Outsourcing

Outsourcing is the practice of buying services or products in countries with lower costs than the United States in order to remain competitive and to improve your profitability.  A Google search will turn up numerous outsourcing sites in Brazil, Russia, China, India and other countries for both products and services. The three most important things to include in any service outsourcing agreement are clarity, flexibility and realistic goals. Outsourcing products involves a written agreement on price, quality and delivery. Each requires that the parties communicate, collaborate and come to mutual agreement as to the purpose of the relationship. It is imperative that the parties agree upon a clear written description of the services.

A failure to describe the services in sufficient detail and with clarity will likely result in pricing and/or quality issues and adversely impact the ultimate success of the venture. It is also critical that the parties establish practical written guidelines for regular communication on operational, financial, and performance issues as well as the resolution of periodic disputes.

The parties should define clear and objective metrics by which they agree to measure performance and make appropriate adjustments. These metrics should reflect the underlying business objectives but be stated in a manner that is measurable. A well-conceived plan will start off small but should produce real savings in Year 1.

If you are outsourcing services you may become involved in managing operational challenges, predominantly people and infrastructure. If you outsource services to a third party these problems will not arise but you may still need to manage absenteeism, attrition, and rising overhead expenses that will affect your cost savings.

Outsourcing is a long-term investment. Whether for products or services initial hidden costs include the expense of selecting a service provider or manufacturer (documenting requirements, sending out requests for proposal and evaluating the responses, and negotiating a contract), legal fees and, in the case of services, the cost of initial low productivity.

Excellent sites for more free outsourcing information include:

www.outsourcing.com

http://www.ezgoal.com/outsourcing/

http://www.outsourcing-center.com/

http://www.vendorseek.com/

There are also many sources for finding offshore manufacturers. Two sites to find Asian manufacturers are:

www.globalsources.com

www.alibaba.com