Table of Contents
Outsourcing provides new business opportunities and aids in achieving organization’s business goals. It widens access of customers, increases sales (market share) of the company, and helps the company grow. The initial step of outsourcing is to determine the most appropriate business process outsourcing (BPO) destination and to analyze the way in which BPO will advance the strategy of the business. Therefore, the main aim of the manager in a large Middle-East manufacturing organization is to take the most effective steps in outsourcing a company division to other country.
Steps Taken in Evaluating the Decision
Steps necessary in the decision-making process include:
- Setting clear objectives. For a successful outsourcing strategy, the organization should set objectives that clearly describe the expected outcomes of the process. It forms a framework model that guides the process.
- Analyzing costs and talent pool. Today, most companies do not pay enough attention to costs when it comes to outsourcing; the use of global services is mainly important for quality improvement and efficiency. An organization saves a lot of money when it outsources its project to a skilled labor force at comparatively low cost. However, the savings can be minimal if imposed taxes are high and if there is a poor network of data and telecommunications. Moreover, a theft of intellectual property with no legal recourse and a legislation, which imposes new fees or strict restrictions on the business can result in minimal or no savings. Further, currently, cost differentials often change. It is thus important to examine major economic trends of the foreign country, where a division is to be outsourced, check whether salaries are rising, and consider costs of training and education. Furthermore, the manager should assess the tax-related legislation in the country and monitor the currency exchange rate in addition to the inflation rate and their volatility in the past years. The organization should find out if the country has an adequate supply of a skilled workforce that will support the business specific outsourcing initiative at a relatively low cost. Without doubt, there is competition for skilled workers; the organization should therefore consider the level of talent. The manufacturing company should evaluate candidates available for the business and if their talent will be enough to support its growth requirements. It is necessary to check whether local workers are experienced in the business of the organization. A deeper analysis of the talent pool is required to find out the overall level of education in major areas of the business, examine the proportion of the workforce trained in the required disciplines, as well as analyze the current trends in nearby universities (Oshri, Kotlarsky, & Willcocks, 2015).
- Analyzing the geographical location and possible risks. Knowing the time zone of the destination country puts the organization in a practical financial position, whereby it can offer more support hours and services. The knowledge of the country’s time zone makes outsourcing successful and improves productivity. When time differences are large, communication will be affected and can frustrate engineers who synchronize work with outsourced teams. Other major risk that faces the business is a change in the government can disrupt it. Government stability cannot be easily predicted, though some criteria can be helpful in the examination. One factor is the longevity of the current government, namely how long it has been in place and how it is perceived by the local people and neighboring countries. The manager should find its confidence level in comparison to governments in other countries that the organization is considering for outsourcing a division. It is necessary to examine if there is political corruption in the targeted country. Generally, corruption causes unrest, and this in turn disrupts the business. The organization should be confident in government’s stability (Erber & Sayed-Ahmed, 2005). The level of support provided to outsourcing organizations by the government should be high. Moreover, the manager should consider the level of investments the government has made in telecommunications as well as IT infrastructure, plans for improving the infrastructure, government records confirming active participation in associations, and the degree of foreign investments support. The assessment should tackle the level at which the government interacts with the workforce. The degree of bureaucracy and the simplified process of getting visas or permits by workers should be checked too.
- Evaluating the infrastructure. The performance of data networks and telecommunications are not the main points to be considered, but their reliability should be evaluated. Unexpected failures can occur as a result of many things and affect computer networks, power grids or cell towers. It will lead to unpredictable and high costs, which will disrupt the business. The manager should ensure there is certainty of business continuity in case of failures of equipment. The management should check the availability of data backup in local destinations, alternative power sources in case of power outage, and reliable mobile communications reliable. Prospective BPO providers should invest in big backup solutions for continuity of the business. The physical infrastructure should be quality and available uninterruptedly. The set-up is to be strong enough for long-term growth. Further considerations should be extended to choosing a specific city of operation (Liou & Chuang, 2010). Cities in a country are not equal with different specialties and limitations. The quality and availability of infrastructure in cities, workforce skills, cost of living, political climate, and the level of education are of great importance.
- Evaluating and understanding risks. Having analyzed the primary relevant factors to be examined, the organization should evaluate their risks to choose the country posing the least economic threats. Depending on this analysis, the organization should take necessary steps to minimize the most probable risks and maximize available opportunities.
- Choosing an appropriate business partner. In most cases, choosing a partner to assist the business in the implementation of the outsourcing project is the best step, which bears positive results. The partner should be an organization actively participating in the same line of business, and it should be located in the targeted country. In addition, it should have experience and understand technicalities involved in outsourcing.
- Implementing and monitoring the project. It is the last step of outsourcing. It is reached when the company has successfully done enough research and evaluated possible outcomes of the action with the help of the partner. At this phase, the organization puts all planned in action.
Method Used in Decision-Making
The most appropriate method to be used is the prescriptive one, where the process focuses on the top management. The required research and preparation for the outsourcing process should be made by the latter to avoid faults (Erber & Sayed-Ahmed, 2005). This method is better than descriptive decision-making because it gives the organization a greater number of options to take, whereby the probability of a failure is lower. Though it requires being implemented by an experienced person, its success rate is higher.
Necessary Critical Thinking Skills
To outsource a division of the Middle-East manufacturing company to other country successfully, the manager should have the following skills:
- Analysis: for the manager to make an accurate decision in this context, the one requires to analyze the destination country critically. In addition, a long-term and short-term results analysis of outsourcing is important before actualizing the project (Quinn, 2013).
- Evaluation: there needs to be a critical evaluation of the costs involved, infrastructure, political stability, and the availability of skilled workforce and the geographical position of the country.
Before the organization outsources a division to other country, the considerations presented above should be used in the decision-making process. Identifying the relevant factors involved, right critical skills, and the correct decision-making method, the organization will be successful in outsourcing.