The Outsource IT to Philippines Blog

Select Page

A beginner’s guide to the outsourcing industry

A common notion about the outsourcing industry is that it is only limited to telemarketing and customer support. But, there are many types of roles that can be outsourced. Outsourcing, by definition, is paying another person or company to do a certain task or business process for a specific period. Almost anything can be outsourced for as long as you have the means and the right outsourcing firm or person to partner with. For outsourcing beginners, you ought to know the basics.  It is essential to understand the very nature of outsourcing.

Outsourcing, like any other business, requires serious attention. Take into consideration certain factors like the business’ compatibility with outsourcing, its agreeability with the in- house employees and if you can afford to outsource. Knowing what kind of outsourcing plan and company you’ll need is also a must. Deciding to outsource would also require documents to be processed.  One of this is the request for proposal. This deals with asking data from your potential partners and determining their service delivery model. Another is the Service Level Agreement. This is the only contract you and your partner may have. It covers how the services should be delivered,  the agreement itself, the dos and don’ts and ways of compensation. Thoroughly preparing these things will help you form a successful partnership.

An employer- contractor relationship is not easy. There is a fine line between an employee and a contractor. Employees enjoy the benefits of a regular in house employees such us health benefits and insurance.  They are mainly controlled by the employer themselves. Contractors, on the other hand, vary in task and employment status. There are contractors that are treated like employees but are not your regular employees. For other contractors, you have no control on how they do their job as long as they deliver the results you want. Most of them only stay until a specific project or task is done.  A clearer distinction between them can be seen in local labor laws. The best partnership is one that allows you to directly control the staff that are employed by the service provider and assigned exclusively to your project.

Measurements – also referred to in the industry as Key Performance Indicators (KPI) are also important. This is used in gauging work productivity and work performance. The bases of compensation for the contracted workers are measured by the hour. This is essential to those contractors who work alone and are tasked with more. Work productivity or unproductivity should also be measured. You, as an employer, should know and maximize the information. You can draft an improvement plan helping your contractors. Results are often than not quantifiable by numbers. You will need measurements or you can set your own metrics to compare it to.

Confidentiality is another factor to consider when you enter into an outsourcing partnership. Information used during the engagement is most often than not highly confidential. Some of which should not be disclosed even after the contract is done. It is important that when you have decided to outsource matters that deal with money, laws, and or the company’s confidential information.  Secure that it is understood by the contractor and that it is stated in the service agreement. When outsourcing offshore, it helps to be assured that your outsourcing service provider is compliant with the global standards of data privacy.

To sum up, here is a short checklist to consider especially if you are outsourcing for the first time:

  • Due diligence
  • Well defined operational/staff control
  • Metrics to use
  • Data privacy

It is good to talk to people about their experiences and personal knowledge. You can also do your research and read about the wide array of topics relating to outsourcing basics and business models.