Category Archives: Outsourcing Articles

What are the companies applying to be on like?

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You would be surprised at the kind of companies we get applying to be listed on our outsourcing directory. Many of the companies have their assistants fill out the form to get listed with us. There are spelling mistakes galore, capitalization mistakes, notes sections which leave you in the dark about what the company actually does, omitted contact people (no contact person mentioned), websites that don’t function, and other problems. Many companies don’t even put themselves in the right category. They will say Data Entry when they focus more on call center services.

What companies in India don’t realize is that Americans are watching every detail. If Americans see even one spelling mistake, they will assume you are careless. You can explain that you used your fresher to fill out the form and that your company really is careful, and that the form filler was new, etc. But, nobody will buy that. American companies might still use your company if you are dirt cheap. But, if you want to gain loyalty, respect and make good money, you need to clean up your act.

Your website needs to load within four seconds at the longest and have complete information about your company, what they do, how they can be reached, etc. These days sites need to be mobile friendly.

You need to have people answer the phone who announce the company’s name clearly, speak clearly, and who can answer questions.

You need to have experienced people doing the work who are carefully managed and who meet deadlines and get the work done according to specification. Nobody respects late work.

Most outsourcing companies out there do not have their act together. If you want to succeed in the future, concentrate more on being put together and you might get more work than you can handle in the long run.

How fast can someone get an answer from your company?

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How fast can someone extract an answer from your company? It is like pulling teeth dealing with you? There are different ways to get information from a company. You can call and try to get ahold of the right person. Or you can email. Calling gets an immediate result if you are lucky, but more be aggravating if you have to talk to a dummy who puts you on hold only to be disconnected which is the standard way of doing business in India.

On the other hand. sometimes I email people to get information from them. The behavior I see varies extremely, and I judge overseas companies partly based on how good their phone manner is and how fast they get back to me.

Excellent Behavior
Some companies will respond to an email within minutes and give detailed answers to all questions. If I ask for rates, they’ll give all of the breakdowns for various types of services and correponding rates based on levels of experience of their workers, etc. Over the phone, a good company will have a rep announce his personal name and the company name. The rep will NOT put you on hold without permission and will give good recommendations as to who the ideal contact person is for your question.

Acceptable Behavior
An acceptable company will get back to me within 48 hours by email and answer my question. How much do you charge for Data Entry work? We charge $2,80 to $4.30 per hour depending on the job. A simple question and an answer that gives you the range of possibilities. Over the phone, such a company would have reps who could conduct an intelligent conversation and get questions answered.

Evasive Behavior
Unfortunately, in many types of businesses, there are many evasive types. I’m not sure how an evasive person can hope to catch clients, but then I’m not sure what is going through their head. If I email them asking for rates, they email me back asking twenty questions regarding the nature of work necessary. I have to put in more work than they do just to get some simple infromation. If I’m emailing 100 companies for the same rate, I’m going to hire the company that gave me the information willingly and quickly, and not to an evasive company who makes me work for basic pricing. Over the phone, evasive companies don’t like to tell you anything. They prefer to make you go to the trouble to make an appointment to speak with a contact person. It is four times the work trying to deal with evasive people, but at least they talk to you.

Bad Behavior
There are various types of bad BPO behavior. Answering the phone with a dull “hello” is typical for Indians. Putting people on hold without permission only to have someone else answer the phone saying “hello” only to be transfered again. You’ll hear three dull hello’s, one after the other and will have to ask who you are speaking to. Then, instead of answering, they will ask who you are, then you ask again who you are speaking to only to be asked to repeat who you are. How exasperating — Indians really have a bad attitude over the phone and their bad attitude is part of the reason they live in poverty. If you ask for a rate, the answer is usually, “Manager not here, call back later” — and then they hang up on you. Maybe you’ll get a manager and maybe you won’t, but you won’t be treated like a valuable person. If you email a bad BPO, you will either not get a response, or get a response five days later, or get a response without an answer to your question. My suggestion to bad BPO operations is to learn to train your workers to answer the phone gracefully, ask permission to transfer people, and try to learn to answer questions. Additionally, state your name when you answer the phone so people don’t have to ask.

