Further payments are to be made with the achievement of preset milestones. Maintain records of all the invoices and accounts. Priorplans have to be made forpost delivery support   It is ideal to make a post delivery support deal prior to the beginning of the project. Remember it is easier to bargain for a support contract before the deal is finalized. Go for it even if you have to increase the total price quote. Save yourintellectual property In today’s era intellectual property is a big asset. Some things to be checked include: Data Protection methodology and policy that includes security of network and server. The employment agreement between the outsourcing partner and its employees. Physical security of facilities like access control system. Minimum data or proprietary technology should be shared for completion of the project. Mention categorically, which information they can put to use and in what way.
  17. 17. Riskmanagement plan It is always essential to have a foolproof risk alleviation plan. Make prior plans for situations like: Change in management.  Unpredicted attrition.  When Service delivery is not up to the mark.  When Partner is going out of business.     Sometimes you would like to continue with the present provider. But it’s always better to be ready with an alternative action  plan. 
  18. 18. CASE STUDIES   Case Study 1 One Tech Alliance Date of Development: January 2009 Title: Social Networking site for IT Companies What we were asked to do: Design and develop a social networking website to facilitate a networking resource for small businesses and to let them establish strategic relationships with other members and to pump up their own revenue while expanding their business prospects. Members located far away or having limited expertise should be able to offer their client base services through profitable relationships accomplished at Showcase of the capabilities of the company in orderto append value to IT markets. Creation of a respectable resource for OneTech members as well as the internal faculty through the website.
  19. 19. OurUnderstanding: Target users would consist of IT related service providers as well as service recipients. The service providers would be able to broaden their clientele whereas the clients would rest assured to receive quality services from the providers. Irrespective of geographical constraints, the site should be able to build up a potential IT community.   The Outcome This website is now serving IT companies and individuals across the globe smoothly. Case Study 2 Discount Mugs Date of Development: January 2007 Title: Discount Mugs E-Commerce Project What we were asked to do: Design, develop and compose an innovative, distinct and fully functional online shopping cart for the retail base of customized items like receptacles, glasses, mugs, commemorative plates, sports bottles and pens. Maintain 100% security with transactions and user related information to prevent any kind of potential fraud or leak of any important information. Publicity of some of their categories and products in the system. Guarantee of complete control over information regarding products, customer details, order related information and other display- oriented information through a high-tech control panel that permits customized reporting & other vital logs.
  20. 20. OurUnderstanding: By and large, the site targets all people, young and old; businessperson or the common man, whoever wanted to have glassware, ceramic ware, drink ware like mugs, glasses, plates, pens or bottles with their company’s logo or tag line or their loved ones’ picture printed on them to use them as business giveaways, mementos or gifts. So we needed to create user-friendly site with a design studio in order to facilitate users to enter their search item.   The Outcome The following year the sales climbed graphs noticeably. BIBLIOGRAPHY Books: 1. The Black Book of Outsourcing: How to Manage the Changes, Challenges, and Opportunities by Douglas Brown. 2. Strategic Outsourcing: A Structured Approach to Outsourcing Decisions and Initiatives by Maurice F. Greaver. 3. OUTSOURCE: Competing in the Global Productivity Race by Edward Yourdon. 4. Offshore Outsourcing: Business Models, ROI and Best Practices by Marcia Robinson and Ravi Kalakota (2004). 5. The Outsourcing Handbook by Mark J Powes, Kevin deSouza, Carlo Bonifazi Providers
  21. 21. Marketplace 
  22. 22. ABOUT KARMICK SOLUTIONS Karmick Solutions is an offshore outsourcing company with an experience of more than 10 years in website design, website development and website marketing. We have been able to provide the best of services to our clients across the globe owing to our years of experience in web development and our vertical market expertise. We have to our advantage a winning combination of high quality at affordable hourly rates. We have consistently maintained a high standard of delivery for our cost-effective solutions. We ensure the quality of development by having in place a standard format of documentation for every project that we undertake. The various stages of development, integration and testing are laid out before the project starts. This in turn ensures timely delivery of the project and 100% client satisfaction. We offer services towards web designs, web application development, E-commerce Solutions, social networking websites, CMS solutions, dedicated hiring, Customized ERP, Multimedia and Website marketing. We help you and your business take a step further with the exposure you need to the web of globalization. We not only design and develop the web application, we also provide a consistent technical support for your business to run smoothly and grow gradually. We are proud of being a team of young, energetic and friendly professionals striving to enhance our performance with every passing day. We share our experience and expertise on technology and business process with each other and jointly work towards providing an effective, customized business solution to our clients. We have successfully achieved goals and targets set by us and we are on our way to becoming one of the leading web development companies recognized globally.
  23. 23. Karmick’s Methodology   Ourmethodology follows: Step 1: Arriving at a project's scope to ensure that Karmick and its clients are sure of what the deliverable product comprises. This includes: Deriving Project Scope, Arriving at success criterion, Risk Assessment, Providing Technology Solution, Identifying resources and skill set required, etc. Step 2: Arriving at a high-level schedule plan with milestones in place, to give a clear picture to the client before hand of 'when‘ and 'what' will be delivered. It comprises: Project Plan, Architecture and Design, Development, Regular Product Builds, Regular automated product testing, Test results and analysis and bug fixes, etc.
  24. 24. Step 3: Accepting any changes to the requirements during the project's life cycle, through change requests and providing estimation in the delivery of the requested modifications. The procedure goes as follows: Setting up user acceptance test environment, Client carries out user acceptance tests, setting up the deployment infrastructure with the required software, etc. Step 4: This is the maintenance step. The main item here includes accepting bugs and minor changes and providing the delivery date. During this phase only existing issues will be fixed. Any new functionality to be added or a change is required in functionality that will result in change of work flow will be considered in change request.
  25. 25. Our Services Website Development   Development of custom web applications using LAMP or Microsoft Technologies.       Organic SEO, PPC, Link building and Content Writing services.   Website Design Designing of website, CSS2 coding, Flash design and W3C compliance. Search Engine Optimization Engagement Models
  26. 26. This book acts as a powerhouse of information bringing together all the knowledge we have gathered over an extensive twelve-year period of working with clients from across the world. Through a thorough discussion on the best practices around creation, management, and expansion of profitable relationships, the book attempts to be a realistic guide for individuals and businesses looking to find their right outsourcing partner.
  27. 27. KARMICKHOUSE 116A, Purbalok (Premises No: 1118) Street No: 6th Kolkata – 700099 (India) Ph. No: +91 33 24264362 Email :