Results tagged “outsourcing Philippines” from Inside DC Global

One of the major challenges facing companies that bank on the outsourcing industry is making sure that they get a good return for the money that they dish out.

Outsourcing contracts regularly integrate an initial cost "reduction" of between 10 to 15 per cent which is set against the expense of running services in-house. In most cases, clients are able to make greater savings. However, the competitive nature of the IT industry and the dynamics of Moore's Law would make it mean that the true cost of IT can fall over the lifetime of a lasting contract.

The challenge for CIOs is distinguishing how far they should expect costs to fall and how they could influence their suppliers to either build cost reductions into a contract or to open up negotiations.

A new technology (which was unforeseen when the contract was signed) that dramatically reduces the cost base for a service poses a difficult. The change to IP-based networking, the increase of voice over IP, and the emergence of software as a service are all recent examples.

For that reason, CIOs would now be most likely be insisting on including benchmarking sections in outsourcing contracts, allowing them to compare both costs and service levels with those enjoyed by other companies with related technological needs.

A single international standard for contrasting outsourcing contracts and benchmarking projects is said to be run by the huge management consultancy firms.

Typically, companies benchmark when they get to the point where they either need to make a decision to outsource or decide to renew a contract. Normally, the Chief Financial Officer (CFO) will ask why, for example, PC prices have fallen and yet he is still paying the same price as what he had paid three years ago. On that point an outside benchmark is often needed."

Conventional benchmarking, however, has disadvantages. A consultancy-led benchmarking exercise can cost between $100,000 and $200,000 (£50,000 to £100,000). This can also be seen as an adversarial method of suppliers, especially when benchmarking is either not specified in the contract or a benchmarking section is not automatic but has to be "invoked".

Outsourcing is a hot political issue in the U.S. but there are indications that the process is not just one way - of Americans losing jobs, a topic that has worked its way into political campaigns since 2000, and moved in increasing rage, particularly among labor unions in the US.

Economists or other people believe that the issue was seriously overstated, and that the net effect has been relatively small. Actually, economists argue that in fact as many as 30,000 jobs have been produced directly by Indian companies investing in the US, for example, with a considerable multiplier effect beyond that.

The tally hardly shows up in US job counts, even during the seven lackluster years of the administration of President George W Bush, some 5.7 million net new jobs had been created by the end of 2007 in the US, with about as many as 7 million gained and lost each year. It means that the 200,000-odd that disappear overseas each year hardly show up in the employment tallies.

Study shows from Federation of Indian Chambers of Commerce and Industry (FICCI), those top companies from India are actually making a positive impact on the US economy. Though it's not that big enough at this point, but it is growing and, in addition to demonstrate the integration of the global economy, it holds positive signs for the future.

In fact outsourcing is positive for the larger economy, in that the reduced costs of production are passed on to consumers or provide capital for additional investment, which also generates jobs.

Search online businesses in the internet and you will have more than a whooping millions of results. There is a gush of online businesses and a massive profit on this. The result: an even greater number of individuals and corporations are being drawn to internet business.

 

Online businesses are not as easy as others may think. Nor is it something as easy money. To be successful in this business, one has to be persistent and determined to profit; formulate new business approach and techniques, and; the right technology. One has to have leadership in both IT and business worlds.

 

That's where IT Solutions Provider such as DC Global comes in. It provides product and services solutions proven to be effective and efficient in the highly competitive and high performance businesses. The group is a consolidated bunch of techies and savvy folks, highly skilled graphic designers, programmers, and search engine optimizers -all of them a qualified asset in today's competitive market arena.

 

While there is also a long list of IT solutions provider serving UK and US and other parts of the world, outsourcing to Philippines is a good and viable option.  The country is home to globally competitive outsource service providers that cater methodologies that promote business, empowers business and delivers high quality results

The Dilemma of an Outsourced Service Provider

 

Outsourced service providers have mushroomed all throughout the world to serve client companies mostly from the UK and the US who are likely to prefer outsourcing to Philippines for many and varied reasons. Outsourcing Philippines however is not spared from several issues confronting it.

 

Outsourced service providers are also known as managed service providers who tackles services fro another company. Tasks and services rendered here include IT services, remote data backups, desktop and security monitoring, and technical assistance and are provided via the internet. Outsource service providers also manage client company's web hosting and maintenance of their websites.

 

 Most companies choose an outsource service provider that can best cater to the needs of the company. Client companies have the option to select manage services provider. And as a business itself, these service providers need to answer several issues and considerations. This is to ensure that as an outsourced service provider, they are able to thrive sufficiently and keep themselves secure of a good and bright future.

 

Below are the issues and considerations outsourced service provider must take into account:

 

Issue:

Outsource agreements that are flexible to change its technology platform over time.

 
Consideration:

Ensure that you're able to change your technology as your business grows. Otherwise, a customer could require one set of technology even as you provide separate technology for other customers. This doesn't mean that you have to disappoint customers' requirements for service levels and technology refresh over time. But it should allow you to meet these requirements in flexible fashion.

 

Issue:

Freedom to use services offshore or use subcontractors as a cost-savings approach.

 Consideration:

To reduce costs, your outsourcing contract should provide that you may relocate services and work with subcontractors of your choosing. The customer will require you to negotiate appropriate confidentiality provisions and may attempt to assert other limitations on these rights. The key to securing this right is to guarantee clients seamless, high-quality service.

Issue:

Other measures service provider needs to have to keep costs under control.

 Consideration:

If a "cost-plus" deal isn't an option, alternatives include per-service fee increases. In this event, the contract should also let you process change requests through an orderly change-control procedure. If there are increased costs, you should have the right to come to agreement with the customer on additional charges. Also consider attempting to get the customer to agree to shoulder some of the burden of unanticipated cost spikes caused by the customer not following agreed-upon procedures.

To the extent that the customer's delays require you to sideline valuable resources, you should consider putting appropriate cost-containment provisions in the agreement. For example, if a customer delay forces your personnel to work overtime, the customer should pay for any increased wages. In addition, the contract can allow for cost-of-living increases if appropriate.

Issue:
Ownership/ proprietorship of the work service provider did or has developed on customer engagement.

Consideration:
Your outsourcing contract should clarify which party owns work performed rather than leave this matter open to question or later negotiation. Vagueness could lead to conflict later on. You and the client should clearly define ownership of the contracted work, whether it's software, business processes or other intellectual property developed over the course of the contract.

Issue:
Service provider's protection against piracy of its best employees.

 
Consideration:
Good talent is always in demand. Your outsourcing contract should reduce the likelihood that the customer will try to recruit your employees by having an appropriate nonsolicitation and nonhire clause.

Issue:
Modular outsourcing contract to be provided by the outsource service provider to its customers.

Consideration:
A master document that references concepts or attachments is suited to the ever-changing reality of an outsourcing. For example, the term of your contract should be a stated number of years or a month after any transition period is completed rather than a specific begin and end date. If your transition effort runs late, the length of time for service delivery is effectively pushed back so that a provider won't find his term shrinking. Contrast this with a more limited, specific date-driven contract that isn't flexible enough to recognize the manner in which project plans may change.