business plan for an outsourcing company

How To Build An Outsourcing Strategy In 5 Steps + Examples

Businesses are in a never-ending race, trying to stay ahead of the competition, catch the latest market trends, and keep the cash flowing – all happening at once. While you strive to keep up with the business’s growing demands, there are a truckload of challenges staring you in the face. You have a great team but you also need the collective power of specialized talents from around the globe. This is where a great outsourcing strategy comes in handy.

Outsourcing is promising but it can actually get pretty tricky. Making sure you get the results you're aiming for while working with outsourcing companies depends on really knowing what's possible and what's not. You need to have a clear understanding of what tasks still belong to you and which ones you should delegate to them.

If you are new to this concept and looking to get your hands on it, our article is just what you need. Here, we will help you sculpt a great outsourcing strategy that is a sure-shot route to boost your company’s productivity and raise that ROI graph. Global talent awaits you. 

What Is An Outsourcing Strategy: A Quick Refresher

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An outsourcing strategy is a detailed plan to get some of your work done through partnering with external individuals or companies . Instead of doing everything in-house, you decide what business processes could be done more efficiently by others who specialize in those areas. These tasks might not be your expertise but are crucial for your business.

Imagine you are running a startup and have many things on your plate – from product development to marketing, customer service to financial management. It's a whirlwind of tasks and you're just one person. Here’s when you need to turn to strong outsourcing strategies !

A strategic outsourcing strategy is all about flexibility. It's not an all-or-nothing deal. You can outsource specific tasks or entire functions , depending on what makes sense for your business. 

When you outsource, you tap into expertise that might not be available in-house which gives you a competitive advantage over others. It is cost-effective too. Instead of hiring full-time employees for every role, you pay for the services you need when you need them.

5 Steps For Creating A Successful Outsourcing Strategy

We prepared a comprehensive guide that is a one-stop shop for all things outsourcing. It condenses all the important steps into a neat package and everything you need is right in there. So let’s take a detailed look at it.

Step 1: Define Your Goals & Needs

Before you start, get your ducks in a row. By ducks, we mean your business goals, needs, and even a few limitations. This step will set the coordinates for your outsourcing process and a whole lot of your success depends on how well you execute this one.

1.1. Assess Internal Capabilities & Limitations

Take a good, honest look at your in-house capabilities . What are you really good at? What could use a little boost? Maybe you've got an excellent marketing team but struggle to keep up with customer service operations. Identifying these strengths and weaknesses will help you target the right processes for outsourcing.

1.2. Assess Current Business Operations & Challenges

Now it's time for a bit of self-reflection. What are the pain points in your current business operations? Is there a specific process that seems to slow everything down? Pinpoint these bottlenecks – they're prime candidates for outsourcing.

Get down to the brass tacks. Take that list of operational pain points and start breaking them into smaller tasks or processes . Think about what tasks could be handled just as well or even better by an external outsourcing services provider. It could be data entry, payroll, IT support – you name it.

1.3. Set Clear Goals & Expectations

Outsourcing for the sake of outsourcing? That's not what we're aiming for. Set clear, measurable goals . Do you want to reduce response time in customer support by 30%? Cut down on software development costs by 20%? These goals give your outsourcing strategy direction and meaning .

1.4. Set Budget

Figure out how much you're willing to invest in this outsourcing venture. You don't want to be in over your head but you also want to have enough to make a meaningful impact . So tally up those dollars and cents and make sure you're not breaking the bank.

1.5. Create A Detailed Outsourcing Plan

Create a detailed outsourcing plan that provides instructions for your business strategy and operations . This plan spells out everything from A to Z. Clearly define the scope of the tasks you're outsourcing. Are you handing over just a slice of the pie or the whole thing? 

Outline the deliverables – what's the quality and quantity you're expecting? Set a realistic timeline – business process outsourcing isn't magic; it takes time to set up and get the gears turning. This document will not only prove handy for your current needs but also provide a roadmap for future outsourcing contracts.

Step 2: Choose The Right Outsourcing Model

Having the right outsourcing model can directly impact your operations, efficiency, and ultimately, your profits. Different models offer different benefits . All you have to do is to dig a bit deeper into each model and then match them with the goals you set in the first step.

Let’s make it easy for you. We’ll discuss 3 major outsourcing models to give you a clear picture of what each has to offer and figure out the perfect match.

2.1. Onshore Outsourcing

Imagine you're sitting in your office, sipping on your favorite coffee blend and discussing business strategies with a team that's located, well, across the town. That's onshore outsourcing for you. This approach involves partnering with outsourcing companies within your own country . No time zone issues, no language barriers, and you're still benefiting from external expertise.

When To Consider Onshore

• If the nature of your business requires compliance with strict regulations that are specific to your country.
• If communication barriers are a major concern and you prefer a shared language and cultural understanding.
• If you want to keep a close eye on your outsourced team and collaborate in real-time without worrying about time differences.

2.2. Offshore Outsourcing

Offshore outsourcing is partnering with a service provider in a different country, often one with a lower cost of living . This can save you big while still accessing the best talent . Think of it as expanding your team's reach to a global scale. Yes, you might have to deal with time zone challenges and perhaps some language nuances but the potential benefits can be substantial.

When To Consider Offshore

• If your business operates in multiple time zones and requires round-the-clock productivity.
• If you're in a market where specific skills are scarce locally but you can find qualified professionals elsewhere.
• If you're looking to cut costs while maintaining quality as labor expenses will be lower in the outsourcing destination.

2.3. Nearshore Outsourcing

Now let's find the middle ground. Nearshore outsourcing is when you collaborate with a service provider in a neighboring or nearby country. This gives you a balance between proximity and cost-effectiveness . While there might still be some time zone differences and potentially slight language variations, they are usually easier to manage compared to offshore outsourcing.

When To Consider Nearshore

• If you want to explore new markets or extend your business reach to adjacent regions.
• If you're looking to hire talent that has similar skill sets and cultural understanding because of geographic proximity.
• If you want a balance between cost savings and close collaboration without the extreme time zone differences of offshore outsourcing.

Step 3: Select The Right Outsourcing Partner

Selecting the right outsourcing partner is about more than just checking boxes. It's about finding someone who complements your internal business processes , understands your company culture, and can help you optimize those processes. 

Here’s how you can make sure that you're picking a partner that's a good fit for the long run.

3.1. Researching Potential Outsourcing Providers

Start by looking into different outsourcing firms or third-party companies that specialize in the services you're looking to outsource. Check out the online platforms, industry forums, and directories. Google is your gateway but Pearl, Upwork, and Freelancer are the ones that you should consider first.

The power of word-of-mouth is unmatched. Reach out to your professional network – colleagues, mentors, peers – and ask for recommendations. This initial phase is all about casting a wide net. The larger your candidate pool, the more informed your decision will be later on.

3.2. Evaluating Expertise, Experience, & References

Now that you have a list of potential partners, it's time to dig deeper. Look into their expertise and experience . Have they been in the business long enough to understand the ins and outs of the processes you're looking to outsource? Check out their track record – successful projects, satisfied clients, and maybe even awards or recognition in their field.

References are golden. Reach out to companies who've worked with your potential outsourcing partners before . Ask them about their experiences – the good, the bad, and the surprising. It will tell you what you are signing up for.

3.3. Ensuring Cultural Compatibility & Communication Capabilities

Remember, you're not just outsourcing tasks – you're partnering with another company. This means your cultures need to gel well. Look into the values, work ethics, and business practices of the potential outsourcing company . If your company is all about innovation and quick decision-making, partnering with an overly bureaucratic firm will be a mismatch.

Make sure the potential outsourcing provider can communicate effectively and clearly. You don't want misunderstandings and miscommunications causing hiccups in your projects. Don't be afraid to test their communication skills during your interactions – it's a litmus test for how well you'll work together when the real projects start.

Step 4: Implement & Manage The Outsourcing Strategy

This step is where your well-thought-out plan starts taking shape in the real world. It's about blending the outsourcing company smoothly into your existing ecosystem. Let's break it down into 3 important sub-steps:

4.1. Ensure Knowledge Transfer & Training

Identify what knowledge is critical for them. This could range from understanding your company's culture and values to specific project-related details.

Create detailed training materials, conduct workshops, or even arrange shadowing sessions where your in-house experts work side by side with the outsourced team . Encourage an interactive learning environment where questions are welcomed and clarifications are made.

4.2. Set Up Necessary Infrastructure & Tools

Identify the tools and software your outsourced team will need. This could be:

• Data-sharing tools like Google Drive and Dropbox
• Project management software like Trello , Asana , or Jira
• Communication platforms like Slack and Microsoft Teams

Keep these tools and software updated to ensure they stay effective and secure. Regularly assess whether they're meeting the needs of both your in-house and outsourced teams.

Consider data security too – establish access controls to protect sensitive information while ensuring that the outsourced team can collaborate effectively.

4.3. Ensure Alignment Between In-House Teams & Outsourced Partners

Set up regular meetings to discuss progress, challenges, and goals. Create channels for instant communication – whether it's email, messaging apps, or video conferencing platforms. Define roles and responsibilities clearly to avoid confusion.

Alignment isn't just about task coordination; it's about shared objectives and understanding. Help both your in-house and outsourced teams see the bigger picture and how their efforts contribute to the overall success of the company.

Step 5: Monitor, Evaluate, & Optimize

This step is where we roll up our sleeves and make sure that our outsourcing efforts are not only paying off but also continuously improving. Let’s discuss how you can achieve this. 

5.1. Establish Performance Metrics & KPIs

To truly gauge the effectiveness of your outsourcing strategy, you need to have performance metrics and KPIs in place that tell you how well things are going. For instance, if you outsource your customer support, your KPIs should include response time, customer satisfaction ratings, and resolution rates. 

If it's about software development, you should track project completion time, bug fix rates, and code quality. The idea is to align these metrics with your initial objectives so that you have a clear picture of whether you're getting the outcomes you wanted.

5.2. Regularly Trace & Assess Outcomes

It's not a "set it and forget it" deal. You should regularly track and assess how things are unfolding. This could be as simple as weekly or monthly reviews , depending on the nature of your outsourcing engagement. When you compare actual performance against your established metrics and KPIs, you can identify trends, spot any deviations, and understand whether you're meeting your goals.

These assessments are also a chance to have open communication with your outsourcing partner . Discuss what's working well, areas that need improvement, and any changes in your business environment that might impact the outsourcing arrangement.

5.3. Address Any Issues Or Deviations Promptly

In the world of outsourcing, as in life, things might not always go as planned and that's okay. The key here is to tackle issues head-on and as soon as they arise . If you notice a dip in performance or a deviation from the agreed-upon standards, don't wait around hoping it will magically improve.

‍ Reach out to your outsourcing partner , share your concerns, and work together to find solutions. The sooner you address these issues, the smoother your outsourcing journey will be. Remember, it's a partnership and both sides should be invested in making it work.

5.4. Continuously Optimize The Outsourcing Strategy

Your outsourcing strategy isn't etched in stone. It's a dynamic process that should evolve based on your experiences and changing business landscape. Analyze the data and insights you have collected to identify areas where you can do even better.

This could mean tweaking your processes, adjusting your KPIs, exploring new technologies, or even rethinking the scope of your outsourcing. The idea is to never settle for "good enough." Strive for excellence and be open to innovation and adaptation.

11 Examples Of Having The Right Outsourcing Strategy In Place

Let's discuss 11 examples that show how having the right outsourcing strategy can help companies optimize business processes.

I. IT Services

Imagine a startup that needs to maintain its complex IT infrastructure. Instead of hiring a full in-house IT team, they outsource their IT services to a specialized firm . This way, they can tap into the expertise of professionals who specialize in IT maintenance while also reducing the costs associated with hiring and training large IT staff.

II. Customer Support

Many large corporations outsource their customer support to call centers in different countries. This not only reduces labor costs but also provides 24/7 customer service coverage because of time zone differences. This gives them a dedicated team available to address customer queries and concerns around the clock.

III. Manufacturing

Think about a fashion brand that designs clothing but doesn't own its own production facilities. Instead, they outsource the manufacturing process to third-party factories. This lets the brand focus on design and marketing while the manufacturing experts handle the actual production efficiently.

IV. Content Creation

Let's say a marketing agency needs a constant stream of blog posts and social media content. Instead of hiring multiple full-time writers, they outsource content creation to freelance writers or specialized content virtual assistants. This way, they get diverse perspectives and a steady flow of content without the overhead of hiring additional staff.

V. Payroll Processing

Consider a medium-sized business with a complex payroll structure. Rather than handling complex tax regulations themselves, they can hire a virtual assistant. This guarantees timely and accurate payments to employees without getting entangled in payroll calculations.

VI. Data Entry & Management

Picture a company dealing with heaps of customer data that needs organization. They can outsource data entry and management tasks. A data entry virtual assistant can ensure that information is organized and easily accessible without overloading the in-house team.

VII. Research & Development

Even big corporations sometimes outsource parts of their research and development projects. Let's say a pharmaceutical company wants to explore a new drug molecule. They collaborate with external research institutions to leverage their expertise in a specific area while sharing the risks and costs of development.

VIII. Human Resources (HR)

Many companies, especially small businesses, outsource their HR functions. This includes tasks like recruitment, payroll processing, and employee benefits management. It's like having an HR department on call, minus the HR department setup costs.

IX. Bookkeeping & Accounting

Think about a small business owner who isn't exactly a numbers guru. They can outsource their bookkeeping and accounting tasks to professionals. This way, they're not stuck deciphering spreadsheets and they ensure their financial records are accurate and tax-compliant.

X. Market Research

A marketing team is launching a new product. Rather than diverting their energy into extensive market research, they can hire a research virtual assistant. This way, they get valuable insights into consumer preferences and trends without taking focus away from product development.

XI. Administrative Tasks

Let's consider a founder of a Fintech startup. This founder has an incredibly demanding schedule. To share some of his workload, the founder decides to outsource tasks to an executive assistant . The assistant takes charge of the CEO's calendar , scheduling meetings, conferences, and appointments in a way that maximizes efficiency and minimizes conflicts.

Why You Should Make PA Part Of Your Outsourcing Strategy?

At Pearl , we understand that startups are all about juggling a thousand things at once – from refining your product to managing your team and keeping the ship sailing smoothly. Our executive assistants know this all too well and are trained to take charge from the word go. 

When we say we hire the top 1% of talent, we really mean it. Our rigorous selection process ensures that only the most skilled and dedicated EAs join our team. With over 100 CEOs served , our executive assistants have handled the chaos of board meetings and event planning and mastered the art of keeping CEOs on top of their game . 

Our executive assistants are from the Philippines so they naturally possess strong work ethics and excellent English language skills. Hiring an executive assistant through Pearl isn't just about saving dollars; it's about smart spending. You get expert assistance at a fraction of the cost of hiring an in-house resource. How? We tap into the brilliance of university graduates who bring their A-game without breaking the bank.

A great outsourcing strategy gives you a way out of ineffective sticky situations by cutting costs, increasing efficiency, and accomplishing specialized tasks. But there are certain preliminaries you should follow – internal readiness assessments to ensure that it will benefit your organization in many ways. 

That's where we come in. At Pearl, we understand that outsourcing isn't just a buzzword; it's a strategic move that needs careful planning. Our team specializes in finding the perfect executive assistants who can seamlessly join your efforts and supercharge your operations.

Ready to dive in? Let's have a chat and figure out how Pearl's executive assistants can be the magic ingredient that takes your outsourcing strategy to the next level. Book a consultation today and explore the possibilities.

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BPO Company Business Plan [Sample Template]

By: Author Tony Martins Ajaero

Home » Business Plans » B2B Sector

Are you about starting a BPO company? If YES, here is a complete sample BPO business plan template & feasibility report you can use for FREE .

Okay, so we have considered all the requirements for starting a BPO company. We also took it further by analyzing and drafting a sample BPO service marketing plan template backed up by actionable guerrilla marketing ideas for BPO companies. So let’s proceed to the business planning section .

One of the most lucrative businesses for an entrepreneur to start up today is a Business Process Outsourcing (BPO). A new BPO company might not be so easy to start up especially as there are already established BPO companies making waves and dominating the scene, however, as a new start-up, one can effectively compete by providing services that would readily fill in the gap.

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A BPO company usually handles certain aspects that relates to a business operation such as call centers, finance, human resources, cleaning services or accounting. BPO companies sprung up due to the fact that businesses needed to outsource their non-core functions in order to be able to concentrate on the core functions of their company, sustain themselves and expand.

Using the services of a BPO company is far cheaper for businesses which make BPO companies to be a highly lucrative business. Another important aspect that you would need to consider before starting your business, is a business plan. It is for this reason that a sample BPO business plan is made available for you below;

A Sample BPO Startup Business Plan Template

1. industry overview.

The Business Process Outsourcing (BPO) industry has no dominant company with a large share of the market. The industry is valued at $136 billion and has grown at a 4% per annum between the periods of 2010 to 2015. There are more than 162,000 such businesses in the united states of America, employing more than 900,000 people.

The industry fared well from 2010 to 2015 and this is due to the fact that the US economy vastly improved due to the rising revenue especially in the finance and accounting sectors, human resources industries as well as credit card services and insurance sectors.

Also, employers in the above named sectors outsourced to BPOs in order to control rising costs due to wage increases and rising health insurance.