Impersonal Companies

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Back when I was starting my web business, people kept telling me to do it like the other companies. I was told not to have a phone number and to just have a form. I disagreed with that logic as I like to keep it personal. As a directory owner, I get to see how others do in business and how following trends works out.

People like my business because we keep it personal and because we offer high quality information with just a simple phone call or email without even needing to be transfered. It is like an instant source of valuable information that helps others survive in their businesses. Other companies make you jump through hoops just to get simple questions answered.

Some of the companies on my directory that only have a form as their sole contact method have a habit of going out of business very quickly. I think it is partly due to their attitude of not wanting to talk to people.

Honestly, to succeed in business is hard, but if you master the art of phone communication, being helpful, and getting work done correctly and on time, you have a real chance as the competition can’t handle those four things.

So, make an attempt to make your business more personal and learn the art of American small talk. It is so important, especially if you deal with Americans!

Automated outsourcing? How would that work?

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Too much of outsourcing follows the model of choosing an unreliable company and relying exclusively on them. This leads to you not getting what you want, and them getting fired. Many companies are swift enough to con you into signing a contract. They’ll be very nice to you and tell you what you want to hear until you sign a contract obligating you to a certain amount of money per month for an ambiguous quality and quantity of service normally measured in hours.

You have no idea if they put in the required hours, or if they gave quality work during those hours. Many companies will give you their worst guy who is completely unqualified, or cheat you out of the amount of hours you paid for. Even if you hire a reputable company, if they give you the wrong worker, your project is finished. If a company hires purely reliable workers, it doesn’t matter as much who you get. But, most companies hire 30% decent employees and the rest are disasters — at least in most outsourcing companies I have dealt with. It is so bad, that you might consider hiring in-house people to help you out — unless you can find reliable help overseas. There are good people, but how to find them? So, what’s my solution?

Choosing Workers
What if outsourcing houses offered you the right to choose your own workers on an online module? What if you could sample their work, read their resumes, and communicate with them on your own without needing to involve a busy manager in setting up an uptight appointment. What if it were like a dating site with photos of the workers, and information about the types of projects they had done and wanted to do along with their employment history at the company. Most outsourcing companies have employees coming and going every several months. If you have a serious project, you need someone who has a track record, and dumping your job every three months is exactly the type of track record I want to avoid.

Choosing Deadlines
What if you can submit job descriptions online for bids, including deadlines and detailed specifications. You could specify who at the company is to do the job, how it is to be done, and how fast.

Rapid Response
The average outsourcing company takes around 48 hours to answer an email. But, what if there were companies that made it a point to get back to people within minutes? You could get your project moving in a flash. If the workers you chose would personally get back to you within minutes, or if they were off duty then within hours, even if they were at home — wouldn’t that be amazing?

Quality Monitoring
What if you and a project manager could regularly monitor the quality of the work being done. At most companies, the work is a deeply guarded mystery enshrowded by a veil of secrecy. You never hear where they are in the project or how it is going. Finally after far too much waiting you get the finished product – a bunch of code filled with so many bugs you can’t possibly use it. You are far behind schedule and handed a pile of junk after the salesman assured you that you would be fine if you would only sign the contract. But, what if you could check on the work daily, and what if you received an email with progress daily even if nothing had been done? At least you would be informed.

The key to automated outsourcing is partly that people are cooperative (which rarely happens in real life) and get back to you quickly. The second key is that you can choose who you use and how fast things get done even if you have to pay extra. I like being in control of my projects, don’t you?

Outsourcing in India

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India Outsourcing
Do you want to outsource to India? Here are some things you should consider.

1. Communication skills in India are not the same as in Western Countries.
The bosses and managers of companies are often very well spoken while their staff normally cannot function well in a conversation. It is common for there to be communication gaps when there are technical issues with the work as well. So, make sure you can communicate before you select a team.

2. People tend to quit a lot.
If you take a lot of time to select a team member in India, be aware that it is likely they will quit within months leaving your project in the hands of someone new at the company who you did not interview, and who may or may not have a clue what is going on.

3. Sloppy workmanship.
There are good programmers and good outsourcing workers in India. But, there are more sloppy people than good people. So, if you hire a company, you need to figure out the company’s batting average. India outsourcing success depends on finding companies that consisently give you good workers rather than ones that cause delays and headaches because 70% of their staff is incompetent. Test workers before you hire a company, and test more than the worker you plan on working with because they will need to be replaced within anywhere from one month to two years unless you are really lucky.

