Outsourcing

Despite the success of outsourcing; grounded on good principles and ethics, many organizations haven’t seen the rosy picture yet. Some companies decided to outsource because of fear of being left out but the happier ones are those who properly conceived and followed the right principles and are making big gains.  Today, business success and outsourcing success are inseparable because outsourcing can give you the needed head-start to a great business.

Just outsource so that you can get the needed help.  Outsourcing basically means asking a third-party vendor to work for you on a contractual basis. By outsourcing to a third party, your business can focus on what it does best and gain a competitive edge in the marketplace.

Whether your organization is a large commercial or small business, providing products and services to customers, you can take advantage of this modern business process. Most organizations need to outsource one task or the other.  The goal is not just cost savings but a dynamic and continuous transformation that will keep your company healthy and competitive.  Companies outsource primarily to cut costs. But today, it is not only about cutting cost but also about reaping the benefits of strategic outsourcing such as:

·         Value addition and expansion

·         Access to skilled expertise

·         Staffing flexibility

·         Financial flexibility

·         Market flexibility

·         Focus on core business activities

·         Increased in-house efficiency

·      Better risk management because you share your risk with the outsource provider

·         You can run your business 24/7 when required

·         Reducing turnaround time

·         Improves service delivery and customer satisfaction

·         Gives your business a competitive edge

·         Reduces overheads

·         Increases in business and generating more profit

For example, most companies will only incur cost of certain set-skilled labour when it is necessary to respond to customers’ demand for products/service within a specified period without having to keep such workers on their payroll permanently but can have access to them as and when they need them through an outsource service provider.   If the workers were not outsourced the companies would have to pay wages and bear other related costs whether the employees work or not.  That is what we call flexible staffing in order to reduce costs and maximize returns.  By accessing the providers skilled expertise and taping all of the above benefits the companies add value to their products and services for greater efficiency and expansion.

Big companies like IBM, Dell, Microsoft, Accenture and others lower their costs and boost their profits when they outsourced to India, Indonesia, China, Singapore, Ghana, etc.   Outsourcing abroad helps create jobs and business opportunities in the destination countries but it hurts the workers who lose jobs and those who lose the prospect of jobs in the home countries.   In many cases the American working publics have called on the US government to put measures in place to stop US companies from outsourcing abroad.  However, Samuel Palmisano, the Chief Executive of IBM in the debate room said that “we have no choice; with globalization it’s critical to tap the lower costs and unique skills of labor abroad to remain competitive.”  

What is Ghana doing about outsourcing?

Comments like the one made by Mr. Palmisano above turn to favour outsourcing destination countries.  Ghana is one of the fastest developing nations for Business Process Outsourcing (BPO) today and currently ranked 21 in the world and 2^nd in Africa after Egypt on world’s top outsourcing countries.  Ghana also serves as the central leader in the ICT sector of West Africa, but it has to do a lot more for its business process outsourcing like the way Indian (ranked 1^st in the world) has done in order to attract the world’s big companies to outsource to our homeland Ghana and provide jobs for our people.  Many countries will outsource to Ghana because of its stable democratic environment, low-cost labor, a strategic position on the equator sharing the same time zone with the UK, tax exemptions on customs duty for R&D, strong on patents and copyright legislation.  Despite this, Ghana needs to expose itself as a dynamic player in the global sourcing market by creating visibility for its BPO industry and improve infrastructure, increase the number of skilled workers, improve telecommunications, resolve ethnic issues, and improve education in order to boost foreign investments in the country. 

This year the Ghana government through the ministry of communication is now building some IT infrastructure (ICT Parks at the free zone enclave in Tema and Accra funded by the World Bank and the Rockefeller Foundation) as a way of getting ready to welcome more offshoring from abroad.  As part of this programme the ministry also trained some graduates in business process outsourcing through the Ghana Technology University College this year.  If Ghana is able to market its capability and provide infrastructure for outsourcing to the world and attract at least a quarter of what the world outsources to India it could employ well over 550,000 (¹/₄ X 2,200,000) people thereby raising standards of living of the people in its middle-lower income country status. 

Ghana has gold but benefit very little from gold.   We cannot be sure if our cocoa will ever perform the miracle either, and the least talked about our oil the better.  For all you know business process outsourcing could be the key to unlocking the gate to resource employment and economic prosperity.  Outsourcing has worked for India as it has for Indonesia, Philippines and China, and so it can for Ghana?

The case for indigenous companies

If the world’s big companies are outsourcing to tap lower costs and unique skills of labour from our country to remain competitive, one would expect our indigenous companies in the country to take advantage of these enabling opportunities to lower costs and get flexible staffing and skilled expertise from experienced outsourcing providers like L’AINE to expand and grow their business and be competitive in the market place.  While the multi-nationals like Coca-Cola, Guinness, Barclays, Ghacem, Tullow, and others are seriously building their books and benefiting from outsourcing, majority of our local companies are still sleeping and haven’t yet heard of outsourcing as an opportunity for them to benefit from.   There is nothing to be scared about outsourcing.  You only need to understand what task to outsource, select the right vendor and get the needed help.

How to outsource

It is worth mentioning that the simple statement -“outsourcing saves money” may be fatal and can lure businesses into outsourcing without considering both the faces of the coin. “Outsourcing saves money, but only if you get the deal right.” Like any other business venture proper planning and research is necessary before choosing an outsourcing partner.  The challenge is that any company that takes the strategic decision to make a move to outsource its business units must overcome the burning ethical issues by choosing a right service provider with the required experience.   One of the easiest ways to judge service providers is to look at their track record in providing outsourced services.   If the vendor has good record of meeting clients’ needs and keeping them happy then you should add them to your shortlist.  The provider should have the ability to forge good relationship and work with your business' goals.  

Also look out for outsourcing providers who employ world-class work environs and systematic HR processes because the environment counts a lot.   Solid infrastructure, data security and confidentiality of information on your core competences are some parameters one needs to look at when entering into an outsourcing arrangement.  Above all, do not ignore past customer references as this can give you insight into how risk-proof an outsourcing vendor might be.

Reference

Sourcingline.com, thecountriesOf.com and businessweek.com

By: James Laar