According to analysis, the industry will continue to experience a fair percent of growth till the year 2022, especially as companies in the affected sectors will be pressured to increase wages for their employees as well as healthcare insurance costs.

According to IBISWorld, the BPO industry is in its growth stage and will grow at a rate of 3.9% over the next 10 years to 2022. In comparison, the economy of the United States will not grow that high as it will grow at 2.5%. This therefore depicts that the industry is a growing one.

Globally, the market for BPOs will reach $220 billion by 2022, which will be due to the fact that companies will be pressured to increase customer satisfaction and improve operational efficiency whilst reducing costs to a reasonable level. Te industry’ growth is due to the fact that businesses have realized how important BPOs are and how they help reduce business risks and increase efficiency.

The United States leads the BPO market globally; however, the Asia-Pacific has the fastest growing market with a CAGR of 10%.

While the Philippines are seen as a strong competitor for BPOs globally, India remains the most lucrative destination for BPOs due to its financial attractiveness, availability of people and skills as well as an appropriate business environment.

Globally, the BPO market revenue declined by $15 billion in 2015 compared to the previous year. The revenue globally for the BPO industry therefore stood at $63.5 billion. Europe, Middle East and Africa generated the largest share of revenue for the BPO industry globally.

2. Executive Summary

Citotech BPO LLC is a standard company that will be located in Houston – Texas to serve all our clients here in the United States and abroad. We intend to provide traditional customer care operations and internal business functions to our various clients as a way to help them handle the non-core aspects of their business.

We are in business to generate revenue and make profit here in the United States of America and our vision is to offer high valued service to our clients and ensure that we not only met up with our clients’ expectations but exceed them as well. We also intend to be amongst the top three BPO companies here in the United States of America by 2023.

We are strategically located in Houston – Texas as it will be very easy for our clients to get to us, whilst easily accessible to our employees. Our location also allows us to have low overheads as well as running costs.

Procuring the best equipment with which to handle our business is a must for us so that we could provide our clients with best service. We also intend to build a business structure that will run smoothly and allow us to achieve our desired goals and objectives.

We will hire the right number of employees who are qualified and competent and who have aligned with our vision as a company and are committed to ensuring that we attain the height we intend for our business.

We will ensure that we provide a conducive and work friendly environment for our employees so that they will be able to focus on work. We will also ensure that they get the right training that will not only enhance their skills but boost productivity for us as well.

We will ensure that our employees are well paid and have the best welfare structure across similar start-ups such as ours in the industry. We know how this can boost their work output and so are willing to ensure that they remain motivated.

Finally, our owner Mr. Steve McMahon is a prominent business man and property developer, who has several businesses both here in Texas and all around the United States of America. He has several years of business experience and all his companies are successful in their own right. He has ensured that only the best are brought to work at Citotech BPO LLC.

3. Our Products and Services

Citotech BPO LLC intends to offer traditional customer care operations and internal business functions as its core functions here in Houston – Texas.

However, we also intend to boost our revenues as well by offering other services that are related to our core functions such as trainings and consultancy services. This is so as to make profit, re-invest part of the profits back into our company and boost our bottom line as well. Below are some of the services we intend to offer our various clients;

• Provision of customer care services to our clients
• Provision of other outsourcing services such as accounting and finance
• Consultancy services

4. Our Mission and Vision Statement

• Our vision is to offer high valued service to our clients and ensure that we not only met up with our clients’ expectations but exceed them as well. We also intend to be amongst the top three BPO companies here in the United States of America by 2023.
• In order to achieve our vision, we intend to ensure that we build a business structure that has committed; professional and highly dedicated employees to allow us attain our goals and objectives. We will also ensure that we get the right equipment that will allow us carry out our job to the highest standard

Our Business Structure

Building the best business structure is very important for us as a business that takes its affairs very seriously and due to this we are willing to go the extra mile to ensure that we hire the best hands that are not only highly qualified but also have the experience to ensure that we are able to attain our desired goals and objectives here at Citotech BPO LLC.

We will be sourcing for highly intelligent individuals who understand what it means to work with a start-up such as ours and ensure that we get to be the preferred BPO company or our clients here in Texas as well as around all the United States of America.

Due to this fact we are going to ensure that the employees we get understand and are aligned with our goals as a company and that our management staff will ensure that our business ethics and standard remains high at all times.

Because we would not be running a conventional BPO company due to the various services that we would be offering, we will be hiring more employees than the average BPO company, to handle all the various responsibilities and tasks so that all the different aspects of the company will run smoothly as one unit, with everyone knowing and understanding their responsibilities.

Below is the business structure we intend to build at Citotech BPO LLC;

Chief Executive Officer

Human Resources and Administrative Manager

Business Development Manager

Infrastructure Manager

Systems Administrator

Frontline Responders

Marketing Executives

Maintenance Department

Security Guard

5. Job Roles and Responsibilities

• Drafts and formulates the company’s core policies
• Drafts the budget and sources for capital for the company
• Reviews policies and removes or modify ineffective ones
• Sources for and hires competent and qualified employees to work for the company
• Ensures that all the administrative functions of the company are effectively coordinated
• In charge of employee welfare package, orientation, induction, performance appraisals and dismissal
• Carries out research on new businesses ideas in order to generate more source of revenue for the company
• Reviews company’s services and looks for ways to upgrade the services
• Works with the marketing executives to determine how corporate sales goals can be achieved
• In charge of all the IT and security systems in the company
• Helps to implement updated solutions across all the company’s infrastructure
• Ensures that company’s data is secure and runs efficiently
• Responsible for the implementation of a network security plan for the organization
• Keep up-to-date with changing network technology and how it is likely to affect the company
• Review software and hardware and recommend upgrades when necessary
• In charge of preparing all the financial information, statement and budget on behalf of the company
• Ensures that the company’s tax records are up-to-date and that it is submitted to the tax authorities on time
• Ensures that the company’s budget is effectively implemented
• In charge of attending to client’s customers’ inquiries, complaints and feedbacks on behalf of the organization
• Keeps up-to-date with industry trends of clients and company policies so as to pass accurate information to the client’s customers
• Ensures that clients are well attended to as well as keep an accurate database of logbooks on behalf of the organization
• Drafts the right marketing strategies on behalf of the organization
• Meets with high level clients and conducts direct marketing on behalf of the organization
• Identify new markets for the company
• Ensures that the equipment bought are genuine
• Carries out light repairs on the equipment in the company
• Installs new equipment and ensures that it works well
• Patrols the premises at night to ensure that no intruder enters
• Monitors the surveillance cameras to ensure that the building is secured at all times
• Carries out any other duties as determined by the management
• Keeps the premises and convenience clean at all times
• Ensures that cleaning supplies are always in stock
• Carries out any other duties as directed by the Human Resources Manager

6. SWOT Analysis

Our intention of starting our own BPO Company is so that we would run a standard business and in order to achieve this, we hired the services of a reputable business consultant here in Texas to look at our business concept and determine if starting this company was the best thing especially as regards the location we are in.

The business consultant was also to help determine if we were going to thrive and compete favorably against our competitors all around the United States of America.

In respect to our request, the business consultant took stock of our strengths, weaknesses, opportunities and threats and used this to determine if we were likely to survive in the BPO industry. Below is the SWOT analysis that was conducted on behalf of Citotech BPO LLC;

We have a strong client relationship management which has allowed us to retain a high number of our clients who outsource several aspects of their business to us and allow us also boost revenue for our company. Part of our strength is the fact that we offer standardized services and deliver processes, resources and tools in an efficient and effective manner.

Our employees are highly competent and qualified and know what it takes to achieve organizational goals. We also have publicity strategies in place that will allow increase awareness for our BPO Company. The various services we offer has also given us an edge over our competitors.

Since we are relatively a new company, we have limited brand presence outside of Texas and this is due to the fact that we are running on a tight budget, which has not allowed us to promote our company as we would have liked. There is also a perceived complexity which has affected our vertical concentration.

• Opportunities

There are several opportunities in this market and they include the fact that there are enough customer bases to be developed and cultivated. There is also an opportunity for us to gain more markets as we expand our business.

The threats that we are likely to face are; declining or slow revenue growth due to a slow economy or the arrival of a major competitor. Every business faces threats and ours is no different, but we have laid down strategies to overcome any challenges we might face.

7. MARKET ANALYSIS

• Market Trends

The BPO industry is very vital to the growth of certain businesses and as such most have developed comfortable relationships that have gone on for decades with their clients. As this relationship grows, these BPO companies are offering their clients consultancy services due to the familiarity with the client’s core business and culture. This is leading to the evolvement of the industry.

A niche of BPOs has started evolving and is known as impact sourcing which is built on the foundation of social responsibility.

The aim of impact sourcing is to deliver quality service at low cost while employing those that were socioeconomically disadvantaged. This is gaining traction as corporations are looking to meet their diversity and social responsibility goals.

Another niche is the knowledge process outsourcing (KPO) where businesses have started to outsource core business services to third parties. This field dwells on tasks that require high research and analytic skills.

8. Our Target Market

There are a huge number of companies (clients) that demand the services of a BPO Company for various reasons. However, in order for us to truly determine our target market, we intend to conduct a thorough market research that will allow us map the necessary strategies in order to attract them to our company.

The aim of the market research we intend to conduct will allow us understand the characteristics of our target market and what to expect from them. In regards to this, we are going to offer our services to the following people;

• Market operators
• Consultancy firms
• Training organizations
• Telecom and IT companies
• Cloud providers
• National regulatory authorities
• Government and public sector
• Financial institutions
• Small and medium enterprises

Our competitive advantage

Our BPO Company is a business that has been established with the intention of offering outsourcing services that are value-added to all our customers. We will offer our services in such a way as to allow us compete favorably against our competitors. We have therefore drafted strategies that would allow us have an edge over our competitors.

We are located in a strategic location that is not only conspicuous but also allow all our employees and clients to easily access us. Our location is one that is also quite cheap enabling us have low overheads that will have an impact on our rates.

We have a highly qualified management team that is not only highly experienced but is also aligned with our core values and objectives.

Our management team are highly committed and dedicated and have the capability of bringing our business to the level we intend for it nationally. All our core objectives are always being communicated and projected positively internally and externally.

We intend to source for and hire employees that are competent and qualified to handle all the responsibilities in our BPO Company. Our employees understand the industry that we are in and use the trends to ensure that we are able to achieve all our goals and objectives.

Finally, we will ensure that our employees are well paid and have the best welfare packages as compared to others in similar start-ups in the same industry.

We will ensure that our employees work in a safe and conducive environment. Our employees will also undergo continuous trainings that will further enhance their skills and also boost productivity for our company and boost the bottom line of our business and allow us grow.

9. SALES AND MARKETING STRATEGY

• Sources of Income

Citotech BPO LLC is established with the sole intention of generating revenue and maximizing profit here in the United States of America. We intend to offer all our clients various services that will bring in this revenue to ensure the sustainability of our business. We therefore intend to generate revenue for our BPO Company via offering the following services;

10. Sales Forecast

The BPO industry is one that is regarded as saturated but regardless of this fact the industry is still has several services that has kept the industry stable and can allow for the influx of more businesses.

We are located in a strategic location here in Houston – Texas which has made it quite possible for us to be optimistic about the revenue we will generate from our BPO Company. We are quite sure that the profits that we will generate from our business will sustain and allow us grow our business within a year of starting and running our operations.

We conducted a thorough evaluation of the BPO industry here in the United States of America that would allow us carry out an accurate sales projection.

The analysis of the sales projections we conducted were gotten from data and information from similar startups that were not only based here in Houston – Texas but all over the United States of America as well. Below is the sales projections that was conducted for Citotech BPO LLC;

• First Fiscal Year-: $350,000
• Second Fiscal Year-: $700,000
• Third Fiscal Year-: $1,400,000

N.B : We conducted the above sales projections based on several assumptions and information that were gotten from start-ups here in Texas and the United States of America. Some of the assumptions we used were that the economy would be stable enough and that there would not be an arrival of a major competitor.

It should however be noted that should there be a change in any of the assumptions, it would have a negative or positive impact on the projected figures.

• Marketing Strategy and Sales Strategy

Every business no matter its level requires marketing in order to thrive and this is why we have set aside a budget for marketing our company.

Marketing is vital for the growth of any business because not only does it generate revenue and boost a company’s growth, it also allows the companies generate interest and increase awareness amongst its target market. The marketing strategies we would draft for our BPO Company are ones that would allow us penetrate the target market and gain a huge share.

Before drafting our marketing strategies, we will conduct a thorough marketing survey using accurate data that will allow us understand our target market and create effective marketing strategies.

We will leverage on conventional and unconventional means of marketing our brand to all our existing and potential customers. These marketing strategies we will create will allow us have a marketing budget that we will channel to the right use.

We intend to hire the services of a reputable marketing consultancy firm here in Texas who has the experience that would be needed to move our BPO Company to the level that we want it to be and also allow us effectively compete with our competitors.

The marketing consultancy firm we have engaged will help us draft the right strategies that would be of great benefit to our business and allow us generate the revenue that would boost our business. We have also empowered our marketing executives to also draft the right strategies that should be in line with our corporate policies and goals.

They will modify or remove ineffective strategies so that we don’t waste money using the wrong channels to market our BPO Company. Therefore, the marketing strategies that we would adopt in generating revenue for Citotech BPO Company are;

• Ensure that we place adverts in local and national newspapers, magazines as well as on radio and television stations
• Empower our marketing executives to engage in direct marketing
• Formally introduce our BPO Company to organizations and other stakeholders in the industry as well as in the United States of America
• Throw an opening party that will generate interest and create awareness for our BPO Company
• Ensure that our business is listed in online and offline directories
• Use social media platforms such as Facebook, Twitter and Google Plus in order to market our BPO Company

11. Publicity and Advertising Strategy

Once a business has been set up, it is important that the business is promoted vigorously. Promoting a business is very important as this is the way that not only awareness is created for the business but also revenue is generated from the exposure as well.

The BPO industry which is already termed as a saturated market, will require intense publicity if it intends to stand out from others and generate revenue.

To ensure that we create the right strategies for our BPO Company, we intend to hire the services of a reputable brand consulting company who have had several years of experience in branding companies in this industry and who would know what strategies would be right for our business and promote us positively to our clients.

We will ensure that the crafted strategies will be one that will not only communicate our brand but will also allow our brand stand out. Below are some of the publicity and advertising strategies we intend to use in promoting Citotech BPO LLC;

• Create a website that is professional and explains what we will be offering our clients
• Use social media platforms such as Facebook, Twitter and Google Plus to our advantage by posting updates with special information weekly
• Throw quarterly contests and special offers an use hash tags to make sure our brand trends
• Attend trade shows and events in order to network, know about new technologies and participate I workshops and presentations that would bring new ideas
• Join relevant associations in order to have valuable information on industry trends and allow others know about our progress
• Install billboards in various strategic locations all around Texas

12. Our Pricing Strategy

Due to the fact that we would be offering a service, it might not be so easy to determine how to rightly charge our clients especially as we would be offering various other services in addition to our core service.

We however will deploy the following strategy that will allow us determine what factors we would use in determining the right rates for our clients. Some of the factors we would use are cost of leasing the facility, power costs, property taxes and what our nearby competitors are offering.

However, since we are relatively new to the market, we intend to start off with lowering our rates for at least two months in order to increase awareness about our business and also attract the needed clients to our business. Lowering our rates for the first two months will also allow us gain a sizeable share of our target market.

After a careful study of our proposed discounted rates, we have found that even though our revenue might be low during this period, we would not be running at a loss in any way.

• Payment Options

Due to the various services that we will offer at Citotech BPO LLC, we will offer different payment services that will suit the different business preferences of our customers. Our payment options will be made to be convenient for our various clients. Therefore, the payment options that we will make available to our different clients are;

• Payment via check
• Payment via online payment portal
• Payment by bank transfer

The above payment options which were carefully chosen by us will work without any sort of hitches for our clients and will also be very convenient for our business as well.

13. Startup Expenditure (Budget)

In order to set-up and run a standard business process outsourcing company, one would require all the equipment that will used to be genuine and be of a high quality so as to be able to withstand the heavy workload that they would be required to carry out.

The bulk of the things that the generated capital would be used on asides from procuring equipment are, leasing and renovation of a facility, paying the salaries of employees and utility bills for at least six months, and ensuring that there is sufficient power.

Therefore the key areas where we intend to spend our start-up capital on are;

• Total fee for registering Citotech BPO LLC in the United States of America – $750
• Obtaining of licenses, local permits, legal services as well as accounting and browser-based call center software – $1,250
• Insurance policy (general liability, equipment insurance, property insurance and workers’ compensation) – $3,000
• Cost of hiring a business consultant – $2,000
• Leasing and renovating a 20-seater facility for use for at least a year – $20,000
• Operational cost for the first 6 months (salaries of employees and payment of utility bills) – $200,000
• Other start-up expenses which includes (workstations, computers, telephone, office furniture, ventilation, lighting, secure internet) – $25,000
• Cost of purchasing office supplies (staplers, folders, paperclips, pens, paper, ink and pencils) – $5,000
• Marketing promotion expenses (general marketing expenses and promotion activities for grand opening ceremony) – $5,000
• Cost of purchasing an official vehicle – $30,000
• Cost of launching a website – $1,000
• Cost of throwing a grand opening party – $5,000
• Miscellaneous – $12,000

From the above analysis, we would need an estimate of $310,000 to be able to start and successfully set up a BPO company here in Houston – Texas.

