When Outsourcing Needed?

A totally outsourced solution would typically suit an organisation that:

• Wishes to retain a strong focus on core business and cost management.
• Feels secure in developing and sustaining partnerships to enable the sharing and management of risk.
• Has a high level of devolution of people management responsibilities to leaders and managers within the organisation and sought to provide sound support and expertise to managers on an as required basis.
• Face a great deal of financial and other business uncertainty and who are in industries characterized by volatility .This is also true of firms in which managers are under a great deal of pressure to cut costs or to not create fixed costs such as acquiring additional staff and equipment. Apparently, it is easier to establish a flexible outsourcing arrangement rather than hire employees who will be released later during the next economic down turn.
• Involved in strategic planning. Outsourcing services thereby not having full responsibility for service delivery of all HR functions allows the in-house HR staff to concentrate on strategic planning.
• Must be or wish to be flexible in their administrative approach. Some find this expedient due to financial or market uncertainties.

To conclude we can summarise the activities, which can be outsourced, and activities which should be retained in the organization for competitive advantage:

Outsource Activities That	Retain Activities That
Have high volumes	Support key business processes
Are repetitive and routine	Get influenced by external forces
Reflect consistent customer needs	Require high content expertise
Have opportunities to leverage	Are ad-hoc, periodic future oriented projects
Are service and efficiency driven	Are difficult to measure
Are easily measurable in terms of performance	Have high impact on organization as a result of non performance, failure or mistake

The bottom line: BPO is a strategic business decision that has long-term implications. Most outsourcing contracts tend to be multi-year agreements. Companies that take a knee jerk approach to BPO will not see the benefits that they were expecting.