4. Hour padding.
If you are outsourcing to India, hour padding is a way of life. People do this in other countries too. You might get charged for familiarization with the code if you hire a new programmer. That ten hours you are charged for is probably for two hours of casual work. Everything you want will be marked up, so those low hourly rates can be a lot more expensive than you think. Medical Transcription on the other hand is more standardized as people charge by the line or by the word.

5. India Call Centers
India outsourcing for call center work is another issue. You need to make sure you get people who are socially graceful, communicate in an audible way, and can sell. For customer service, I recommend the Philippines. But, outsourcing to India will get you more business minded people who are aggressive about selling. Just make sure your new hires have the ability to be empathetic and sell otherwise you might be paying for a nightmare.

6. Where do you find good outsourcing companies in India?
If you want to find good outsourcing companies in India, offers a highly filtered list where the bad companies have been weeded out or moved to the bottom of the list. Unfortunately, there is no such thing as perfection if you hire overseas, but the price is right and is the most highly maintained directory of its kind out there.

Trends in outsourcing & immigration are suprisingly similar

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What do I mean?
When people immigrate, they tend to immigrate to the same destinations. Nobody goes from California to Ohio. But, many people go from Michigan to California. People immigrate to America. But, how many would immigrate to India even if there were jobs there? Syrians are in a huge hurry to get to Sweden and Germany. But, if all of the other Syrians go there, how many opportunities will be left? How come the Syrians don’t want to go to India or China? That’s where the money is! My point is that people’s minds are limited. Most people cannot fathom doing anything that other people are not doing in mass. If everyone else is wearing a green shirt, you will want to wear one too. If everyone else is jumping off a cliff, you’ll probably do it too without a second thought.

Outsourcing is popular in India. It is such a trend that even if it becomes a bad idea to do outsourcing, people will continue doing it just like they continue selling corn on the street even if not a soul will buy it from them.

But, the countries with high unemployment are not doing outsourcing — and perhaps they should. They don’t do it or much of it perhaps because it has not yet become a culturally engrained behavior. I have never heard of a Madrid based BPO specializing in data entry. I haven’t heard of a Somali Call Center. When was the last time you got an inquiry from an Italian technical support company? No, the emails are almost all coming from Mumbai or Manila, not Mogadishu.

So, with a labor shortage in America and India, maybe it is time to venture into other countries and set up outsourcing operations. Labor rates in Pakistan, Kenya, and Rome are a lot easier to deal with than Bombay or Boston. The question is — who will make the first move


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Outsourcing is a business practice where a particular company will hire someone who does not work for their company such as another company or a freelancer to do particular tasks for them. Typically, tasks outsourced will be highly repetitive or specialized tasks such as calling long lists of names with a particular call script, accounting, programming, data entry, technical support, payment processing, or some other specialized task.


The reason companies outsource work to other companies are multi-fold. One reason could be to:

Save Time — so that employees and management can focus more on the core competencies of the company such as selling widgets while outsourcing bookeeping and reminder calls to companies who specialize in those particular tasks. Another reason could be:

Cost Cutting — Many outsource companies are located in India, The Philippines, or Eastern Europe where labor costs are lower than the United States, hence, creating an opportunity to capitalize on less expensive labor.

Skill Optimization — is yet another reason to outsource work as outsourced companies specialize in particular tasks such as blog set up, eCommerce site creation or XML conversion while your company specializes in widgets.

Eliminating Uneven Schedules — if you have a job to be done that will take only 10-15 hours a week on some weeks and more or less hours on other weeks, hiring a full-time or even part-time employee is a commitment that you will have trouble keeping. If that employee quits in the middle of a project, you’ll have another problem. It might be easier to outsource the project to a company who specializes in that task and has dozens of people who know exactly how to do it rather than hire your own staff.

Reducing Hiring — hiring and firing is expensive and is an art form that you might not have time to master. If you have a particular job that people are always quitting every two months, it might be easier to have the job outsourced to Manila where they have full-time HR managers to handle the hiring and firing for you! That way you can focus on widgets instead of dealing with people who quit on a whim leaving you high and dry. The outsourced company you hire will have plenty of backups all in the same specialty when the employee assigned to you quits.