It should be noted that the above capital stated will be used to pay the salaries of employees and utility bills such as electricity and water for at most 6 months. We will also use part of the capital to lease and renovate a 20-seater facility as well as procure the equipment that will be used.

Generating Funding / Startup Capital for Citotech BPO Business

Citotech BPO LLC, is a business outsourcing company that is owned by Steve McMahon, a prominent business man and property developer, who has several businesses both here in Texas and all around the United States of America. Steve will not be seeking for external investors for his business and so will likely limit his sourcing of income to just two avenues;

The two different areas where Steve McMahon intends to generate capital from are;

• Generate 40% of capital from sale of some his stock
• Approach the bank to loan 60% of the capital

N.B : Steve sold some of his personal stock for $124,000 in order to generate the first capital for his business. He approached the bank in request for the sum of $186,000 so as to be able to kick-start his business.

The loan will be repaid in 7 years at the rate of 3% per annum and has already been approved by the management of the bank. All necessary papers have been signed and the Citotech BPO LLC’s account will be credited by the end of the week.

14. Sustainability and Expansion Strategy

In order to ensure that we grow our business to an enviable level, we intend to focus on several strategies that would allow us not only thrive but also excel as well. Some of the factors that we intend to focus on are; building a strong business structure, retaining a high rate of our loyal customers and also reinvesting in our business in order to ensure that we remain for as long as we should.

Building a business structure is very vital because not only will it allow us to start and run our BPO company with as few hitches as possible, it also enable us to be able to focus on our core service and achieve our goals more quickly.

We will hire qualified and highly competent employees that do not only have the necessary experience but also are aligned to our core values and are committed to ensuring that we are able to grow from a start-up to becoming a national force that is able to compete favorably with our competitors.

We will ensure that our employees are well trained so that their skills will not only be enhanced but will also ensure that the productivity of our company are enhanced.

We will also ensure that our employees are well paid and have a great welfare package that is better than their counterparts in similar start-ups such as ours. We will also ensure that the environment we will use for our employees is conducive.

We will ensure that we retain a high level of our clients because we know how valuable our clients are to us. Our aim is to ensure that we not only meet with our clients’ expectations but also surpassing them as well. We will offer our customers high quality service that is commensurate with our core policies.

We will ensure that all our loyal customers are rewarded with incentives every once in a while. We also intend to offer contests and other attractive programs in a bid to attract new customers to patronizing our services.

For our business to grow to an enviable standard, we will re-invest 25% of our profits back into the business. This is to ensure that we have a solid bottom line and that our BPO Company is able to run itself without having to sources for funding externally all the time. We intend to focus on these three factors as we believe that we would be able to suitably sustain and grow our business.

Check List / Milestone

• Business Name Availability Check: Completed
• Business Registration: Completed
• Opening of Corporate Bank Accounts: Completed
• Securing Point of Sales (POS) Machines: Completed
• Opening Mobile Money Accounts: Completed
• Opening Online Payment Platforms: Completed
• Application and Obtaining Tax Payer’s ID: In Progress
• Application for business license and permit: Completed
• Purchase of Insurance for the Business: Completed
• Conducting feasibility studies: Completed
• Generating capital from family members: Completed
• Applications for Loan from the bank: In Progress
• Writing of Business Plan: Completed
• Drafting of Employee’s Handbook: Completed
• Drafting of Contract Documents and other relevant Legal Documents: In Progress
• Design of The Company’s Logo: Completed
• Graphic Designs and Printing of Packaging Marketing / Promotional Materials: In Progress
• Recruitment of employees: In Progress
• Creating Official Website for the Company: In Progress
• Creating Awareness for the business both online and around the community: In Progress
• Health and Safety and Fire Safety Arrangement (License): Secured
• Opening party / launching party planning: In Progress
• Establishing business relationship with vendors – wholesale suppliers / merchants: In Progress
• Purchase of trucks: Completed

How to Write a Business Plan for an IT Outsourcing Company That Works

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Welcome to our blog post on how to write a business plan for an IT outsourcing company in 9 easy steps. In today's fast-paced technology-driven world, the demand for IT services continues to grow at a rapid pace. In fact, according to recent statistical data, the global IT outsourcing market is projected to reach a value of $413.7 billion by 2021, with North America being the largest market in terms of revenue.

So, if you are considering starting your own IT outsourcing company, now is the perfect time to capitalize on the industry's growth and establish a successful business. To help you get started, we have curated a comprehensive checklist of 9 essential steps to guide you through the process of writing a business plan that will set the foundation for your company's success.

Let's dive right in and explore each step in detail, starting with conducting market research. By understanding your target market and analyzing your competitors, you will be able to identify opportunities and challenges that will ultimately shape your business strategy. This knowledge will allow you to determine your core services and offerings, define your business objectives and goals, and develop a pricing strategy that reflects the value you provide.

Next, we will delve into creating a marketing and advertising plan to effectively promote your services to potential clients. This plan should be tailored to your target market, highlighting the unique advantages of your company and positioning you as the go-to IT outsourcing provider.

Establishing a legal structure is also a crucial step that ensures compliance with relevant regulations and protects your business interests. Additionally, creating a financial plan and projecting budgets will allow you to effectively manage your resources and make informed business decisions.

By following these 9 steps, you will have a comprehensive business plan that outlines your IT outsourcing company's path to success. So, let's get started and turn your entrepreneurial dreams into a thriving reality!

• Conduct market research
• Identify target market
• Analyze competitors
• Determine core services and offerings
• Define business objectives and goals
• Develop a pricing strategy
• Create a marketing and advertising plan
• Establish a legal structure
• Create a financial plan and project budgets

Conduct Market Research

Market research is a crucial step in developing a business plan for an IT outsourcing company. It provides valuable insights into the industry landscape, potential customers, and competitors. By conducting thorough market research, you can make informed decisions and create a solid foundation for your business.

When conducting market research, it is essential to gather relevant and up-to-date information about the IT outsourcing industry. Look for industry reports, market trends, and forecasts to gain a comprehensive understanding of the current market conditions and future opportunities.

Market Research Tips:

• Identify your target audience and gather data about their needs, preferences, and pain points.
• Analyze industry trends and technological advancements to identify potential service offerings and areas for growth.
• Study your competitors' strengths, weaknesses, and market positioning to develop a unique selling proposition.
• Engage in surveys or interviews with potential clients to validate your business concept.
• Gather data on pricing structures, customer acquisition costs, and revenue potential to develop a realistic financial plan.

Additionally, consider identifying your target market during the market research phase. Understanding your potential clients' specific needs and pain points can help tailor your services to address those needs effectively. This knowledge will also assist in creating a targeted marketing and advertising plan.

By investing time and effort into conducting thorough market research, you can identify industry gaps, refine your business model, and develop strategies to differentiate your IT outsourcing company from the competition. This knowledge will prove invaluable as you move forward with creating a comprehensive business plan.

Identify Target Market

Identifying your target market is a crucial step in developing a successful business plan for an IT outsourcing company. By understanding who your potential clients are, you can tailor your services and marketing efforts to meet their specific needs and preferences.

When identifying your target market, consider the following:

• Industry focus: Determine the industries or sectors that are most likely to require IT outsourcing services. For example, you may choose to target healthcare organizations, financial institutions, or technology startups.
• Company size: Define the size of companies that would benefit most from your services. Are you targeting small businesses, mid-sized enterprises, or larger corporations?
• Geographic location: Determine whether you will focus on local clients or expand your reach nationally or even internationally.
• Specific needs: Identify the specific IT needs and pain points of your target market. This could include areas such as software development, cloud computing, IT infrastructure, or cybersecurity.

Tips for Identifying Your Target Market:

• Conduct market research to gain insights into your potential clients' behavior, preferences, and challenges.
• Segment your target market based on industry, company size, location, and specific needs.
• Utilize online tools and platforms to gather data and analyze market trends.
• Speak with industry experts and professionals to gather insights and validate your target market assumptions.
• Keep your target market definition flexible and be open to adjusting it based on market feedback and changing trends.

Analyze Competitors

When starting an IT outsourcing company, it's essential to analyze your competitors to understand the market landscape and identify opportunities for differentiation. By studying your competitors' strengths, weaknesses, and strategies, you can position your business for success. Here are some important steps to follow:

• Research and identify your direct competitors in the IT outsourcing industry. Look for companies that offer similar services and target the same client base.
• Examine their service offerings and pricing models. What specific IT services do they provide? How do they package and price their services? Are there any unique features or value propositions they offer?
• Analyze their target market and customer base. Who are their main clients? Do they focus on specific industries or cater to a broader range of businesses? Understanding their client demographics will help you identify gaps and potential areas for specialization.
• Consider their reputation and customer feedback. Online reviews, testimonials, and case studies can provide valuable insights into how well their clients perceive and value their services.
• Assess their marketing and advertising strategies. How do they promote their services? Which channels do they utilize, such as social media, content marketing, or industry events? Understanding their marketing tactics can help you shape your own marketing plan.
• Analyze their online presence, including their website, blog, and social media profiles. Take note of their branding, messaging, and user experience. Identify areas where you can differentiate and improve.
• Consider reaching out to former clients or industry connections to gain additional insights about your competitors.
• Keep an eye on emerging trends in the IT outsourcing industry and monitor any new entrants that may pose a threat or offer innovative solutions.
• Continuously reassess and update your competitive analysis as the market evolves.

Determine Core Services And Offerings

Once you have conducted market research and identified your target market, it is crucial to determine the core services and offerings that your IT outsourcing company will provide. This step involves carefully analyzing the needs and preferences of your target market and aligning your services accordingly.

1. Assess the market demands: Consider the specific IT services that are in high demand within your target market. Are clients seeking software development, network setup, cloud computing, or cybersecurity services? By understanding the market demands, you can tailor your services to meet the needs of potential clients.

2. Leverage your expertise: Evaluate the skills and expertise of your team. Highlight the areas where your company has a competitive advantage and can deliver exceptional results. This can include specialized knowledge in a particular programming language, experience in handling complex network infrastructures, or expertise in implementing robust cybersecurity measures.

3. Determine your offerings: Define the specific services you will offer to clients. Will you provide end-to-end software development solutions, help clients set up and maintain their network infrastructure, or offer comprehensive cybersecurity audits and monitoring? Clearly articulate your offerings to ensure clients understand the full range of services you can provide.

• Consider offering a range of services to cater to different client needs.
• Stay updated with the latest technological advancements in the IT industry to expand your service offerings.
• Regularly assess the market demands and fine-tune your offerings to stay competitive.

4. Assess resource requirements: Identify the resources, such as skilled professionals, software tools, and infrastructure, you need to deliver your core services effectively. Ensure that you have the necessary resources in place or plan to acquire them before offering the services to clients.

5. Consider scalability: Plan your core services in a way that allows for scalability as your business grows. Assess if your offerings can be expanded or modified in the future to accommodate new client requirements.

By carefully determining your core services and offerings, you can position your IT outsourcing company to meet the specific needs of your target market. This strategic decision will be fundamental to attracting and retaining clients while establishing your company as a reliable and trusted partner in the IT industry.

Define Business Objectives And Goals

Defining clear and specific business objectives and goals is crucial for the success of an IT outsourcing company. These objectives will guide your company's actions and help you stay focused on achieving your desired outcomes. Here are some important steps to consider when defining your business objectives and goals:

• Identify your long-term vision: Start by envisioning where you want your company to be in the future. This could be in terms of revenue, market presence, client satisfaction, or any other relevant aspect. Your long-term vision will serve as a guidepost for setting your objectives.
• Set SMART objectives: Make sure your objectives are Specific, Measurable, Achievable, Relevant, and Time-bound . For example, instead of setting a general objective like 'increase revenue,' make it more specific like 'increase annual revenue by 10% within the next fiscal year.'
• Align objectives with core services: Your objectives should be closely aligned with the core services and offerings of your IT outsourcing company. Think about how achieving these objectives will directly impact your ability to deliver exceptional services to your clients.
• Prioritize objectives: It's important to prioritize your objectives based on their importance and feasibility. Consider which objectives are critical for the growth and sustainability of your business and focus your efforts on those first.
• Establish key performance indicators (KPIs): KPIs are measurable metrics that will help you track your progress towards your objectives. Identify the KPIs that are most relevant to your objectives and regularly monitor and analyze the data to ensure you are on track.

Tips for Setting Effective Objectives:

• Involve key stakeholders, including management and employees, in the objective-setting process to ensure buy-in and commitment.
• Make sure your objectives are challenging but realistic. Setting unrealistic goals can lead to frustration and demotivation.
• Regularly review and reassess your objectives to ensure they remain aligned with the evolving needs and goals of your IT outsourcing company.
• Communicate your objectives clearly and consistently to all stakeholders, both internal and external, to foster a sense of shared purpose and accountability.

Defining your business objectives and goals is a critical step in developing a comprehensive business plan for your IT outsourcing company. It will provide a clear direction for your company and serve as a roadmap towards success.

Develop A Pricing Strategy

Developing a pricing strategy is a crucial step in creating a successful business plan for an IT outsourcing company. It involves determining how much to charge for your services and finding the right balance between profitability and competitiveness. Here are some important considerations:

• Understand your costs: Before setting your prices, it is essential to have a clear understanding of your costs, including labor, overhead, equipment, and any other expenses related to providing your services. This will help ensure that your pricing is aligned with your business's profitability goals.
• Research the market: It is essential to research the market to determine the typical pricing structure for IT outsourcing services. This will help you understand the industry trends and ensure that your prices are competitive.
• Differentiate your pricing: Consider offering different pricing options to cater to various customer needs. This could include offering tiered pricing based on service levels or providing bundled packages that offer additional value to customers.
• Consider value-based pricing: Instead of solely focusing on your costs, consider incorporating the value your services bring to clients into your pricing strategy. This approach takes into account the benefits and outcomes your clients can expect from working with your company.
• Be transparent: Clearly communicate your pricing structure to clients, including any potential additional costs or fees. Transparency builds trust and helps clients make informed decisions about partnering with your IT outsourcing company.
• Regularly review and evaluate your pricing strategy to ensure it remains competitive and profitable.
• Consider offering discounts or promotions for new clients or long-term contracts to attract and retain business.

Create A Marketing And Advertising Plan

Once you have determined your target market and analyzed your competitors, it is essential to create a comprehensive marketing and advertising plan to promote your IT outsourcing company and attract potential clients. A well-designed plan will help you maximize your reach, build brand awareness, and generate leads. Here are some important steps to follow:

• Identify your unique selling proposition (USP) and key differentiators: Determine what sets your IT outsourcing company apart from the competition. Highlight your strengths, expertise, and innovative solutions that will appeal to your target market.
• Define your target audience: Identify the specific industries, businesses, or organizations that are most likely to require your services. Understand their needs, pain points, and preferences to tailor your marketing efforts accordingly.
• Choose the right marketing channels: Select a mix of online and offline marketing channels that will effectively reach your target audience. Consider leveraging digital platforms such as search engine optimization (SEO), social media marketing, email marketing, and content marketing. Explore offline options like industry events, trade shows, and direct mail campaigns.
• Create a strong brand identity: Develop a compelling brand logo, tagline, and consistent visual elements that reflect your company's values and resonate with your target market. This consistency will reinforce your brand messaging and enhance brand recognition across all marketing and advertising materials.
• Design a content marketing strategy: Proactively share valuable and relevant content through blog posts, whitepapers, case studies, and ebooks. Position yourself as an industry expert and build trust with your audience. Use SEO techniques to optimize your content and improve your website's visibility in search engine results.
• Implement lead generation tactics: Use lead magnets such as free consultations, webinars, or downloadable resources to capture potential clients' contact information. Connect with them through targeted email campaigns to nurture relationships and convert leads into paying customers.
• Monitor and analyze your marketing efforts: Regularly track the performance of your marketing and advertising activities. Utilize key performance indicators (KPIs) such as website traffic, conversion rates, and social media engagement to assess the effectiveness of your strategies. Make data-driven adjustments to optimize your marketing plan continuously.

Tips for Creating an Effective Marketing and Advertising Plan:

• Stay updated with the latest industry trends and technological advancements to ensure your marketing strategies align with the evolving needs of your target market.
• Build strong partnerships and collaborations with complementary businesses or influencers in the IT industry to expand your reach and gain credibility.
• Regularly review and update your marketing plan to incorporate new ideas and tactics based on feedback and market dynamics. Flexibility is key in an ever-changing business environment.

