Successful Outsourcing (specifically Offshore Outsourcing)
Tremendous competitive advantage for nowadays Small or Medium Businesses.

    Usually Outsourcing definition is submitting to an outside contractor a business function that was initially performed “in house”. If this contractor is outside the customer’s country, we referred the outsourcing as “offshore” or “offshore outsourcing”. In the outsourcing process, the two organizations (i.e. Customer and Contractor) may enter into an agreement or contract that usually involves exchanges of services and payments.

     The outsourcing practice is a familiar concept to small or medium businesses that routinely employs specific local companies to perform for them the payroll processing, accounting, distribution and some other office functions. In our informatics era, everyone is engaged in outsourcing in a way or another.

      Yet, business functions outsourcing (as in manufacturing lines outsourcing) seems like a very scary and dangerous move for small or medium businesses.

      The truth is that for a small company with limited resources is difficult to find the right matching partner without an offshore presence that surmounts the language and culture barrier. One cannot just enter the outsourcing process arena without knowing the rules-of-the-game only because other companies in their industry have done it. The key to successful outsourcing is to take advantage of all the benefits of outsourcing.

      A great Business Process Outsourcing (BPO) Company - such as ElevTech - SRL - is the one that offers a “one-stop package” where the provider must have:
                                                                                                the expertise to understand customer niche of business, outsourced product specifications and manufacturing process;
                                                                                                the offshore local resources to find the best match for the specific outsourced product;
                                                                                                the resources to find the best prices for the raw materials with respect to product specifications;
                                                                                                tools and processes expert designers (tool makers, R&D, and Engineering expertise);
                                                                                                Incoming, Work-in-Process and Outgoing specialized inspections;
                                                                                                traceability through an established and accurate monitoring Reporting System;
                                                                                                continuous dedicated contact with updated information on nonconformities and delivery;
                                                                                                shipments consolidation, logistics and warehousing.

      In choosing the right BPO, one also needs to consider, prior to enter into a contractual agreement, the performance, insurance, work capacity, training costs, terms and conditions, service rates or any other condition to be considered under a contract. Do not forget though that the contractual agreement must be beneficial for both parties as a necessary condition for cooperation and growth.

     Some short-term benefits from outsourcing include payroll reduction with at least 30%, overhead reduction because there is no need for extra office space, office supplies, computers, phones and other equipment, and liberates cash due to required-only payments.

      The offshore outsourcing is more and more NECESSARY for businesses survival. Small Businesses face now not only rising costs and limited sales, but also lack of resources to develop and launch new products. Their specific industry entry/sustain barrier becomes higher and higher as competition is ruthless and banks loans or assets are insufficient. They must find new, more innovative ways to overcome disaster and reverse fate. The offshore outsourcing is one of such new and innovative way.

      Wise and successful offshore outsourcing provides many short and long-term benefits.
            Number ONE listed benefit of outsourcing is the Cost Savings. Offshore outsourcing converts the Fixed Costs into Variable Costs and than reduces them. In the process, the Minimum Order Quantity (the equivalent for the money Break Even) moves to lower values and releases capital for investments elsewhere in the business (like R&D, promotions, advertising, etc). This capital not only boosts business productivity (more output with less input) but it makes business more attractive for investors since it dramatically increases the Cash flow.
               Scalability: the outsource company will manage production fluctuations due to forecast mismatches.
            Tax Benefit: countries offer tax incentive when moving manufacturing operations within another country to counter high corporate taxes
               Reduced Labor Costs due to cut costs associated with hiring & training, and opportunity costs associated with redeployment of existing human resources.
            Improving Customer Satisfaction (QCD): when Quality increases, Prices decrease and Delivery is In-Time.
               Operational Expertise: access to better operational practices that would be difficult to develop “in-house”
            Development Expertise: access to a larger talent pool – science and engineering – inexistent or weaken ‘in-house”
               Reduce Time to Market: strong relationship with the supplier that moves development of new products offshore and speed up the process due to supplier additional capability and expertise.
            Risk Management: manufacturing liability falls on the outsource company under local or international laws.
               Efficiency: important competitive advantage due to provider cost structure that absorbs the costs to be passing to end-customer in addition to the inherited small business impact in the niche of the Market.
            Time Zone advantage: because of time world difference, another competitive advantage due to provider implementing overnight solutions, design or production. Outsource company completes critical tasks while customer is after hours.

      More and more businesses in countries like U.S., U.K., Norway and Australia took already advantage of these benefits and move toward offshore outsourcing. Outsourcing had never been defined as a way to replace business human resource since that resource is the most valuable of all the assets. When not abused, it is an innovative way to cope with the small business existing condition when redeployment of resources is so badly needed.

     The released human resources due to offshore outsourcing is now distributed inside the organization for critical tasks like technical or educational training, R&D, new projects, new production lines, business promotions, etc. The outsourcing becomes nowadays a catalyst for change that enhances capacity for innovations when customer human resources team up with offshore supplier experts for the benefit of both their organizations.

      Historically speaking, the world economy recovered from each crisis through the effort of small businesses (small caps) and maybe offshore outsourcing is the “answer” to prevail over our actual turmoil with all due respect for globalization.

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