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.
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.
business functions outsourcing (as in manufacturing lines outsourcing)
seems like a very scary and dangerous move for small or medium
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
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
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
Incoming, Work-in-Process and Outgoing specialized inspections;
traceability through an established and accurate monitoring Reporting
continuous dedicated contact with updated information on
nonconformities and delivery;
shipments consolidation, logistics and warehousing.
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.
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.
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
and successful offshore outsourcing provides many short and long-term
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
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.
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
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
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.