Establish A Legal Structure

Establishing a legal structure for your IT outsourcing company is crucial for protecting your business and ensuring compliance with applicable laws and regulations. Here are some important steps to take when establishing a legal structure:

• Choose the right business entity: Consult with a legal professional to determine the most suitable legal structure for your company. Common options include sole proprietorship, partnership, limited liability company (LLC), or corporation. Consider factors such as liability protection, taxation, and ease of management before making a decision.
• Register your business: Once you have chosen a legal structure, you will need to register your IT outsourcing company with the appropriate government authorities. This typically involves filling out the necessary paperwork and paying any required fees. Be sure to research and comply with all registration requirements specific to your jurisdiction.
• Obtain necessary licenses and permits: Depending on your location and the nature of your business, you may need to obtain certain licenses and permits to operate legally. Conduct thorough research to identify the specific licenses and permits required for your IT outsourcing company and ensure timely compliance.
• Protect your intellectual property: As an IT outsourcing company, your intellectual property may be a valuable asset. Take steps to protect your proprietary software, designs, and other intellectual property through the use of trademarks, copyrights, and patents. Consult with an intellectual property attorney to understand the best strategies for safeguarding your company's assets.
• Establish contracts and legal agreements: Working with clients and vendors requires clear and enforceable contracts. Draft comprehensive agreements that outline the terms and conditions of your services, project timelines, payment terms, and any other relevant provisions. It is advisable to seek legal advice when creating these contracts to ensure they protect your interests.
• Consult with a qualified attorney or legal professional who specializes in business law to help you navigate the legal aspects of establishing your IT outsourcing company.
• Keep thorough records of all legal documents, contracts, licenses, permits, and registrations.
• Regularly revisit and update your legal structure as your business grows and evolves.

By establishing a solid legal structure for your IT outsourcing company, you can minimize legal risks, protect your business interests, and operate with confidence in the competitive market.

Create A Financial Plan And Project Budgets

Creating a financial plan and project budgets is a vital step in the process of starting an IT outsourcing company. It allows you to have a clear understanding of the financial aspects of your business, helps you set realistic goals, and ensures that you have a roadmap for managing your finances effectively.

When creating a financial plan, it is important to consider various elements such as startup costs, operational expenses, revenue projections, and cash flow management. Here are some key considerations:

• Startup Costs: Identify the initial costs involved in setting up your IT outsourcing company. This may include office space, equipment, licenses, software, and any other necessary infrastructure. It is crucial to accurately estimate these costs to avoid any financial surprises in the early stages.
• Operational Expenses: Analyze and project the ongoing operational expenses that your company will incur. This may include personnel salaries, rent, utilities, insurance, marketing expenses, and other overhead costs. It is essential to have a detailed understanding of these expenses to determine your breakeven point and profitability.
• Revenue Projections: Forecasting your company's revenue is essential for financial planning. Consider factors such as the target market size, competitive landscape, pricing strategy, and sales projections. It is crucial to be realistic and conservative in estimating your revenue potential.
• Cash Flow Management: Effective cash flow management is crucial for the sustainability of your business. Create a cash flow statement that outlines your projected inflows and outflows of cash on a monthly or quarterly basis. This will help you identify potential cash shortages and take necessary measures to mitigate them.
• Consult with a financial advisor or accountant to ensure accuracy and reliability of your financial projections.
• Research and understand the tax obligations and regulations specific to the IT outsourcing industry.
• Regularly review and update your financial plan as your business grows and evolves.

By creating a comprehensive financial plan and project budgets, you will be better equipped to make informed decisions, secure funding if needed, and navigate the financial challenges that may arise in the competitive IT outsourcing industry.

In conclusion, writing a business plan for an IT outsourcing company requires careful consideration and planning. By following these 9 steps, you can create a comprehensive plan that will guide your company's success. Conduct market research to understand your target market and analyze competitors. Determine your core services and offerings, and define your business objectives and goals. Develop a pricing strategy and create a marketing and advertising plan to reach your target audience. Establish a legal structure and create a financial plan to project budgets and ensure financial stability.

By following these steps, you can create a solid foundation for your IT outsourcing company and increase your chances of success in the competitive market.

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How to start a BPO business (step-by-step guide)

Want to know how to start a BPO company?

With tons of businesses looking to outsource their non-core activities, starting a BPO company has never been more lucrative!

In this article, we’ll show you how to start a BPO company and run it effectively.

Table of Contents

What is business process outsourcing (bpo), the six steps to start a bpo business.

Business process outsourcing is an activity where a company contracts its non-core work to an external party. Traditionally, most companies outsource the work to dedicated BPO firms.

For example, many companies in the United States outsource their customer support to small BPO companies in India.

However, with the rise of the gig economy , companies now also hire freelancers to do the job for them.

Why do companies do this?

Outsourcing non-core business activities like data entry and customer service let companies focus solely on their core business operations. This way, they can only invest resources in tasks that matter the most.

What’s in it for you as a BPO vendor?

The BPO industry just keeps growing. As tons of companies are looking to outsource their non-core activities, there are plenty of business opportunities in the BPO industry for new BPO providers.

By setting up BPO firms like domestic call centers in countries like the Philippines and India, you’re also going to save tons of money.

You’ll incur:

• Reduced setup costs.
• Cheaper overheads.
• Lower salaries.

Plus, there’s no shortage of services that businesses are willing to outsource!

This means that you can start a BPO business that specializes in pretty much anything, such as:

• Inbound or outbound call center services.
• Market research.
• Data entry.
• Human resource management.
• Payments or claims processing.
• Customer support and other back-office services.
• Digital marketing and e-commerce.

Here’s how you can start and run a business process outsourcing company in six simple steps:

1. Determine the type of BPO you want

The first step in setting up a BPO company is identifying your business niche.

Zeroing in on a niche helps you determine:

• Your BPO industry sector.
• The activities your BPO firm undertakes.
• The type of clients you engage with.

For example, you could provide call center services to small companies in the retail industry. Here, your BPO sector is retail, your activities are call center services and the type of clients you work with are small companies.

Remember, when starting out, select an outsourcing service you’re familiar with. For example, if you have no experience handling administrative work, don’t offer those services. Even though it may seem straightforward, you’re better suited to offering services you’re already trained in.

Once your company has gained enough traction, you could choose to expand your business in one of two ways:

1. Horizontal BPO

Refers to BPO activities that can be offered across multiple industries. For example, you could only provide technical support across various industries like IT, financial, retail and marketing. In this scenario, your service remains unchanged; however, the industry focus of your business varies.

2. Vertical BPO

Refers to BPO services that are industry-specific. For example, medical coding and billing are activities that are specific to the healthcare industry. Here, your industry focus remains the same while your offerings expand to include other activities within that industry.

2. Develop a new business plan

The next step is developing a business plan for your company.

Ideally, your plan must be well-researched and comprehensive . You need to analyze the intricacies of your chosen niche and look at what your competitors are doing.

Your business plan should:

• Determine your company’s long-term direction.
• Set clear business budgets, objectives and milestones.
• Identify your business structure.
• Help lenders and investors understand your business idea.

While it’s important to develop a good plan, you need to review and update it regularly. This ensures that you’re always able to adapt to any new changes in the market.

3. Do the paperwork

Once your business plan is ready, you’ll have to handle all the necessary paperwork involved in setting up a company.

As this varies on a country-by-country basis, you’ll need to find out how the process works in your country.

For example, if you’re looking to start your BPO business in Bangalore, Chennai or anywhere else in India, here’s how you can register your business:

• In India, you need to register your business under the Companies Act 2013 . This law regulates the responsibilities and operations of firms in the country. You also need to register with the National Association of Software and Services Companies (NASSCOM) to be certified as a BPO provider in India.
• If you are a call center or offer telemarketing and other IT services in India, your business must be listed as a Private Limited Company . You also need to obtain the Other Service Provider (OSP) license from the Department of Telecommunications (DOT) .
• Once you’ve received the OSP license, you may also need to register your business under the Goods and Services Tax (GST) , depending on your BPO offerings.

Laws and tax regulations are always complicated and confusing, so why not consult a legal expert to help you out?

They can easily break down the complexities of your registration process and identify laws that may be beneficial for your business.

4. Invest in the necessary equipment and technology

Regardless of the kind of services you offer, you’ll need to invest in some essential equipment and technology.

For example, most BPO companies need resources such as:

• Office space and furniture.
• Computers and office supplies.
• A high-speed internet connection.
• Workforce management tools .

Some BPO firms such as call centres will also need specialized equipment such as headsets and recording systems.

Remember, the equipment you need will vary based on the type of business process outsourcing service you’re offering. So go over what you need and only invest in that software.

Most companies spend tons of money on tools they don’t need!

With that being said, here are a few key tools that every BPO firm should have:

A. Communication tools

You’ll need a set of good communication tools to keep your projects running smoothly. These tools will help your team collaborate over projects and share updates and relevant files.

Messaging tools

Messaging tools like Fleep and Slack help you quickly collaborate over projects and share relevant data with your staff. You can even create individual channels for team-specific conversations. For example, you can create a sales message channel for focused discussions with your sales team.

Video conferencing tools

Video calling tools like Skype and Zoom help you easily interact with your BPO staff. You can host team meetings and product reviews even if your BPO staff is spread across the globe! It’s an excellent way to build team chemistry and ensure that everyone in your BPO team feels connected.

B. Performance tracking tools

Performance tracking tools help you monitor the productivity of your employees.

Most companies use them to:

• Determine how active their employees are while working.
• Identify if someone’s passing idle-time as work hours.
• Track how long projects take to complete. Create accurate records of time worked to bill clients.

With tools like Time Doctor , you get all this and more!

What’s Time Doctor?

Time Doctor is a powerful time tracking and productivity monitoring software.

It lets you:

• Track time an employee spends on each task.
• Monitor their web and app activity during work hours.
• Identify poor-time usage to hold the employee accountable.
• Ensure that your staff is actively working.
• Access tons of accurate reports for client billing.

Here’s a closer look at how Time Doctor helps you monitor your BPO employees:

1. Simple time tracking

Most time tracking tools can be confusing to use.

This is an issue because when your staff is wasting time figuring out how to use a tool, they’ll have less time to work on their tasks!

Luckily, TimeDoctor is super easy to use.

The tool lets you track time in four simple steps:

• Open Time Doctor.
• Enter the task or project name.
• Start the timer (the app then starts tracking time quietly in the background).
• Stop the timer when you’re done with your task.

As you won’t have to train your employees to use Time Doctor, they can get started right away!

2. Powerful and accurate project records

Time Doctor’s Project Reports give you a detailed break down of the hours spent on each project. It shows you who worked on each task and for how long. For example, if you’re a call center, you’ll know which employee spent the most time answering customer calls.

As the reports are accurate to the second, you can even use it to bill your clients on an hourly basis.

What’s more?

Time Doctor generates tons of other detailed reports, such as:

• Timesheet report – shows the total hours worked by all your BPO staff over a given period.
• Time use report – displays the time spent on tasks by each employee over a specific period.
• Timeline report – displays each employee’s daily work activity in chronological order.
• Attendance and late report – shows who was absent or late on each day and their reason for it.

You can click here for more information on Time Doctor’s reports.

3. Keep your team focused on their tasks

You can’t have your employees get distracted while they’re working, right?

Luckily, Time Doctor has a web and app activity tracker .

The tool automatically monitors your employee’s web and app usage during work hours. If someone accesses an unproductive website like Facebook or YouTube, Time Doctor displays a pop-up asking them if they’re still working. This nudge is enough to get them back to work.

For added flexibility, you can customize which websites and apps are categorized as unproductive.

Time Doctor also gives you a Web and App Usage Report that shows which websites and apps were used by each employee and for how long.

4. Seamlessly integrate with your other workplace software

Time Doctor instantly integrates with tons of different workplace software to help you track the time spent on those tools. You can connect it to your project management, team communication and payment tools for added functionality.

Click here for the complete list of Time Doctor’s integrations.

5. Staff your BPO firm

You’ll now have to staff your own business process outsourcing company.

A. Determine your requirements

Since you’re only starting out, it’s safer to hire around 15-20 experienced people on a full-time basis. As they’re experienced, they won’t require much training in the new job and can help you scale up quickly. Once you grow, you can start to expand and hire more people.

However, this isn’t a hard-and-fast rule.

The number of people you hire and your hiring criteria will vary based on your BPO specialty.

For example, when staffing an on-site call center , you may need to hire at least 50-100 people. However, if you’re opting for a remote-based call center, you’ll need a 25 seater BPO.

When hiring call center agents, your chief evaluation criteria must be communication skills. You’ll need to hire people who are fluent in your chosen language, can communicate effectively and empathize with customers.

B. Finding candidates

Finding the right candidates is never an easy task.

However, when you have a clear idea of the number of people you need and the type of people you’re looking for, this becomes easier.

Create a detailed job description that outlines:

• The activities they’re expected to perform.
• The qualifications needed.
• The skills required for the job.
• What your company is about.
• How this job can help them.

Outlining all of that is essential as it’ll give the candidate a clear idea of what they can expect from the job. This will help narrow your selection pool to include only the most committed candidates who fulfill all your requirements.

Post this job description on sites such as LinkedIn or AngelList to get the applications rolling in! Alternatively, you can hire a part-time hiring manager to find candidates for you in case you need to staff up quickly.

Once you have a set of reliable employees, you can create a referral program where they recommend talent from their networks to join your BPO firm. This is another good staffing option as your employees understand your company culture and will only recommend candidates who are a good fit.

6. Marketing your business and getting clients

Now that your business is up and running, you need to market it to gain more clients.

A. Build a top-notch website for your company

Start by building a user-friendly website for your company. Hire professional copywriters and web designers to create your site.

The benefits?

• A user-friendly website helps you build brand credibility and improve the search engine discoverability of your business.
• Your website clearly describes who you are and what you do—helping you inform leads of your services.
• It makes it easy for people to contact you if they need your services.

Important Tip

When getting a domain name for your business, avoid .net domains if you can. Always try and get a .com domain as that’s usually the go-to extension that people use when searching Google.

If you opt for a .net domain, someone might type your company’s name, follow it with .com and be directed to a competitor’s site!

B. Networking

Using your current network to find clients is your best bet when you’re starting out as a small business. As these people already know you, they’ll be more than willing to give your BPO firm a shot. You can even ask them to recommend you to their connections to build your name in the BPO industry.

C. Spreading awareness

Traditionally, BPOs relied completely on sales teams for leads, since they were targeting enterprise clients only. However, with the scope of BPO expanding to mid-size and small businesses too, you can also opt for several different marketing strategies such as:

• Using social media to spread awareness and find clients.
• Using SEO and content marketing to get found on search engines.
• Using paid ads on LinkedIn and Google.

Starting your own BPO company isn’t rocket science.

You need to analyze the BPO industry in your niche, outline a strong business plan, complete the necessary paperwork and invest in the right tools to run your business. Once you’ve done that, you’ll have no trouble running your BPO firm and growing it in no time!

View a free demo of Time Doctor

Andy is a technology & marketing leader who has delivered award-winning and world-first experiences.

What is an attendance point system? (free template included)

Remote work is continuing to rise across the united states, related posts, improving employee engagement at your bpo: 5 tried and tested strategies, 7 strategies for bpo firms to retain top talent, 11 awesome call center software for small business needs, understanding profit margins in the bpo industry, the top 5 virtual assistant companies in the usa, how much does it typically cost to hire a virtual assistant.

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What Is Outsourcing?

Understanding outsourcing, what are the benefits of outsourcing internationally.

• Outsourcing FAQs

The Bottom Line

• Business Essentials

Outsourcing: How It Works in Business, With Examples

Pete Rathburn is a copy editor and fact-checker with expertise in economics and personal finance and over twenty years of experience in the classroom.

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Outsourcing is the practice of hiring a party outside a company to perform services or create goods. In some cases, these were traditionally performed in-house by the company's own employees and staff. Outsourcing is a practice usually undertaken by companies as a cost-cutting measure or a strategic management tool. As such, it can affect a wide range of jobs, from customer support to manufacturing to the back office.

Outsourcing was increasingly used as a business strategy in the 1990s, when multinationals used third-parties for logistics and manufacturing functions, along with others. But due to its broader economic implications, the practice of outsourcing is subject to considerable controversy in many countries. Those opposed argue that it has caused the loss of domestic jobs, particularly in the manufacturing sector. Supporters say it creates an incentive for businesses and companies to allocate resources where they are most effective, and that outsourcing helps maintain the nature of  free-market economies in a highly connected world.

Key Takeaways

• Companies use outsourcing to cut labor costs, including salaries for their personnel, overhead, equipment, and technology.
• Outsourcing is also used by companies to focus on the core aspects of the business, spinning off the less critical operations to outside organizations.
• On the downside , communication between the company and outside providers can be challenging, and security threats may increase when multiple parties can access sensitive data.
• In some cases, companies will outsource as a means to move things around on the balance sheet.
• Outsourcing employees, such as with 1099 contract workers, can benefit the company when it comes to paying taxes.

Investopedia / Mira Norian

When a company uses outsourcing, it enlists the help of outside organizations not affiliated with the company to complete certain tasks. The outside organizations typically set up different compensation structures with their employees than the ones used by the outsourcing company, enabling those organizations to complete the work for less money. This ultimately enables the company that chose to outsource to lower its labor costs through the combination of less pay and fewer benefits.

Businesses can also avoid expenses associated with overhead , equipment, and technology.

In addition to cost savings, companies can employ an outsourcing strategy to better focus on the core aspects of the business. Outsourcing non-core activities can improve efficiency and productivity because another entity performs these smaller tasks better than the firm itself. This strategy may also lead to faster turnaround times, increased competitiveness within an industry, and the cutting of overall operational costs.

Companies use outsourcing to cut labor costs and business expenses, but also to enable them to focus on the core aspects of the business.