Freelancers — Some companies hire freelancers which is a type of outsourcing.

Fixed Schedule — Others hire another company for a particular schedule with a contract which extends for a particular number of months or years such as 40 hours a week for two years.

Employee Leasing — Some companies hire a team of workers from an agency which is sometimes called “employee leasing.” Other companies pay for results in specialties like lead generation rather than paying for particular hours of work.

Assignment Based — Programming or software development outsourcing often has a company pay for a completed product or for a particular number of hours to do a particular job although there is very rarely a deadline.

On Call — Some outsourcing is on an on call basis. Programmers might be hire to fix code only when it breaks or to do programming work as needed. Call centers might have a small assignment from time to time only when needed.


Outsourcing jobs are sometimes categorized using particular terms such as:

ITES — Information Technology Enabled Services which could include data entry using computers, web design, technical support, or other tasks which involve technology to facilitate the task in some type of a way.

KPO — Knowledge Process Outsourcing is also a bype of Business Process Outsourcing that includes tasks that require a higher level of education, knowledge or skills such as Accounting, Software Development, Research, etc.

LPO — Legal Process Outsourcing focuses primarily on legal research, patent research, contract drafting and legal support services, but rarely involves actually going to court.

RPO — Research Process Outsourcing or Recruitment Process Outsourcing. Research outsourcing is popular in Bangalore, India as there are many companies that offer market research, web research, and Pharmaceutical research. RPO could also be a form of human resources outsourcing where an outside company will help you find employees or leased agents. This is by far the least popular form of international outsourcing as there are few providers who offer overseas assistance with recruitment.

HRO — Human Resources Outsourcing as mentioned above is the least popular form of international outsourcing as there are very few overseas companies who offer competent service in this industry. However, there are a few companies in India and the Philippines that allow you to lease call center agents and programmers at low rates. However, the quality of such help is dubious and not guaranteed in any way by the provider company.

MBPO — Medical Business Process Outsourcing includes outsourcing of Medical Billing, coding and Medical Transcription. Quality standards and billing in these fields is a lot more uniform than in other BPO tasks as companies can charge a percentage in Medical Billing and can offer rates per number of characters or words (or lines) in Medical Transcriptions. Quality standards are also easy to measure as there are international standards for Medical Billing and Medical Transcription. You can measure errors as a percentage rate. If a company makes more than a particular fraction of a percent of errors, they generally go out of business or get fired.


Commonly outsourced jobs might include: Accounting, Bookkeeping, Call Center, Data Entry, ePublishing, Legal Research, Market Research, Medical Billing, Medical Transcriptions, Social Media, Software Development, and Web Design. However, there are many specialties in most of these types of outsourcing jobs.

Accounting Specialties — Bookkeeping, Tax Preparation, Payroll, Bank Reconcilliation

Call Center Specialties — Appointment Setting, Chat Support, Collections, Customer Help Desk, Data Verification, Email Support, Inbound Customer Care, Lead Generation, Order Taking, Outbound, Survey Taking, Technical Support, Telemarketing, Ticket Sales,

Data Entry Specialties — Data Capture, Data Cleansing, Data Conversion, Data Entry, Data Mining, Data Processing, Data Quality, Data Security, Data Transcription, eCommerce Data Entry, Forms Filling, Forms Processing, Image Processing, Product Data Entry, Scanning, etc. Data Conversion includes XML, SGML, HTML5 conversion, PDF or JPG conversion, and conversion from one language or format to another.

Social Media tasks might include article writing, proofreading, posting on Facebook, managing a Twitter account, LinkedIn, Instagram, Pinterest, or any of the other common social media platforms. Most companies specialize in several social media platforms, but cannot provide service for ones they are not familiar with or don’t have sufficient staff for.

Software Development Specialties — Blog Set up, eCommerce Set up, Software Testing, Web Design, Employee Leasing, etc.

Common software languages include: C, C#, C++, ERP, J2ME, Java, jQuery, LAMP, MySQL, .Net, OpenSource, PHP, Ruby on Rails, SAP, SQL, XML, and more.


