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outsource

BENEFITS OF OUTSOURCING

QAMS has found that the survey results below are consistent with what our clients have told us.  Certainly it is important to save time, money, and to improve productivity. However, the greatest benefit seems to come from outsourcing when the firm is suddenly able to focus completely on their core competency (i.e. law, consulting, finance, insurance, or whatever the case may be).

Top 10 Reasons Companies Outsource

Source: Survey of Current and Potential Outsourcing End-User, The Outsourcing Institute Membership

1. Reduce and control operating costs

Companies that try to do everything themselves incur vastly higher expenses, all of which are passed on to the customer. An outside provider's lower cost structure results in greater economies of scale and other advantage based on specialization, thus reducing a company's operating costs and increasing its competitive advantage.

2. Improve company focus

Outsourcing lets a company focus on its core business by having operational functions assumed by an outside expert. Freed from devoting energy to areas that are not in its expertise, the company can focus its resources on meeting its customers' needs.

3. Gain access to world-class capabilities

The best providers make extensive investments in technology, methodologies, and people. They gain expertise by working with many clients facing similar challenges. This combination of specialization and expertise gives customers a competitive advantage and helps them avoid the cost of chasing technology and training. In addition, there are better career opportunities for personnel who transition to the outsourcing provider.

4. Free internal resources for other purposes

Every organization has limits on the resources available to it. Outsourcing permits an organization to redirect its resources, most often people resources, from non core activities toward activities which serve the customer. The organization can redirect these people or at least the staff slots they represent onto greater value adding activities. People whose energies are currently focused internally can now be focused externally -- on the customer.

5. Resources are not available internally

Companies outsource because they do not have access to the required resources within the company. Outsourcing is a viable alternative to building the needed capability from the ground. New organizations, spin-offs, or companies expanding into new geography or new technology should consider the benefits of outsourcing from the very start.

6. Accelerate reengineering benefits

Reengineering aims for dramatic improvements in critical measures of performance such as cost, quality, service and speed. But the need to increase efficiency can come into direct conflict with the need to invest in core business. As non-core internal functions are continually put on the back burner, systems become less efficient and less productive. By outsourcing a non-core function to a world class provider, the organization can begin to see the benefits of reengineering.

7. Function difficult to manage/out of control

Outsourcing is certainly one option for addressing this problem. It is critical to remember that outsourcing doesn't mean abdication of management responsibility nor does it work well as a knee jerk reaction by a company in trouble.
When a function is viewed as difficult to manage or out of control, the organization needs to examine the underlying causes. If the requirements expectations or needed resources are not clearly understood, then outsourcing won't improve the situation; it may in fact exacerbate it. If the organization doesn't understand its own requirements, it won't be able to communicate them to an outside provider.

8. Make capital funds available

There is tremendous competition within most organizations for capital funds. Deciding where to invest these funds is one of the most important decisions that senior management makes. It is often hard to justify non-core capital investments when areas more directly related to producing a product or providing a service compete for the same money.

Outsourcing can reduce the need to invest capital funds in non-core business functions. Instead of acquiring the resources through capital expenditures, they are contracted for on an "as used" operational expense basis. Outsourcing can also improve certain financial measurements of the firm by eliminating the need to show return on equity from capital investments in non core areas.

9. Share risks

Tremendous risks are associated with the investments an organization makes. Markets, competition, government regulations, financial conditions and technologies all change extremely quickly. Keeping up with these changes, especially those in which the next generation requires a significant investment, is very risky.
Outsourcing providers make investments on behalf of many clients, not just one. Shared investment spreads risk, and significantly reduces the risk born by a single company.

10. Cash infusion

Outsourcing may involve the transfer of assets from the customer to the provider. Equipment, facilities, vehicles and licenses used in the current operations have value and are sold to the vendor. The vendor then uses these assets to provide services back to the client. Depending on the value of the assets involved, this sale may result in a cash payment to the customer.

When these assets are sold to the vendor, they are typically sold at book value. The book value can be higher than the market value. In these cases, the difference between the two actually represents a loan from the vendor to the client which is repaid in the price of the services over the life of the contract.

Five Phases of Outsourcing

1.Needs Assessment

QAMS will perform an assessment of your “AS IS” operations which will provide an accurate picture of organizational effectiveness and efficiency as measured by time, money, and performance.

A comprehensive questionnaire is used as a tool to gather most of the information needed. In addition, we’ll interview the person or people you think can help us to understand your current methodologies and processes.  If possible, we’ll watch and measure work being done.

2.Business Process Streamlining

By now we have come to clearly understand the needs and expectations of the internal client. We will also understand your firm’s goals and objectives. Then, based on best principles and practices, cross-training objectives, and best use of technology we’ll propose changes to the way work is being done with a view towards the “TO BE” operations.  

QAMS has no ties to any office equipment manufacturers.  Our obligation and commitment is strictly to our clients. Hence, QAMS will take an unbiased look at the office equipment and supplies being utilized and propose changes that would cut life cycle costs (including acquisition, maintenance, disposition, and replacement) based on the true needs and consumption history of your firm.

This process leads to a strategic vision and plan for your outsourcing decision.

3.Proposal for Outsourcing

Based on the results of Phase 2 QAMS will provide a clear and concise proposal to provide your firm with services.  The proposal will be thorough but easy to read and understand. The costs will be explained, detailed, and transparent. There will be no hidden or extra costs involved.  

We’ll include detailed job descriptions for all personnel proposed.  We’ll propose a management plan that will include all services to be provided, metrics-based business objectives, and a client meeting and reporting schedule.

Also, QAMS will propose an explicit well structured yet flexible contract that will provide a solid framework for success.

4.Seamless Transition

We know that the hard stuff is the soft stuff. Change can be a difficult thing especially if it’s not done right. We do it right. We know the hurdles and we know how to clear them. We prioritize our efforts to make sure that mission critical business is always well taken care of. Our people are trained and ready on day-one. We communicate constantly with the firm regarding what we’re doing, when we’re doing it, and how. Where feasible, based on recommendations of your company, we’ll hire people that were there already that clearly demonstrate a desire and ability to make the “TO BE” a huge success.  

QAMS always over-staffs by two people during the transition. Then after the transition those two people become the backup staff for your regular team during peak periods, vacation, and sick days.  

We utilize proven methodologies for successful change management.

5.Continuous Improvement

Our people receive significant cross-training and regular performance reviews. They are highly motivated and rewarded for efficiency and effectiveness. We constantly benchmark our business processes and seek ways and means for improvement. If something works very well at one of our other sites, we’ll propose trying it at yours. We periodically do customer satisfaction surveys and we always use the results of those surveys to improve and enhance our service. We stay abreast of new technologies and regularly gauge how those new technologies may benefit your firm.

 

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