Examples of Outsourcing

Outsourcing's biggest advantages are time and cost savings. A manufacturer of personal computers might buy internal components for its machines from other companies to save on production costs . A law firm might store and back up its files using a cloud-computing service provider, thus giving it access to digital technology without investing large amounts of money to actually own the technology.

A small company may decide to outsource bookkeeping duties to an accounting firm, as doing so may be cheaper than retaining an in-house accountant. Other companies find outsourcing the functions of human resource departments, such as payroll and health insurance, to be beneficial. When used properly, outsourcing is an effective strategy to reduce expenses and can even provide a business with a competitive advantage over rivals.

What Are Some Criticisms of Outsourcing?

Outsourcing has disadvantages. For instance, signing contracts with other companies may take time and extra effort from a firm's legal team. In addition, security threats can occur when another party has access to a company's confidential information and that party suffers a data breach. Furthermore, a lack of communication between the company and the outsourced provider may occur, which could delay the completion of projects.

Beyond these factors, outsourcing has faced criticism due to the job precarity and lack of job promotion opportunities for contract workers. As mentioned above, contract workers often earn lower compensation than full-time workers and have fewer benefits, creating inequities in the workforce.

Outsourcing internationally can help companies benefit from the differences in labor and production costs among countries. Price dispersion in another country may entice a business to relocate some or all of its operations to the cheaper country in order to increase profitability and stay competitive within an industry. Many large corporations have eliminated their entire in-house customer service call centers, outsourcing that function to third-party outfits located in lower-cost locations.

In 2023, a Deloitte survey found that India, Poland, and Mexico were the top countries for outsourcing shared services. Meanwhile, outsourcing IT service desk functions was the top service exported in the information technology sector globally.

First seen as a formal business strategy in 1989, outsourcing is the process of hiring third parties to conduct services that were typically performed by a company itself. Often, outsourcing is used so that a company can focus on its core operations. It is also used to cut costs on labor, among other costs. While privacy has been a recent area of controversy for outsourcing contractors, the practice has also drawn criticism for its impact on the labor market in domestic economies.

What Is an Example of Outsourcing?

Consider a bank that outsources its customer service operations. In this case, all customer-facing inquiries or complaints with concern to its online banking service are handled by a third party. While choosing to outsource some business operations is often a complex decision, the bank determined that it would prove to be the most effective allocation of capital, given consumer demand, the specialty of the third party, and cost-saving attributes. 

What Are the Disadvantages of Outsourcing?

The disadvantages of outsourcing include communication difficulties, security threats where sensitive data is increasingly at stake, and additional legal duties. On a broader level, outsourcing may have the potential to disrupt a labor force. One often-cited example is the outsourcing done by the manufacturing industry in America, which has, to a large extent, moved production of its goods to other countries. In turn, higher-skilled manufacturing jobs, involving robotics or precision machines, have emerged at a greater scale.

While outsourcing can be advantageous to an organization that values time over money, some downsides can materialize if the organization needs to retain control. Outsourcing manufacturing of a simple item like clothing will carry much less risk than outsourcing something complex like rocket engineering or financial modeling. Businesses looking to outsource need to adequately compare the benefits and risks before moving forward.

Deloitte. " 2023 Global Shared Services and Outsourcing Survey ."

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The Complete Guide to Business Process Outsourcing (BPO)

Running a successful business requires constant optimization, however, juggling essential tasks with core competencies can be a tightrope walk. This is where Business Process Outsourcing (BPO) steps in. By delegating specific functions to a skilled external provider, you can free up internal resources, potentially reduce costs, and unlock a world of benefits.

This complete guide equips you with everything you need to know about BPO. Whether you're a seasoned entrepreneur or just starting, you'll gain the knowledge to make informed decisions about outsourcing and its potential impact on your business.

Understanding the BPO Landscape

Business Process Outsourcing or BPO refers to the practice of contracting a third-party service provider to handle specific business tasks or processes. These processes can be back-office functions like accounting, human resources, or payroll, or even front-office functions like customer service and sales support.  

By outsourcing these tasks, companies can focus on their core competencies and potentially achieve greater efficiency and cost savings. The BPO landscape itself is vast and ever evolving. Here's a breakdown of some key categories to provide a clearer picture:

• Front-Office BPO: Focuses on customer-facing functions like customer service, sales support, and telemarketing. This ensures a high level of customer interaction remains professional and efficient, even when your internal team is stretched thin.
• Back-Office BPO: Handles internal operations, including accounting, human resources, payroll, and data processing. By outsourcing these often-time-consuming tasks, your in-house team can dedicate their energy to driving strategic initiatives.
• Knowledge Process Outsourcing (KPO): Deals with specialized knowledge-based tasks such as legal services, market research, and intellectual property management. KPO providers offer a deep well of expertise that can be invaluable for complex projects.
• Industry-Specific BPO: Tailors services to specific industries, such as healthcare BPO or legal BPO. These providers understand the unique nuances of your industry and can deliver solutions that perfectly align with your needs.  

Unleashing the Benefits of BPO

There are numerous compelling reasons why companies of all sizes might consider outsourcing certain business processes. Here are some of the key benefits to consider:

• Cost Reduction: BPO providers often operate in locations with lower labor costs, leading to significant cost savings for companies. This allows you to invest those saved resources back into core growth areas.
• Improved Efficiency: By offloading non-core tasks, your internal team can dedicate their time and expertise to core business functions. This streamlined approach can lead to significant efficiency gains across the board.
• Access to Expertise: BPO providers often specialize in specific processes and can offer a higher level of expertise than you might be able to develop in-house. This ensures your outsourced tasks are handled by true professionals, maximizing results.
• Scalability: BPO allows you to easily scale your workforce up or down based on your needs. This provides greater flexibility, allowing you to adapt to changing market conditions or project demands.
• Focus on Core Competencies: By delegating non-core tasks, you can free up your team to focus on core competencies and strategic initiatives that drive growth. This renewed focus can lead to a significant competitive advantage.
• Enhanced Innovation: The fresh perspective and expertise of an external provider can spark innovation and introduce new ways of thinking about your processes. This can lead to improved workflows and overall business optimization.  

Choosing the Right BPO Partner: A Strategic Decision

Selecting the right BPO partner is crucial for a successful outsourcing experience. Here are some key steps to consider during this critical phase:

• Identify Your Needs: Clearly define the processes you want to outsource and the desired outcomes. What specific challenges are you hoping to address? What are your long-term goals for outsourcing?
• Research BPO Providers: Look for companies with experience in your industry and a proven track record of success. Look beyond basic qualifications and seek out providers that demonstrate a genuine understanding of your specific needs.
• Evaluate Capabilities: Assess the provider's infrastructure, technology, security measures, and talent pool. Ensure they have the resources and expertise necessary to deliver on their promises.
• Cost Considerations: Request quotes from several providers and ensure pricing aligns with your budget and expectations. Don't get caught up in the cheapest option; focus on value and long-term ROI.
• Communication and Culture: Prioritize clear communication and cultural fit to ensure a smooth working relationship. Open communication channels and a shared understanding of expectations are essential for success.
• Security and Compliance: Verify the provider's security protocols and compliance with relevant industry regulations. Data security should be a top priority when considering any BPO partner. ‍

Avoiding the BPO Mistakes: What the Right Partner Offers

Selecting the right BPO partner isn't just about potential gains; it's also about mitigating risks. Here's what you can avoid by partnering with a reputable and experienced BPO provider:

• Hidden Costs and Scope Creep: Transparent pricing and clear communication ensure you're not hit with unexpected fees or project scope changes. A reliable partner will work collaboratively to define clear expectations from the outset.
• Communication Silos and Inefficiency: Seamless communication channels and established workflows prevent information gaps and delays. The right BPO partner fosters a collaborative environment that optimizes efficiency and keeps everyone on the same page.
• Security Concerns and Data Breaches: Rigorous security protocols and compliance with industry regulations safeguard your sensitive information. A secure BPO environment gives you peace of mind and fosters trust in the outsourcing process.
• Quality Inconsistencies and Missed Deadlines: A skilled BPO partner employs a robust quality management system, ensuring consistent delivery of high-quality work. Meeting deadlines and maintaining accuracy are paramount, and the right BPO provider prioritizes these aspects.
• Cultural Misunderstandings and Integration Issues: A partner with experience in your industry and a focus on cultural fit bridges the gap between your internal team and the outsourced workforce. This smooth integration ensures a positive working relationship and maximizes the benefits of BPO.

Successfully Implementing BPO in Your Business

Once you've chosen a BPO provider, a successful implementation plan is essential. Here are some key aspects to consider:

• Clear Communication: Establish clear communication channels and expectations with the BPO provider.
• Training and Onboarding: Ensure your internal team receives proper training on working with the new BPO partner.
• Performance Monitoring: Set up performance measures and track results to gauge the effectiveness of the BPO solution.
• Regular Reviews: Conduct regular reviews with the BPO provider to address any issues and ensure alignment with your goals.

At Lean Solutions Group, we understand the power of BPO and its potential to transform your business. We are a client centric BPO provider specializing in staff augmentation for US companies. Our streamlined process ensures you hire only the best professionals for essential roles like customer support, recruitment, and more.

We have extensive experience in various industries and prioritize cultural fit to create seamless integration with your existing team. Our team of experts handles all aspects of talent acquisition, from searching and vetting to training and onboarding. Contact us today!

Susana is a content creator with a passion for research. She has journalism and digital marketing as her professional background. Susana loves music, concerts, movies, and traveling. As a hobby, she collects vinyl records of all genres of music.

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How To Start Outsourcing Business [PLAN]

• by Olaoluwa
• January 16, 2023 August 28, 2024

Here is a business plan for starting an outsourcing business.

Like most new businesses, launching an outsourcing business will present a lot of challenges. Being able to overcome them is where most entrepreneurs find deep satisfaction.

The process begins with writing an outsourcing business plan.

This requires a lot of considerations and deliberations with the end goal being to create a well-written plan that’s easily implementable.

OUTSOURCING BUSINESS STARTUP GUIDE

For many business owners, the need to get or attract funding is primary. With a good plan, that is very achievable. Basically, your outsourcing business plan helps reveal the viability of your business idea.

More importantly, your plan serves as a tool to implement your business strategies and also monitor its growth.

Key Sections you must include in your Plan

In a bid to create a great plan, certain points or sections need to be covered. These serve as a framework around which the entire plan is developed.

They include the executive summary section, company or business description, products & services section, as well as the market analysis section.

There are other equally important sections like the strategy & implementation, organization & management, as well as financial plan & projection sections.

With all of these combined, you have an easily implementable sound plan. But what’s contained in these sections? Let’s find out.

i. Executive Summary

This is the first section of the plan in order of arrangement. It’s the section potential investors will want to see before anything else.

It’s called the executive section because it provides a brief overview of your outsourcing business plan. In other words, this section can be referred to as the condensed version of your business plan.

As expected, the executive summary section should be highly summarized with main points such as your outsourcing business name and location, the products and services on offer, mission & vision statements, as well as the specific purpose of the plan.

Let’s discuss these points in brief.

Business Name & Location

You’re expected to have figured out a befitting name for your outsourcing business before writing your plan.

As part of the introduction, a location must also be provided. All of these provide a starting point for readers to follow and to understand more about your business idea.

Products & Services

What type of services and products do you intend on providing?

This is a key detail of your business plan investors will be interested in. Because this is the executive summary section, it’s necessary to avoid getting into all the details as there’s a whole section for it in the main plan.

Mission & Vision Statements

The mission statement for your outsourcing business should clearly state the goal you plan on achieving as a business. In other words, it articulates your business’ purpose by stating the why.

For the vision statement, the current and future objectives of your outsourcing business are brought to the fore.

In basic terms, your vision statement should embody your dream for the business and adopts a long-term perspective.

Specific Purpose of the Plan

Without a specific purpose, your business plan will be deficient.

What do you want your outsourcing business plan to achieve? For some entrepreneurs, the purpose might mainly be for strategic planning while for others, it might be to attract investments or other reasons.

State your purpose for having the plan.

ii. Company Description

A broad look at your business operations is necessary with key areas to be looked at like short and long-term goals as well as how you intend to make a profit.

This detail among several is important to investors. Also, the legal structure you’ll be adopting is important. What more? The company description will require adding a summary of your business’ growth.

Financial or market highlights will need to be part of the details to be added here. Provide a brief history of your outsourcing business as well as the problems you intend to solve through your services and products.

Who are your target clients? Will you be working with suppliers? Include such details included here.

iii. Products & Services

Anyone in the dark about the services and products your business will be about should be enlightened by the information they get from this section.

This will require a detailed description of your services with the main emphasis being customer satisfaction.

If ongoing research and development activities are leading to the development of newer products, such should information should be included here.

What advantage(s) does your outsourcing business have over its competitors?

iv. Market Analysis

An in-depth marketing analysis is required to gain a better understanding of the business.

With such knowledge, you’re able to demonstrate that to your audience by covering key areas of operation such as providing a sketch of your target market segments with demographics where necessary.

To measure up, you’ll need to assess how you stand relative to your competitors by identifying their strengths and weaknesses.

You should also be able to provide marketing data on historical, current, and projected operations through an in-depth analysis of the market.

v. Strategy & Implementation

Marketing and sales are primary determinants of growth for any business.

With the help of an operating plan, provide cost and pricing details of services and products as well as any promotions you intend on embarking.

You want to also state how you intend to reach your target audience and capture a fair share of the market.

vi. Organization & Management

A competent organization and management team must be in place to aid with the smooth running of your outsourcing business.

Under this section, provide an organizational chart that clearly identifies and describes key employees and the departments they occupy.

Who is/are the business owner(s)? You’ll need to go into more detail by providing names, percentage ownership, and level of involvement in the business.

Moving from the business owners, provide the profiles of your management team members.

vii. Financial Plan & Projection

It’s always advisable to seek professional help when putting the financial plan together. This won’t be necessary if you’ve got great accounting skills.

Otherwise, have an accountant help out with details such as the historical financial data, as well as having realistic prospective financial information.

With these sections carefully written and included in your plan, you should be ready to proceed with implementation. You also get the added benefit of attracting funding for your outsourcing business.

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Blog » Business » Outsourcing Plan: Why You Need It and How to Make It

Outsourcing Plan: Why You Need It and How to Make It

The key component of every business is the ability to adapt. In order to build a successful business, one must monitor the needs of customers, partners, market, budget, company goals and standards and provide a win-win situation for all sides.

It’s a big responsibility and hardly managed on its own. As the business grows, so do its needs, but before you find yourself buried in work and anxiety, consider trying outsourcing as a way to keep things afloat.

Whether you run a small business or a big company, outsourcing allows you to keep up with the competition by giving a certain percent of work to a trained professional or other company for an affordable price. This way you can use the outside resources to reduce costs and implement innovations through great talent and professionals from across the globe. Also, with additional help, you will have the time to focus on the main functions of your business.

What to outsource

Almost any part of a business can be outsourced depending on necessity. There are two main outsourcing processes – BPO and KPO. Business Process Outsourcing (BPO) is a cost-effective way of outsourcing a portion of non-core or critical activities of the business to a third party. It includes a lot of fields, from money management, marketing development, data entry, to customer services, IT help, and online research.

On the other hand, Knowledge Processing Outsourcing (KPO) may not give financial benefits, but it helps in value. It is based on outsourcing the main (core) functions and requires knowledge of expertise – legal services, analytics, business and market research services, data conversion and others.

The most effective choice lies in outsourcing parts you can’t afford, or don’t need, only a few times a month:

• Professionals for bookkeeping and financial analysis
• Repetitive tasks – IT tech accounting, systems, network support, customer support, etc.

How to prepare

Don’t rush! The strategy is crucial for efficient outsourcing. To create a well-developed plan, first, you must thoroughly examine your business and set a clear goal. Retain the strong suits of the company; if something is working for you there is no need to change it. If you are running a small business, avoid outsourcing areas that directly impact customers.

Once you have established your main objectives and expectations, consult with your partners and/or an expert. Research and feedback can provide great suggestions for improvement. Complete market and risk analysis to be fully prepared for the possible outcome. Make a list of the criteria for quality, expertise and necessary costs for maintaining a standard you and your customers expect.

Other things to think about are pro and cons of outsourcing to freelancers vs. companies. The decision between the two depends on the type and quantity of work that needs to be done. With a good freelancer, projects can be innovative, precise and cost a lot less than a company would charge.

The problem is they are not always dependable and available all the time, whereas companies offer control quality and 24/7 availability. Even though it seems reasonable to pay more for consistency, remember that nothing is 100% secure. Bigger issues can occur when outsourcing offshore. It is harder to scale a small business with operational issues, delays, and unpredictable taxes. That’s why it’s important to know how to manage your remote workers .

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How to choose.

When it comes to choosing the right option for outsourcing , keep in mind that the responsibility is mutual. Don’t hire the first party you contact. There are a few factors to consider before making a deal:

• Flexibility
• Language barriers

To avoid mistakes, always check credentials and construct a solid contract with outlined specifics:

• Clear expectations
• Defined roles and rights
• Exit strategy – termination or date of renewal

Communication is incredibly important, at every step of the way. Secure access to the latest technology for easier workflow and better results. Regular checkups and a common work platform ensure a more productive environment and lower the risk of delays and mistakes. So make sure you choose the right software solutions for your business.