You might also like:

Wikepedia’s article on — outsourcing

Investopedia’s article on — outsourcing

Entrepreneur’s article on — outsourcing

See our informational page on the term — outsourced.

See 123outsource’s compilation on best articles about outsourcing.

What countries are best to outsource a particular task to?

Six problems that only individuals working in a BPO industry would understand.



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Definition of Outsourced / Outsourcing

Outsourced is the past tense of the verb to outsource.

(1) To obtain services from an outside or foreign supplier in place of an internal source.
(2) To contract work to an outside firm or abroad.
(3) To assign particular specialized and/or repetitive tasks that are not core competencies of the mother company
to an outside or foreign company.
(4) To procure back office services with an outside supplier or provider.

BPO Outsourcing is becoming more and more popular as companies have to fight harder to survive in a world where margins are getting tighter by the day. If a company is doing a particular task even slightly less efficiently than the competition, they will lose profits and market share in the long run. One solution available which may or may not increase efficiency is to outsource particular tasks to a company that specializes in those particular tasks. For example, if your company focuses on widget production, but 10% of your labor resources are devoted to reminder calls, it might make sense to focus more on widgets, and outsource the reminder calls to Manila where there are companies who specialize in all aspects of the call center business. Knowledge intensive tasks are also more and more commonly outsourced to KPO and LPO companies who specialize in knowledge process outsourcing and legal process outsourcing.

Outsourced — the TV show
Outsourced is also an American television sitcom filmed in Los Angeles that was set in an Indian Workplace fictionally located in Mumbai, India. A catalog based company selling American novelty goods such as whoopee cushions, foam fingers, and wallets made of bacon hires Todd Dempsy from Kansas to relocated to Bombay. Every episode of this hillarious comedy focuses around Todd’s culture shock dealing with Indians and attempting to teach the local Mumbai staff all about American sensibilities and culture.

See NBC’s profile page for the show — Outsourced


You might also like

See our feed of articles about — outsourced

See our comprehensive definition of — outsourcing — which goes over when and why outsourcing is done, types of outsourcing arrangements (freelance, contract, staff leasing), a detailed look at categorizations of outsourced tasks (BPO, KPO, LPO) as well as a detailed look at 55+ commonly outsourced specialties in the call center, data entry, software and other outsourcing industries.

Is it fair that American jobs are outsourced to India?

What is the correct order of steps to screen an outsourced company?

Compilation of best outsourcing articles:
The best tasks to outsource are not critical or time sensitive
If you invested in BPO employees, what types of tasks would you teach them?
The 2 minute contact rule


Compilation of best outsourcing articles

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Here is a compilation of our best non-marketing oriented outsourcing articles. We hope you enjoy them.

The best tasks to outsource are not critical or time sensitive

Is your outsourcing job just a job?

Bringing back jobs to America: How ’bout the South y’all?

If you invested in training your BPO employees, what types of tasks would you teach them?

The most important factor for creating leads for your outsourcing company

If you do outsourcing, your programmers need English

What type of salesperson to avoid in outsourcing

The 2 minute contact rule

Gaining new clients and nurturing them correctly

Is it fair that American jobs are outsourced to India? (2015 version)

Outsourcing work for $2 per hour?

How does outsourcing work?

There are tradeshows for products; Why not have them for outsourcing?

A story about outsourcing invitations to a bicycle event

Outsourcing is like a long-distance romantic relationship!

How much do you train a call center worker who only lasted three months?

Should you outsource your printing to a single vendor or multiple vendors?

Joining a parade of outsourcing for small businesses

How is the outsourcing landscape transforming?

Zen and the art of pep talks

The million dollar outsourcing query call

Cottage industries in India ruin India’s outsourcing reputation

Putting the ball in their court — outsourcing advice for beginners

What types of tasks are good to outsource?

Phone etiquette for outsourcing companies

Hiring people with great personalities

Indian companies who answer professionally are even worse

5 reasons you should have your outsourcing company under one roof

Pre-contracts for outsourcing: before the real contract!

6 habits of successful outsourcing companies

Is offshore outsourcing right for you?