What to avoid

Considering the time, we usually spend online, every layman can determine if there’s something wrong with a certain website. They can discover a hoax lurking behind the corner. Your professional expertise gives you, even more, experience in this area.

So, if your gut is telling you that there’s something is wrong with a company that you are considering making your temporary partner, don’t ignore the alarming signs. Minding your own safety is quite important when outsourcing, so you should take appropriate precautionary measures and protect yourself.

The best way to do so is to make a list of things you should check every time you get in touch with an unfamiliar business. First of all, you should pay attention to the URL – if there are any irregularities there, chances are you found a fraud.

Browsers like Chrome, Internet Explorer, Firefox and Safari can help you with this – when a website is legit, they give their approval by placing a green bar before the URL. Otherwise, you will be able to notice a red warning that states “not secure”.

Furthermore, you should do some private snooping. It’s quite common that businesses have a testimonial section that quotes customers and businesses they’ve worked for in the past. If you want to be sure that a certain company is legit, you should simply get in touch with listed names and ask for their opinion.

Finally, the last item on your checklist should be social platforms. Primarily, if a business you’re evaluating doesn’t have accounts on social networks, there must be something wrong with it – every serious company is active on them.

However, if you find links that lead to profiles, it will be simple to spot if a business is legit. Both satisfied and unsatisfied users don’t hesitate when leaving their comments and rates, so after only a couple of minutes of scrolling, you’ll be able to know what to expect.

Overall, outsourcing is an excellent aid for expanding a business. Although it comes with some risk, the reward is a lot higher, if properly executed. The only question is: “Do you want to add outsourcing to your operational plan?”

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Everything You Need to Know about Business Process Outsourcing

By Kate Eby | January 17, 2017

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In today’s connected world, a successful business is often an efficient one, and the difference can come down to smart, innovative processes, with suitably adept management to match. Novel, modern process management techniques can take your business from good to great. One outgrowth of BPM, business process outsourcing (BPO), can enable just such a change if enacted in a careful, conscientious manner and with a quality vendor.

This article has everything you need to know about business process outsourcing: what it is, what types of processes and functions BPO vendors support, the current state and future outlook of the industry, and how to choose a vendor that’s right for your company. Along the way, BPO experts weigh in, and we even provide a vendor scorecard template to make that decision easier for you.

What Is Business Process Outsourcing?

Business process outsourcing (BPO) is the practice of contracting a work process or processes to an external service provider. BPO fills supplementary business functions like payroll, accounting, telemarketing, data recording, social media, customer support, and more.

From fledgling startups to massive Fortune 500 companies, businesses of all sizes outsource processes, and the demand continues to grow, as new and innovative services are introduced and businesses seek advantages to get ahead of the competition. BPO can be an alternative to labor migration, allowing the labor force to remain in their home country while contributing their skills abroad.

BPO is often divided into two main types of services: back office and front office. Back-office services include internal business processes, such as billing or purchasing. Front-office services pertain to the contracting company’s customers, such as marketing and tech support. BPOs can combine these services so that they work together, not independently.

The BPO industry is divided into three categories, based on the location of the vendor. A business can achieve total process optimization by combining the three categories:

Offshore vendors are located outside of the company’s own country. For example, a U.S. company may use an offshore BPO vendor in the Philippines.

Nearshore vendors are located in countries that neighbor the contracting company’s country. For example, in the United States, a BPO in Mexico is considered a nearshore vendor.

Onshore vendors operate within the same country as the contractor, although they may be located in a different city or state. For example, a company in Seattle, Washington, could use an onshore outsourcing vendor located in Seattle, Washington, or in Huntsville, Alabama.

Why Do Businesses Outsource Processes?

Outsourcing is a part of many successful business models, especially for companies who do not have the resources and services they need available internally. Businesses often outsource to decrease costs, expand their presence, or increase flexibility.

Some people believe that businesses are only after the tax break associated with outsourcing jobs, or “shipping jobs overseas” as some political ads claim. According to PolitiFact , this is a flawed notion. PolitiFact concedes that there are tax breaks for a company when it relocates, whether out of country or to a different state, but there is no specific tax break or loophole in the U.S. tax code related to outsourcing.

What is relevant to this argument, however, is that the U.S. corporate income tax is one of the highest in the developed world (39.1 percent). Therefore, U.S. companies benefit from outsourcing operations to countries with a lower income tax because businesses pay the rate of their host country. In addition, businesses cite many other reasons to engage in outsourcing:

To decrease costs : Outsourcing cuts down on costs for in-house labor, particularly for staffing and training, and for the work space to accommodate local employees. An outsourcing company physically located in a developing country leverages lower-cost labor markets. Finally, outsourcing enables businesses to use variable-cost models, like fee-for-service plans, instead of fixed-cost models that are required when retaining local employees.

To concentrate on key functions : Outsourcing allows businesses to hone in on their main offerings instead of company functions that aren’t directly tied to their core processes. For example, when outsourcing, the company won’t have to monitor the payroll accountant’s performance. Rather, it can focus its energies on highlighting its business differentiators and maximizing overall growth. In turn, these actions can boost a company’s competitive advantage and enhance its interactions with the value chain. Ultimately, the company can enjoy improved customer satisfaction and increased profits.

To achieve better results in noncore functions : Outsourcing companies specialize in what are considered noncore functions of other businesses, delivering world-class capabilities for its clients. In fact, an outsourcing company that invests in specialized processes and technologies can deliver cutting-edge breakthroughs to its clients. For example, a gaming design company may not want to pay for the latest payroll program on the market, but an outsourcing business that offers payroll services would likely make that investment to benefit its own performance, as well as that of its clients.

To expand their global presence : Some outsourcing companies can serve customers in multiple languages, around the clock, thus relieving the local company of the responsibility. Outsourcing companies can leverage their presence in multiple countries and keep the local company’s redundant divisions to a minimum. For example, WNS Global has 37 “delivery centers” across the world and specializes in business process management.

To enable flexibility : Companies that outsource their noncritical functions can act more quickly and more efficiently when managing the risks associated with introducing new products or services. They can also reassign their internal resources to more critical functions to help ensure better coverage and allocate responsibility.

To improve speed and efficiency : Companies that outsource processes are opting to let specialists handle those tasks, thus saving time, improving accuracy, and increasing their capacity. For example, a BPO that specializes in records management can automatically index documents, making them available for retrieval and keeping a company in compliance with legal requirements. This replaces manual data entry and storage.

Ryan Fitzgerald, owner of and realtor at Raleigh Realty , has extensive experience with BPOs. He says, “There are both pros and cons to creating an outsourcing process for your business. The obvious pros are that it saves you time and effort, which likely saves you money. There are only so many hours in a day, so you will want to focus the limited time you have on the work that makes you the greatest ROI (return on investment) on your best work.

“Another pro is that there is a good chance the person you're outsourcing your projects to is armed with a better skill set for the specific goal you're trying to accomplish. By outsourcing your work, you allow yourself the opportunity to be more productive and grow your business faster.

“One of the biggest cons is that you leave yourself exposed if you don't do the work yourself. What happens if the person you're outsourcing to moves away? What if they take your ideas and give them to other businesses you're competing against? We had an instance where we bought a lot of video marketing equipment and decided to outsource our projects to a video professional. That video professional is now reaching out to our competitors to ask if they would like the same work done. That means one of our competitive advantages is potentially lost if other real estate companies see the value.

“There are a lot of benefits to business process outsourcing, but make sure you keep an eye on how it could come back to hurt you as well.”

What Types of Services Do Outsourcing Companies Support?

BPO providers support a number of services to help fill gaps within companies. Some of the participating industries include healthcare, pharmaceuticals, energy, business services, retail and e-commerce, telecom, automotive, utility companies, banking, supply chain, capacity solutions, and asset management.

In fact, the growth in BPOs has resulted in the emergence of subspecialties, including everything from information technology-enabled services (ITES) to travel:

Information technology-enabled services (ITES) BPO : This form of BPO leverages information technology (IT) over the internet or data network to deliver services. Some examples of ITES BPO jobs are service desk analyst, production support analyst, and IT analyst.

Knowledge process outsourcing (KPO) : KPO has changed BPO a bit. Some KPO vendors support functions that are considered core in business, although they may not be core functions in the particular business that hires them. KPO firms offer more than process expertise; they may also provide business and domain-based expertise. Some examples of KPO services include research, analysis, or Microsoft Word and Excel work. KPOs may be capable of making low-level business decisions if they do not conflict with higher-level business policies, but those decisions may be undone easily. KPO vendors are usually linked to the business’s value chain, and they hire people who are competent in a specific field.

Legal process outsourcing (LPO) : LPO is a subset of KPO and encompasses a huge range of higher-level legal work, not merely lower-level legal transcription. LPO firms can draft patent applications and legal agreements, as well as perform legal research. Some LPO firms even advise clients. In-house legal departments usually retain LPOs. Experienced paralegals using industry-standard databases do the work.

Research process outsourcing (RPO) : A subset of KPO, RPO specializes in research and analysis functions. RPO companies perform research and analysis work that supports business, investment, biotech, and marketing firms.

Travel : This pertains to all the operations a business needs to support its travel logistics, from reservations to hotel and vehicle bookings. Travel BPO saves money for the company because it cuts costs while increasing customer satisfaction. Airline and travel companies also engage in BPO for either front- or back-office process streamlining. For example, an airline could outsource its ticketing process.

Each BPO company will specialize in specific services. They may be grouped as follows:

Customer interaction services : The BPO company would cover a business’s voicemail services, appointment schedules, email services, marketing program, telemarketing, surveys, payment processing, order processing, quality assurance, customer support, warranty administration, and other customer feedback.

Back-office transactions : This includes check, credit, and debit card processing; collection; receivables; direct and indirect procurement; transportation administration; logistics and dispatch; and warehouse management.

IT and software operations : These technical support functions include application development and testing, implementation services, and IT helpdesk. For example, manual data entry can be replaced with automated data capture, increasing data intake and reducing cycle time.

Finance and accounting services : These functions include billing services, accounts payable, receivables, general accounting, auditing, and regulatory compliance.

Human resource services : BPOs can help address workforce challenges. They can also cover payroll services, healthcare administration, hiring and recruitment, workforce training, insurance processing, and retirement benefits.

Knowledge services : These higher-level processes may include data analytics, data mining, data and knowledge management, and internet and web research, as well as developing an information governance program and providing the voice of customer feedback.

The Risks of Business Process Outsourcing

The global market size of services outsourced from the United States was $88.9 billion in 2017 and is expected to hit $140.3 billion by 2022, as reported by Statista and The BPO Services Global Industry Almanac 2017 Company Report . This was after steady growth of 4.4 percent compounded annually from $45.6 billion in 2000. For U.S. companies, India and the Philippines perform a large portion of the outsourcing services. India in particular is a leader in BPO for the United States because its labor force is highly skilled, educated, English-speaking, and economical.

Not only are these countries geographically disparate, they are different cultural entities as well, which may constitute a risk for the contracting company. In fact, hiring any outside vendor to perform business processes for your company comes with inherent question of efficiency and quality. This is especially concerning because the industry has seen reported shortages in skilled workers, increased trade protectionism, and gridlocks due to political issues. Other risks include the following:

Security : In outsourcing, especially when information systems (IS) are involved, companies face communication and privacy risks. Security is more difficult to maintain when the business taking care of your IS is not in the same country, especially one with different security requirements. Potential data privacy breaches and vulnerability disclosures are a real threat, particularly with the current prevalence of hacking. The internet, which makes BPO for IT feasible, also may offer a portal through which hackers enter.

Underestimating the costs of services : Companies that employ BPO vendors often underestimate the running costs, especially in upgrades and contract renegotiation. Other hidden costs include vendor selection, currency fluctuations, hardware and software upgrades, internal transitions, layoffs, and the potential decrease in individual worker productivity.

Overdependence on service providers : Once a company designates a vendor for specific processes, the vendor becomes a part of the workflow. The company can incur extraneous costs and decreased productivity when the vendor encounters problems or lapses in its work — for example, when the cost of hiring workers increases. Vendors often replace veteran employees with less experienced workers to keep costs down, and quality suffers as a result.

Communication issues : Language barriers can limit activities when your company hires individual service providers spread across the globe. This can result in delays in new processes and curbs on feedback from different departments, and it can potentially magnify current problems in your business operations. Further, customer-facing services may present language barriers to third-party vendors.

When outsourcing your processes and parts of your business, you face significant risks, depending on the type and structure of your company. For example, in very large segmented companies, outsourcing only the back data entry can carry a low risk. But for a small business that is reliant on BPO as part of its manufacturing, the risk increases. Other possible risks associated with outsourcing include:

Data breaches

Quality control

Operation restoration

Nonlocal employees

Maintenance of strategic alignment

Political instability

Changes in technology and exposure to hacking

Specialization to the point that the niche demand is no longer necessary

On the other side of the equation, BPO companies face risks as well. These include:

Robotic process automation (RPA) : RPA uses bots or artificial intelligence (AI), a form of cognitive computing. These robots operate on a user interface in the same way a human worker would. Due to the demand for increased cost efficiency and innovation, robots are becoming more widespread. According to the Institute for Robotic Process Automation , RPA creates 25-50 percent cost savings. Robots cost between one-fifth to one-ninth of a full-time equivalent (FTE) worker in the United States, and about one-half of an FTE in a developing country. Some experts postulate that BPOs may adopt RPA in limited use or that BPOs will still have contracts, but their role will change to become more of a consultant.

The Business Process Outsourcing Industry

Globally, the BPO sector is worth over $300 billion. BPO vendors employ more than 3 million people in India, and more than 1 million people in the Philippines. Millions more are employed by BPO companies in Europe and the United States. BPO vendors are located all over the world, especially in developing nations with low income tax. South Africa has shown recent dominance in the BPO market, notably in call centers.

In the past five years, the BPO industry has exploded due to shifts in social media use and the concurrent demand for multichannel communication. Consumer behavior has changed too. Browsing social media is now the third most popular online activity, and 81 percent of the U.S. population has at least one social media account.

Before 2000, companies provided customer service through websites and by transferring calls via interactive voice response, and the BPO industry was primarily composed of call centers. But with the growth of social media and, according to Rightscale , the majority (95 percent) of small to medium-sized businesses’ dependence on cloud technologies, BPOs now provide more professional and technical services such as web design, human resources, and accounting services. This has led to increased investment in BPO, with $462 million poured in by startups in 2014.

Another iteration of the BPO industry is business transformation outsourcing (BTO). BTO offers strategy consulting services, not only in-the-box, traditional supportive business functions. BTO consultants help businesses revamp their processes through outsourcing. In other words, BTO consultants review your business as part of their services and find the opportunities to implement BPO where it makes sense and is most beneficial for the company.

The Future of Business Process Outsourcing

The future of BPO is similar to that of many industries in that automation will be key. Many experts point to RPA as the main avenue through which BPO will change. For example, data entry work and image recognition can be automated easily. However, experts report that certain functions, like handwritten data and telemarketing, will resist automation.

All industries, including BPO, will likely leverage emerging technologies, such as cloud services, social media, and machine learning, to reduce costs and accelerate growth. One business model, the productized service, combines software and an outsourced staff member. An example of productized services is a package that bundles cutting-edge accounting software and accounting services, with both services billed to the contracting company monthly. Startups in particular are becoming more dependent on this type of service, so there is mutual dependence with BPOs.

The trend of providing and supporting improvements in social media management tools is expected to continue. Investments in cloud computing will also persist, as it becomes a more mature platform. In addition, BPOs will invest in diversifying their workforce. As BPOs get more competitive and are forced to lower their prices, they will move to lower-cost alternatives such as software automation and AI. With the threat of losing workers to AI and automation, governments and business leaders are educating them so they can meet the newer demand for highly skilled positions.

With businesses expecting BPOs to fill their gaps or even becoming dependent on them, BPOs are required to be more transparent so that they may build and maintain trust. In the 2016 U.S. presidential election, BPO providers were concerned that they would lose their ability to work for U.S. companies if the new administration changed policies on trade, tax laws, and visas. However, experts do not believe that changing political tides will negatively affect BPO or KPO. Because KPO in particular requires higher-level skill sets or higher education, experts believe that individual country politics will be less apt to disrupt the businesses.

Our experts weigh in and provide their opinions of the future of BPO, and some have recommendations for hiring BPO vendors:

According to SEO expert and business advisor Alex Genadinik, Founder and CEO of Problemio.com , “Moving forward, I fear that there will be a decline of quality as the market saturates with more and more companies and freelancers that do essentially the same relatively low-quality work. The challenge is that if you hire high-quality companies, they typically do great work, but are costly. As a business owner, this means that you must either get to the point where you can hire costly companies on a long-term basis or allocate resources to SEO in-house. If done intelligently, it doesn't have to require many resources, but at least you will have control and transparency of what the SEO work is being done. This ensures that your employees are not cutting corners or doing something that will get your website penalized by Google.

“I have experience outsourcing to a BPO for my business Problemio.com, and I have been hired by SEO marketing agencies to train their staff. What I can say is that if you are hiring on a budget, you will get very low-quality work. Only the top tier of the BPO companies actually do good work that I as an SEO expert would deem acceptable. So for the long term: Hire high quality or don't hire at all.”