Your heart already knows what you want to become in business

Outsourcing can save you 60-90% of costs

The concept of lower middle management

Outsourcing in Japan


Is it fair that American jobs are outsourced to India? (2015)

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In America, the debate over outsourcing has raged on for decades. Americans are outraged that their jobs are outsourced overseas; while companies are outraged that they can’t find suitable labor resources at a sustainable rate in America. So, who is right, who is wrong and why?

What goes up must come down
When America loses jobs, it is normally because there are not enough quality people available to do those jobs. Many manufacturing jobs went to China, Honduras, Vietnam and other countries simply because labor was so expensive, unreliable, and temperamental in the United States. Additionally, labor unions made it cost prohibitive to manufacture automobiles in the United States which nearly put many American car manufacturers out of business. For decades there were endless disputes between labor and management which were very disturbing and costly. Many manufacturers decided it would be easier to relocate somewhere where people actually wanted to work without all the hostility. However, despite tens of millions of American jobs being outsourced overseas, unemployment has been generally 5-10% over the years. Additionally, we are so short of labor, that we rely on a constant influx of Latin Americans and other immigrants to help do all types of jobs. America has a labor shortage, and no matter how many jobs are offshored, there will still be a labor shortage. Additionally, jobs sent overseas gain American currency as payment, and that payment comes back to us in the form of purchases of agricultural exports, toiletries, and other products. If you visit India, everything in their small stores seems to be made in America — you’ll recognize Tide, Head and Shoulders, Snickers and hundreds of other brand names.

If America starts really hurting…
Americans often want manufacturing to come back to the states. What they don’t realize is that for economic conditions to be ripe for manufacturing to come back, our labor rate would have to come down to $3 per hour. America would have to be in a permanent economic depression for labor rates to ever be that low. With the recent mass influx of Latin Americans into the United States, labor rates have been going down. Hispanics have a higher birth rate than Anglos and normally do labor intensive jobs which means that future labor rates in the U.S. will be very low as we will have a huge labor pool of Hispanics. Additionally, with technology and robotics becoming so developed in America, we will be able to compete with China for the first time in recent history. Chinese workers are not as efficient as American workers, and lack the robotics to help them decrease labor costs. It seems clear to me that tech-aided manufacturing is already making a comeback in the United States and could continue to prosper as labor rates in China rise.

What about programming jobs?
It is very difficult to find a programmer in the U.S. Most programmers are overloaded and there is a vast shortage of qualified programmers in America and overseas. It is common for programmers to leave jobs undone as other jobs come onto their plate. You might feel that is irresponsible, and you are correct. But, the work ethic and integrity today is not like it was years ago. This is part of the reason jobs are outsourced to India. Conversely, the level of responsibility or quality of work in India is dismal. There are some good programmers, but nine out of ten are not. Hourly rates and availability are where India can really compete against the U.S. After you factor in how little they get done per hour, and how much of the work is so sloppy that it needs to be completely redone — it no longer looks like a bargain.

Americans need to compete
Americans feel entitled to make a huge salary. Additionally, many Americans have a real attitude problem, ego, and are hard to manage. People in India are happy to work for less. An IT job is their ticket out of slums so miserable, you wouldn’t be able to stand even walking through one. When you see the level of desperation in India, you will see how Americans need to be a little more motivated to compete.

Call center jobs went to India and took a U-turn
Americans are always resentful that so many call center jobs went to India. Then Americans were once again dismayed that the quality of the call center employees in India really horrifying. The Indians got their karmic payback and most of their call center work was redirected to the Philippines. Even companies in India often outsource their call center work to Manila as the quality of the reps and the clarity of their English is so much better. Is it fair that Indian jobs are being outsourced to the Philippines? I don’t hear Indians wailing about this type of thing. They are too busy finding other ingenious ways of taking “our” jobs.

There is no “our”
There is no such thing as an American job. The job belongs to the employer. If an employer hires lousy workers, they will soon lose their business. In real life a company cannot just outsource any job wherever they want. They have to be very particular about the quality of the work being done. If the work is terrible, they lose a very expensive client and their reputation.

Does anyone want to work?
Ironically, I have been trying to outsource some call center work myself. However, nobody is emailing me back. I offered to pay more than their fee, but wanted to interview the workers myself just to make sure they were good. I guess people want me to sign a year long contract and hope for the best when it comes to figuring out which rep I get. Well, I am not going to guess anymore. I’m doing the work myself and automizing the rest. Now, “American” jobs are being done by an auto-caller. I think that my personal story is ironic — foreigners don’t even care if they get “our” jobs, and I don’t see any Americans begging to do my lousy calls either. In reality, it seems that nobody wants to work. No wonder companies outsource overseas. You can get someone who doesn’t want to work at a quarter of the price.

Outsourcing was first used as a business strategy in 1989

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According to Robert Handfield’s “A brief history of Outsourcing”, outsourcing was not formally used as a business strategy until the year 1989. Outsourcing is the delegation of particular tasks or projects to an outside company or consultant. These days, outsourcing is very popular and standard, especially for large corporations who have global networks of skilled people ready to assist.

In the past, it was considered not advisable for companies to outsource critical tasks or core competencies. However, now many companies are doing exactly that. In my experience, smart companies in the United States do not outsource purely to save money. They divide their workload into segments or components. They find which tasks are the least critical and outsource only those. Saving money on important tasks can get you into trouble and can backfire as a strategy if the provider company doesn’t get the job done correctly and on time as that can cost you a client.

Traditionally, companies outsourced tasks they just couldn’t handle themselves. Publishers outsourced composition, printing, and fulfillment regularly. Outsourcing support services didn’t start appearing until the 1990’s with tasks such as Human Resources, Data Processing, Mail Distribution, Programming, Security, etc.

Outsourcing is a great strategy to deal with the problem of fluctuating demand. If your business is sometimes very busy and other times very slow, you can decrease your permanent employees and hire other companies to handle your overflow. However, the real costs for outsourcing are deceptive. Many companies quote particular rates, but the real price for them to get the job done within particular time constraints are hidden as many companies do not guarantee delivery times.

Outsourcing can also reduce training time. If there are certain tasks you want to focus on, then you can train people for those. You can outsource other tasks which are not worth training your own people to do. Many small businesses engage in multi-tasking and have dozens of tasks to do. New and even old employees typically only want to do two or three of the dozens of tasks, so to get them done it is often easier to find an outside consultant.

Is it better to do everything yourself at varying levels of competency or to hire twenty consultants who are each experts in their niche field? This is a question only you can answer. But, outsourcing to freelancers, overseas BPO’s or domestic companies will give you some insight into the quality of what you are paying for.

In today’s world, outsourcing could be for various reasons. Searching the world to find the best people to give you the best results is one of the reasons for outsourcing. Cost effectiveness is another. Overflow management will continue to be a reason as well. Strategic partnerships are a standard business practice among larger companies and corporations. The problem is that for smaller companies, it is hard to find reliable service providers as the high quality providers tend to be monopolized by larger outfits. So, as a small business owner, blindly mimicking the tactics of the big boys is not an effective strategy. You need to research companies one by one and sample their work to see who is a real strategic asset for you and who is just an unreliable buffoon!

How does outsourcing work?

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There are different models for outsourcing. Big companies dominate this arena and often open up their own overseas offices or partner with others who have a reputable office overseas. Other companies hire individual freelancers domestically or overseas. It is also common for American or British companies to hire BPO companies in India, The Philippines, Romania or Africa to do a variety of tasks. Many BPO companies specialize in one type of task such as call center work while others can do anything from telemarketing to payment processing, bookkeeping, ecommerce set up and PHP programming.

The way outsourcing typically works is that a company in an industrialized country will need help getting some repetetive work done. They will often source companies overseas who can do the work for a fraction of the price domestically. Sometimes a quote will be given for a particular job while other times a long term service contract will be set up. Call centers often want you to commit to use a single rep for a period of one year while others will lease you an employee on a day by day basis. Programming houses typically charge per hour, but they can also bid for finished projects. The problem is that the specifications need to be very clear if someone is bidding on a completed project, and what if there are bugs in the program or if something doesn’t function correctly?

As with any other business arrangement, it is much easier if you know the people you are working with. If you have gotten reliable results from them for a year and you know the staff members personally, you are much safer with them than with a stranger regardless of what the contract says. A contract is only a piece of cyber-paper and doesn’t specify how good the “quality” will be. And if your contract is violated, how can you possibly enforce it if the company you are using is in Mumbai?