Thomas Wooldridge, who specializes in web design, social media, and PR at Relamark Web Design & Marketing, advises, “BPO is something that will never go away. It's like saying you want to bring back encyclopedia books or Blockbuster videos. Our world has never gone backward from technology. The internet has made it much easier to bring the whole world together.

“There will always be a need for low-skill and low-wage workers who would be difficult to hire in the West, although many countries such as India, the Philippines, or China will gladly do it on your behalf. On the other hand, the same country you used to hire the low-wage workers will eventually get smarter. The local economies and workers’ skills will improve to where they are demanding higher pay. So then you have to look into another third-world-type country to attract.

“For example in the 1990s, India was the prime location for BPO services. Because of this, education and middle-class incomes rose to the point that they have nearly surpassed that of workers in the United States. Now U.S. companies have to nearly import those same workers to take the jobs that Americans couldn't fill. That is why there is a tremendous growth in Indian medical doctors and IT people in the United States.”

Pete Abilla, Lean Six Sigma expert turned entrepreneur and owner of  FindATutorNearMe , a tutoring marketplace with over 100,000 private tutors, says, “During my career, I've spent a lot of time improving the processes of clients. One trend I'm seeing is that organizations are more interested in training their own employees in the techniques of Lean manufacturing and Six Sigma. However, for some processes, such as call centers and primarily back-office operations, it might be more cost effective to outsource those to a BPO entity. Another trend I'm seeing is that BPO organizations are best to use for departments that are primarily cost centers and not revenue generators for the company.”

Ben Walker, the CEO of Transcription Outsourcing , LLC, says, “We work with all kinds of companies, small, medium, large, public, private, and many different government agencies, on a daily basis. They use my company because they don’t have the internal personnel to do what we do for them. Transcription is not something a lot of people do any more, so by utilizing us and our teams of transcriptionists we can help them get what they need much faster and cheaper than they could do it themselves. I don’t think companies like mine will be going anywhere any time soon because we do highly specialized work that you can’t replace at the drop of a hat and start filling cubicles next week.”

Derric Haynie , CEO of Vulpine Interactive , says, “By the end of 2017 or early 2018, I'm planning on opening up my own counterpart agency in Asia (Bali or the Philippines are front-runners right now). The reason I'm doing this is because my business relies heavily on systems and processes, things that technology can't quite do, but doesn't require significant strategy or high-level employees either. By opening up our own business, we can ensure quality and continuity while simultaneously keeping costs very low.

“While I don't think all companies will move toward this model, I do see it as highly viable and would expect more ‘outsourcing’ to actually be done in-house as even small companies like mine can open up their own in-sourced shop in another country.

“In the short term, I see BPO being easier to access and utilize by all companies, but I also see AI and technology eliminating many BPO jobs in the short- and long-term future. It's the same venture, not a new venture. We will just be opening an office in Asia to handle all of our low-level processes. I imagine there will be many problems starting a business in another country. I have yet to assess all of them properly. I’m not looking forward to that.”

FInally, the new BPO destinations expected to emerge in 2018 include Bulgaria, Romania, Egypt, Mexico, and Columbia. Due to fierce BPO competition, oversaturation, and reduced business growth, these five countries may become alternate low-cost locations.

Business Process Outsourcing Commercial Providers

Below you’ll find links to lists of BPO companies throughout India, Asia, the U.S., the U.K., Australia, and Europe. A BPO company usually specializes in one service or group of services, such as back-office support or, in the case of RPOs, biotech research. These lists are not comprehensive, as new companies crop up weekly, and companies frequently merge.

You can also try service companies that can help you find the right BPO vendor for your needs. Through the contracting process, these service companies can help ensure that all of your needs are covered. Many also use e-procurement services (supplier exchange) to keep the costs constant. E-procurement is a system that allows business-to-business management of services. Here are some useful resources:

eBook directory through the IT and Business Process Association of the Philippines

A commercial company lists of BPO contact information

BPO service providers listed by region and functional area through 123outsource

How to Choose a Business Process Outsourcing Vendor

It’s no easy task choosing a vendor to support your outsourcing needs, but you’ll need to review many details prior to settling on one company and getting an appropriate agreement in place. Experts recommend a formal, extensive process to choose a vendor that has the best outsourcing experience and can meet your company’s goals. The following is a list of tasks to perform in sequential order for companies considering hiring a BPO vendor:

Define your requirements and review potential vendors : Start by defining your key stakeholders, and engage them in the process from the beginning. Set all key stakeholder expectations early and engage them often. During this step, your company must also figure out the key objectives, risks, and scope for BPO. This is your business case scenario, so this step should take the longest and include a full review of your company processes, not only those initially considered for outsourcing. During this step, you should start to source potential vendors and develop a scorecard to determine the most important criteria. You can find a template for developing a scorecard here.

‌ Open Vendor Selection Scorecard Template - Google Sheet

Put together a request for proposal (RFP), and source vendors : In concert with your company stakeholders, determine the most crucial elements of a BPO provider. Develop and send out an RFP from your market research. At this stage, define what service management model your company will use.

Choose the right vendor for your company : Evaluate the proposals. Start analyzing the change that will result from contracting with a third-party vendor. What are the risks and benefits determined from the shortlist of potential vendors?

Negotiate the contract : This is the most important step in the process of acquiring a third-party service provider. Both parties must reach an agreement not only on the service parameters, but also on the contract schedule. It’s critical to ensure buy-in and agreement by all stakeholders.

Transition the work and processes to your chosen vendor : This is the actual “go” step. Develop and put in place a plan for transitioning to the new model. Ensure that your business has open communication internally and with the service provider.

Manage your relationship : Verify proper governance during the life of the contract with your service provider. Performance monitoring is key for ensuring that your company reaps the expected benefits of outsourcing. Expect a collaborative relationship and plan to renegotiate your contract and its scope at the end of its term.

Additional tips that can help you choose the right BPO:

A good outsourcing company should help you decide which parts of your business you need to keep in-house. Beware of a company that tries squeezing core processes out of you.

A good outsourcing company values the work of every employee. This enables a better connection between their company and your organization and can help increase productivity.

A good BPO company’s objective is to help your organization boost sales without consuming too much money.

Choose your BPO company carefully. Look for evidence that it can deliver the task well and on time.

Ask two questions when looking for a BPO service provider: (1) How can I find the right candidate? and (2) How do I manage the outsourcer after I settle their contract?

The key to a successful BPO experience is to do your research beforehand, lay out clear expectations and deliverables with your selected vendor, and stick to what both parties agreed upon.

Overall, the company should choose a BPO vendor carefully and conscientiously. The relationship should be defined formally, and managed and considered regularly.

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Outsourcing

7 Steps to Successful Outsourcing for Your Business

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So you’ve decided to outsource some work to a third party, but how do you make sure you get the results you’re after? You need to find the perfect partner, someone who can follow your design but has the autonomy to work independently. How well they perform will have a direct effect on your business, so this is a decision that you need to get right.

If you’re new to the outsourcing approach then this is the article that you need. We’re going to go over everything you need to know to create an effective outsourcing strategy. We’ll talk about the steps involved in outsourcing and how you can make sure your partner delivers the goods.

We’ll go over things such as how to transfer key information to a third party and how to build new processes to help facilitate an outsourcing relationship. You’ll also learn how to handle ending a contract whether it comes to a natural stopping point or the work isn’t up to standard.

1. Finding the right partner

The most important step of an outsourcing approach is finding the right company or person to partner with. Someone without the necessary experience is going to hold your company back. You want to choose a partner who has proven experience working to deadlines, meeting and exceeding expectations, and providing good value for the work.

As part of your outsourcing implementation plan, you’ll need to decide the scope of the project you are handing off. This will help to inform what kind of company you partner with, whether it is something small like logo design or something grander like creating assets for a video game.

A logo can be handled by a single person or a design firm. There are plenty of websites that can help you find a freelancer including Upwork, Fiverr, and 99Designs. On these websites, you’ll be able to review someone’s portfolio and professional feedback before approaching someone.

Sometimes it makes financial sense to outsource entire departments. Small businesses may need an accountant but lack the resources to bring someone in full-time. A great option is to contract an outside firm that can handle this for you. In these instances, you want to look at firms with outsourcing experiences that can deliver great results at cheap rates.

2. Finalizing the deliverables

Once you’ve found the right partner, you’ll need to decide on the deliverables before a contract can be drawn up and signed. An effective outsourcing strategy will include a detailed contract that leaves no room for error on what is expected. A key part of early conversations should be about locking down expectations and making sure everyone is on the same page.

Here is where an outsource implementation plan is going to make the biggest difference. It may seem like a lot of work to make but it’s useful to have this document for both parties to refer back to. Include details about the goals of the partnership and how your business will support the third party.

One key thing to do is create systems and processes that are uniform between both businesses. Using a project management tool like Teamly means everyone can follow the same tasking system and be able to communicate effectively between teams. Each deliverable and every step involved can be included in Kanban boards on Teamly for quick reference.

Lastly, a dry run at this stage is going to be beneficial for both your business and your outsourcing partner. Set aside a few hours where both teams can pretend it is the first day of work together. Go about the day as you would expect things to progress and make note of any inefficiencies. A rehearsal helps to ensure everything works smoothly and there are no roadblocks between the two companies.

3. Partner Relations

Once the deliverables have been agreed and the contract is signed you should appoint someone to be the contact person. By having a single point of contact between your business and the third-party vendor, any issues or questions can be addressed quickly and coherently. An effective outsourcing strategy will avoid emails to and from multiple people as this can slow down progress.

You’ll likely have set a timeframe for the deliverables in the contract and if your freelancer or agency doesn’t know who to contact they may not be able to keep to it. Treat this as a relationship instead of a transaction and nurture it as you would your own employees. You may elect yourself as the point person, or a trusted member of staff. The key is to select someone who can take ownership and seek out information on behalf of the partner company.

This will create a closer working relationship and will help to grow a long-lasting partnership between the two companies. If your project is large in scope it may be worth assigning a project manager or team that can facilitate relations with the third party. As long as you can avoid communication breakdowns, the project should run smoothly, on time, and on budget.

4. Knowledge transfer

One of the key steps involved in outsourcing is the transfer of knowledge from your business to the partner company. They need to be trained in how your business operates and how to meet your expectations. Other companies may not use the same software, so it will be important to get them up to speed if they need to use in-house software such as your CRM.

Sharing your tech stack with a third party can ensure that you’re working in tandem with each other. This will also help your in-house team to assist the outsourced team where it is appropriate. They may already be using the same tech you use but if they don’t it’s worth getting everyone on the same software.

They may also need access to design documents and knowledge of company tone and attitude. Knowledge transfer is a collaborative process that can be shared through a series of informal and formal discussions. Early in the project, you should arrange a meeting to discuss the brand as well as the deliverables.

Consider if it is worth creating templates and best practices (such as naming conventions, support, and codifying) that can be shared with the outsourced vendor which they can share with their new hires. Following Agile methodology can help to facilitate knowledge transfer by breaking the project down into short 2 week sprints. There will be ample opportunities to share knowledge during meetings and roadblocks can be addressed before the next sprint.

5. Implement transition plan

Here is the part of your outsourcing implementation plan that covers the transition to the third-party vendor. This will be a highly collaborative process and should be led by the in-house project manager if one has been assigned. Involved in this process are the various internal stakeholders as well as the important people at the new company.

You should make sure that the dry run has been completed successfully, the tech stack has been agreed upon, and the transfer of knowledge has everyone on the same page.

Now you’ll need to decide on the timeline for the deliverables and each component of the project. Send over the important assets that the third party needs to complete their work. This could include login information for certain software, or shipping necessary hardware to their address.

Once everything is in place, it’s time to take your hands off the wheel and entrust the developer to deliver the goods. Any third-party vendor will want to retain their autonomy during this process. Micromanagement is likely to rub them the wrong way and if you are unable to let go, it may be better to do this in-house.

Let your point person be there to answer any questions but allow the vendor to work away on the deliverables. They will use your design document and best practices to ensure the work fits your brand identity.

6. Assessing the deliverables

Before you sign off on the deliverables you’ll want to ensure they meet your expectations. Depending on the type of work being done you should try to build revisions into the contracts. For example, if you are commissioning a logo design from a freelancer or agency, make sure to add one or two revision requests. This protects you if the initial design misses the mark.

Other types of contracts may stipulate work will continue until the final product is signed off on. The important thing is to ensure you’re not paying for work that you can’t use or limit the amount of money spent on goods you aren’t happy with.

In a perfect world, the end result will be ideal and the project can be signed off. At which point you can look at commissioning a new project or ending your relationship there, with both parties happy with the result.

Sometimes, however, there will be issues with quality or deadlines missed which can sour the relationship. At this point, you’ll need to decide whether to cut your losses and find a new vendor, bring development in-house, or swallow your pride and accept the project as-is. In order to make this decision, you’ll need to look at the costs, resources, and time available for the project.

7. Ending the contract

Ending a contract with a third-party vendor can happen for a number of reasons and not all of them are within your control. The most obvious reason pertains to quality but sometimes you’ll need to end a contract early if there are financial issues. If you are hit by an economic downturn, one of the first things a company will do is look to end outsourcing to save money.

An exit plan is a great idea in these instances to ensure you can end the relationship on good terms. While it is impossible to plan for every natural or economic disaster that may come into play, you can plan ahead for changes in the market and budget constraints. The exit plan should contain the steps you’ll take if your partner fails to meet expectations or other factors that mean you need to terminate the account.

In the plan, you should cover the steps involved with bringing the project in-house or transitioning the assets from your partner to a new vendor. Consider how to facilitate these changes without running into interruptions in your day-to-day business.

An outsource implementation plan is crucial to start working with outside partners. You’ll need to know how to set deliverables and timeframes in order to work effectively together. When selecting a partner you need to pick someone with proven experience of working with an outsourced approach.

Allow them the autonomy to work on the project the way they see fit while adhering to your tech stack and brand identity. Share design documents and culture with them through formal and informal discussions. If you are unhappy with the work they have provided, look at implementing your exit plan and choose a new provider or look at bringing the work in-house.

Ultimately, outsourcing should save you time and money for projects you can’t work on in-house. Creating a good working relationship with other businesses will be beneficial for your company’s growth in the long term.

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Project Management

The 5 Most Frequently Used Project Management Methods and Styles (How to Choose the Right Strategies for Your Company)

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How to build a better business with outsourcing.

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Shane Barker  is a digital marketing consultant who specializes in sales funnels, targeted traffic and website conversions. 

Did you know that the outsourcing industry is expected to grow into a $405.6 billion market by 2027?

While many entrepreneurs think that outsourcing is only for big firms, I’m here to tell you otherwise. Technology has now made it more accessible for small businesses to outsource a variety of tasks to get work done faster and better.

Since I started my agency, I’ve worked with many ghostwriters, content creators, search engine optimization (SEO) specialists, influencers and designers from different regions of the world. That’s how I’ve been able to successfully deliver results-driven digital marketing services to clients from diverse verticals and bootstrap my business to seven-figure revenue.

The best part about outsourcing is that it allows you to work with top-notch talent without any geographical limitations. You can focus solely on qualifications and expertise while choosing your team of professionals.

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During my 25 years of experience, I’ve put together a few best practices that can help you build a better business with outsourcing. Follow them to save time, reduce costs and increase your return on investment (ROI).

1. Understand when you should outsource.

Every business should have a core team working full-time to deliver products/services of top-notch quality and address customers’ requests and concerns.

If you feel like your team is getting overwhelmed by work or spending too much time on tedious tasks, that’s when you should consider outsourcing. You can also outsource if some work areas are out of your expertise area.

For example, I like to keep myself highly engaged with the content creation process — be it the production of my podcast episodes or insightful blog posts. However, I leave the tasks of audio/video editing, grammar check, optimization and so on to the experts.

This helps me focus on what I do best — strategizing, giving value to my readers/listeners and doing the real talking.

2. Identify the tasks you should outsource.

When outsourcing for your business, you should make sure to keep all tasks related to your core competencies to yourself and your in-house team.

For example, I won’t outsource brand consulting to another professional because that’s something my clients pay me for.

What should you outsource instead?

• Highly repetitive tasks such as email sorting, calendar management, payroll services, IT tasks, etc.

• Expertise-specific tasks such as financial analysis, bookkeeping, audio/video editing, content writing, graphic designing, etc.

3. Find the right professionals to partner with.

Finding the right people is the most important part of outsourcing. It’s the most challenging part, as well.

And the Covid-19 outbreak has only made it worse because more and more people are now working from home as freelancers. It’s difficult to identify professionals who’ll genuinely help your business grow.

To all business owners out there who are struggling to find the right task force, I’d suggest that they consider the following factors while hiring freelancers:

• Do they have the expertise and experience you need?

• Do they believe in your company and products?

• Do they love doing their work?

• Do their freelance services fit within your budget?

You should also look at their past work samples and see how their previous clients rated their services.

With the changing freelancing landscape, you can also rely on online marketplaces, both new and familiar, to find and hire professional freelancers with multiple talents who can help you achieve your business goals.

4. Work responsibly with the selected freelancers.

Once you’ve found the right professionals to outsource to for each task, you should focus on getting the most of your collaborations.

Here are a few tips that have helped me work with freelancers smoothly:

• Create briefs outlining your expectations and task guidelines clearly.

• Communicate the steps involved in the task.

• Trust your work partner with their job. Don’t micromanage your outsourcing workforce or there will be no point in outsourcing.

• Leverage project management platforms to keep your tasks and deadlines organized. This will also make communication easier.

5. Track the performance of your outsourcing task force.

Do you want to build a better business with outsourcing?

Then tracking results is necessary. You need to weigh the costs versus the benefits of outsourcing. This will help you identify who your most valued professionals are and which tasks are better completed in-house.

Before outsourcing a task, you should identify the performance metrics important for the task.

For example, if you’re outsourcing writing blog posts, you should track parameters like readability score, content optimization score, content quality, and the number of views to evaluate if the person has done their job right.

If not, you can always look for other professionals. I regularly evaluate the performance of my work partners to analyze when to end collaborations, give bonuses and increase payouts. This has helped me build a team that I can rely on.

Ready to grow your business with outsourcing?

As you can see, outsourcing has a lot of potential.

There’s no denying that having a core in-house team you can rely on is great and crucial to the growth of any business. But outsourcing work can help you find talented professionals around the world and get the most of their talents and services.

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6 Steps for Building a Successful Outsourcing Strategy

• April 15, 2023
• In Business , Talent , Staffing & Hiring

Software development firms and business IT departments increasingly rely on technical staffing services to help run their businesses to offset mounting costs, or pull in outside engineering talent. Small to midsize US-based businesses are especially well positioned in terms of their market position to take advantage of the benefits that come from outsourcing. By understanding how to implement different outsourcing models when required, companies can rein in their HR budgets, while gaining access to skilled technical labor when that labor is needed most (e.g. on a tight deadline, or to fill in-house skills gaps).

BXGI believes that in order to get the most for our clients, it’s essential a firm knows how to build a successful outsourcing strategy. By laying out a detailed blueprint of how to approach outsourcing ahead of time, a company can ensure that it’s day-to-day work schedule continues to run as smoothly as possible as augmented staff integrate with internal creative or development teams. Over the years, BXGI has worked with a variety of clients, and discovered that when a business adopts a comprehensive outsourcing approach from the onset, vendors can better manage and maintain exceptionally high service quality, while keeping clients’ expenditures as low as possible.

Here are 6 crucial steps to building an effective outsourcing strategy:

1. Outline Detailed Outsourcing Goals

A company that clearly defines its outsourcing goals early on is already one step ahead of the competition. Firms that carefully outline their outsourcing objectives, step-by-step, will be in a better position to select the right staff augmentation model for their particular industry than companies that pay less attention to these steps, because they’ve taken the time to understand the pros and cons of outsourcing.

Another advantage of defining crystal clear outsourcing goals is the opportunity to take stock of a company’s actual outsourcing needs. While staff augmentation comes with many positives, there are some downsides as well, which could mean outsourcing might not be the best staffing approach for a particular business during a certain period of time. But when a gaming or software development firm is preparing for a next phase in product development, or launching several new projects that exceed the ability of their current employees to handle, or require outside technical or creative expertise, staff augmentation agencies can help provide a company with the skilled professionals it needs.

By establishing well-defined outsourcing goals early on, a firm can utilize IT staffing in the most effectual manner possible — hopefully increasing productivity, while saving money at the same time, by scaling up or scaling down supplemental staff as business or budgetary concerns dictate.

2. Budget for the Expected and Unexpected

According to Statista, which specializes in market and consumer data, information technology outsourcing (ITO) hit $62 billion in 2018 (business process outsourcing, or BPO, reached almost $24 billion). And while the size of the IT outsourcing market will likely fluctuate over the next few years due to changes in the global economy, as well as due to companies cutting costs by moving less critical IT services over to cloud computing environments , operational managers still need to budget for different business scenarios that come from working with a staff augmentation model.

When mapping out monthly, quarterly and annual budgets, companies need to take into account their present staff augmentation needs, while factoring in how augmentation can help reduce their overall personnel budgets, if and when properly implemented. But they’ll also need to budget for the unexpected, such as unforeseen employee turnover, or a new contract that requires more skilled labor than is currently on staff.

Managers often cite “hidden costs” as one of the primary reasons why outsourcing endeavors can fall short of initial expectations. A reputable IT staffing firm can help a company validate its supplemental staffing plan, finding the right balance between affordability and expected results, while also identifying possible hidden costs, giving the client the ability to quickly increase or decrease supplemental staff when needed, or on short notice, without breaking the bank.

3. Choose the Right Outsourcing Engagement Model

When building a compressive outsourcing strategy, HR executives should prioritize the specialized skills they’re searching for, and why. By clearly defining the technical or creative expertise they need to add, it becomes easier for managerial teams to choose an outsourcing engagement model that matches their specific staffing requirements.

There are a variety of outsourcing models to choose from, including onsite, onshore, nearshore and offshore engagement models, all of which come with different benefits and risks. A company looking to offload noncritical technical operations would likely be interested in a different type of outsourcing model than a software firm on the hunt for an exceptionally rare programing skill, which would differ still from the model a gaming studio would select to fill a few in-house skills gaps on a short-term basis. By choosing the right outsourcing engagement model — in consultation with an experienced technical staffing firm — from the beginning, businesses can put supplemental staff to work as quickly and efficiently as possible, without wasting time or resources, or cutting down on productivity for any significant amount of time.

4. Mitigate Outsourcing Risks

While outsourcing comes with many benefits, it also carries with it some risks that need to be addressed (as we’ve already briefly covered). By understanding and mitigating these risks, companies can reduce their financial exposure, while increasing the efficiency of the outsourcing model they select. Here are four risks to pay particularly close attention to:

• Trust and Control: Managerial oversight is reduced when a company outsources, especially when choosing the onshore, nearshore or offshore models. HR directors can build trust by learning as much as they can about the IT staffing firm they’re working with, speaking with previous clients, and making sure they’re comfortable with their vendor’s outsourcing methodologies. These simple steps can help establish clear communications protocols, fostering a sense of cooperation and trust between a company and its vendor.
• Hidden Costs: As we’ve discussed, hidden costs, when it comes to outsourcing, can quickly lead to client dissatisfaction. When signing a contract with an IT staff augmentation agency, HR executives need to make sure their contracts clearly outline terms of payment, any lists of possible (and acceptable) supplementary charges, what services might incur additional charges, a ceiling to additional expenses, as well as a procedure for reviewing surcharges if and when those services/charges are actually needed.
• Quality Issues: In addition to a reduction or loss of operational control or oversight, outsourcing can also carry the risks of quality issues. These risks can be mitigated by working with vendors that have demonstrated a commitment to quality control with past clients and projects, and have a comprehensive process in place to quickly resolve any quality issues — onsite or offsite — with a creative or development project (employing augmented staff) should product or service quality issues arise.
• Confidentiality and Intellectual Property Rights: BXGI believes intellectual property is a serious matter. Rather than create any uncertainty over intellectual property issues (like copyrights, patents, or trade secrets) HR and legal executives might have concerning supplementary staff, BXGI safeguards against these issues by having all of our creative and technical talent sign exclusive work ownership agreements and NDAs. These contracts take our clients’ confidentiality concerns into account, while also protecting their intellectual property rights.

5. Actively Track Outsourcing Progress and Added Value

In order to monitor the advantages and disadvantages that come with outsourcing, it’s important a company or development team has some clear key performance indicators (KPIs) in place. These indicators can help executives decide if the particular staff augmentation model they’ve chosen is the right one for them. And while these performance indicators can vary widely, a reputable outsourcing vendor should be able to offer multiple indicators (assuming the client has already established clear outsourcing objectives), including, but not limited to: benchmark procedures for breaking down outsourcing costs versus supplemental staff job performance, measuring outsourcing expenditures against productivity, measuring the output and efficiency of different augmented teams against expected outcomes outlined in a service-level agreement (SLA) — and of course setting up the specific internal protocols designed to measure and report KPIs in the first place.

By measuring the benefits and progress (or lack of progress) of the outsourcing engagement model a company selects, corrective steps can be implemented if staffing expectations aren't being met. But if those predefined expectations are being met, actively tracking outsourcing benefits and progress can help strengthen the model being employed, thus contributing to continued outsourcing success.

6. Establish Strong Client/Vendor Communication Channels and Relationships

One of the most straightforward and obvious steps to outsourcing success is finding a technical staffing firm that can mesh with a client’s way of doing business. Corporate culture and communication protocols can vary extensively in the business world. Companies looking to hire augmented staff locally or remotely all want to work with technical staffing agencies that operate in a transparent, responsive manner, and that will address any outsourcing issues that may occur promptly and professionally.

An outsourcing vendor that takes the time to learn about a client’s internal business culture, and how it runs its engineering and creative teams, will be building the foundation to a relationship that fosters good communication. This close relationship, in turn, helps IT staffing firms provide the most appropriate company-specific staffing solutions they can, while remaining flexible enough (thanks to constant client/vendor communication) to predict and adjust to a company’s personnel needs down the road.

Companies that lay out a well-defined blueprint in terms of what they expect from their outsourcing agency, and are aware of the advantages and occasional disadvantages that come with outsourcing and staff augmentation (especially in relation to their specific industries), will be in a better position to optimize the advantages, while reducing any associated risks. By building a careful, detailed approach to outsourcing from the beginning of a project, managers will be setting up a clear path to creating a sustainable and successful outsourcing strategy, which will ultimately help them better meet their business goals.

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Updated: 4 June 2024 Contributors:  Mark Scapicchio, Matthew Finio, Amanda Downie

Business process outsourcing (BPO) is the practice of hiring external service providers to handle noncore business functions or processes.

BPO entails contracting an external service provider to fulfill a business function or process. BPO is sometimes referred to as information technology-enabled services (ITES) because in the modern world, outsourced processes are often reliant on IT.

BPO was first used in the manufacturing industry, where firms gained efficiencies by outsourcing business tasks for supply chain management . Today, BPO services are used in healthcare, asset management, energy, pharmaceuticals, ecommerce, and other industries as companies use new and innovative ways to improve customer experience and gain competitive advantages.

Generally, companies outsource non-core business functions—tasks that, while essential to the business, are not part of its core value proposition—that are similar across companies and industries. These include back-office functions (internal business functions) like accounting, IT services, sourcing, procurement, quality assurance and human resources management. Front-office (customer-facing) roles like sales, marketing or customer support are included as well. These roles are also using newer technologies such as chatbots .

Traditionally, companies have outsourced functions mainly to cut costs, save time and improve performance. These benefits remain the primary drivers of the BPO market, but the trend toward digital transformation has more firms looking beyond cost-saving strategies. There is now an increased focus on access to technology and expertise that are not available in-house.

Explore the 2023 Gartner® Magic Quadrant™ for Finance and Accounting Business Process Outsourcing.

The proliferation of new technologies like Robotic Process Automation  (RPA) and artificial intelligence (AI) has impacted BPO processes. These advancements have ushered in unparalleled levels of efficiency, accuracy and scalability, making BPO a competitive advantage  for many organizations.

RPA automates repetitive and rule-based tasks traditionally performed by humans. By deploying software bots programmed to replicate human actions, RPA simplifies processes, enabling human workers to focus on more complex tasks. This streamlining of workflows reduces errors and accelerates process execution.

Integrated analytics, which connect data insights solutions to everyday workflows and applications, are enhancing business intelligence. Machine learning (ML) , a subset of AI, is dedicated to using data and algorithms to mimic human learning processes. This continuous refinement of accuracy over time represents a significant leap forward in data processing and analytics. ML can extract valuable insights from vast amounts of structured and unstructured data, leading to better decision making.

Predictive analytics, another branch of AI, employs mathematical and statistical models to identify data patterns and generate predictions. Integrated analytics offer deeper visibility into operations and aid in identifying emerging trends. This empowers organizations to make informed, data-driven decisions to stay ahead.

With technology playing such a pivotal role in business success, organizations are looking for BPO partners with expertise in AI, automation and emerging technologies. These partners can bridge the technology gap and help organizations remain competitive within their industries.

Identifying the appropriate functions for BPO requires strong business process management and a complete understanding of organizational processes. Typically, the outsourcing of a function or process will involve the following steps:

Organizations base this decision on many factors, including company size and industry, market size and economic forces, and overall needs and goals. For example, startups or small businesses might decide to outsource any number of functions because they lack the in-house expertise or do not have the staff to do them. Larger organizations might decide to outsource because a third-party vendor can complete the task more efficiently or effectively.

The organization must choose the business functions best suited for outsourcing and consider the impact outsourcing will have on technology requirements and current processes. Organizations must evaluate how this new business model affects the company, from processes and workflows to finances and taxes to company culture.

Organizations must determine which vendors offer the best outsourcing services at reasonable rates and turnaround times. Depending on an organization’s needs and their assessment of service providers, an entire business operation might be contracted to one vendor. Alternatively, the operation might be divided among multiple vendors. Comparing vendor offers against requirements and expectations helps make this decision.

An organization must decide whether to offer a vendor a fixed-price contract or a time-and-materials contract. If the service provider agrees to a fixed-price contract, they are paid a fixed amount regardless of the amount of time and resources expended on the outsourced role. For a time-and-materials contract, the provider is paid based on the amount of time and resources used during the work.

Alternatively, the contract may be based on performance outcomes. Whatever the contract type, service-level agreements (SLAs) should be established to simplify the evaluation of the quality of service provided.

Develop and implement a plan for moving the workload to the vendor. Communication, both internally and with the vendor, is crucial for a smooth transition.

The organization should regularly assess the vendor’s performance against the objectives and goals outlined in the contract, usually on a quarterly or annual basis. This evaluation should include metrics to gauge aspects such as efficiency, accuracy and customer satisfaction. This helps the organization decide whether to renew, amend or terminate the contract.

Business process outsourcing offers valuable benefits for organizations and allows for greater focus on highly skilled and specialized roles essential to core objectives. These benefits include:

Access to innovations. As specialists in the services they provide, BPO vendors often invest in the latest technology solutions available to maintain an advantage over competition and offer the greatest value for clients. This allows companies to access cutting-edge technology, like AI, advanced analytics or automation solutions that handle more complex processes, while minimizing costs.  

Efficient global presence. Outsourcing providers can deliver around the clock service to customers in multiple languages, eliminating the need for an organization to staff a local office. In addition, for organizations looking to expand, a partnership with a BPO vendor in the region can grant a better understanding of local markets and help streamline the expansion process.

Improved efficiency and standardization. BPO providers are often specialists in non-core business operations, like payment processing, call centers or accounting. Thus, they can handle these operations with greater efficiency and expertise than if the services were handled in-house.  

Increased focus on core business competencies. By outsourcing non-core competencies, organizations free up resources. These can be redirected toward business differentiators that drive value and give the company a competitive advantage.  

Reduced cost. While overhead costs are unavoidable, by outsourcing various functions to third-party vendors, organizations can reduce in-house labor costs related to staffing and training. They can also take advantage of fee-for-service plans that are more cost effective than retaining full-time employees. Through offshore outsourcing, organizations can use lower-cost labor markets and tax advantages to improve the bottom line.

Business process outsourcing can be classified according to the location of the hired outsourcing company and the type of service rendered.

BPO based on location:

• Near-shore outsourcing. Here, the contracted vendor operates in a neighboring country, like a firm in the United States of America outsourcing to Mexico.
• Offshore outsourcing. This is when an organization contracts a provider in another non-neighboring country. For example, a German firm hiring a vendor in the Philippines.
• Onshore outsourcing. Also referred to as domestic or local outsourcing, this is when both the organization and the service provider operate in the same country.

BPO based on the type of service:

• Knowledge process outsourcing (KPO). This is the outsourcing of core, information-related business activities to a third party, or to a different group within the same organization with expertise in that particular area. Examples of KPO services include research and development (R&D), data and technical analysis, and consulting services.
• Legal process outsourcing (LPO). LPO is a subset of KPO involving the outsourcing of higher-level legal work. Examples include the drafting and revision of legal agreements and patent applications, legal research and client advising.
• Research process outsourcing (RPO). Another subset of KPO, this is the outsourcing of research and analysis functions. Organizations that commonly engage in RPO include biotech and investment companies.

Choosing a BPO industry service provider to meet an organization’s outsourcing needs requires thorough planning. The goal is to choose an affordable vendor with the right mix of expertise and experience. The following are general steps to follow when evaluating and choosing a BPO provider:

Define the requirements. All relevant stakeholders should be involved from the outset in choosing a vendor. Each department should outline requirements and expectations as they relate to the functions to be outsourced. The key objectives and foreseeable risks of outsourcing these functions should also be counted.  

Publish a request for proposal (RFP). An RFP is a document that describes a job and invites bids from qualified vendors. The expectations for the role and the contract terms are often stated in an RFP.  

Select a vendor. Evaluate the proposals. Assess the strengths and weaknesses of the shortlisted vendors and compare against stated requirements and objectives, weighing any value-adds offered by vendors.  

Negotiate the contract. Once a vendor has been selected, begin to finalize the contract. Because the contract terms have already been detailed in the RFP, most of the terms should already be agreed upon. Make sure that the service parameters and delivery timelines are clearly understood by all stakeholders.  

Transfer the workload and regularly evaluate performance. Follow the pre-established plan for the transition of services to the vendor. Communicate regularly with relevant in-house teams as well as with the external service provider to maintain efficient business operations and foster a collaborative relationship. Monitor and evaluate vendor performance against the key performance indicators (KPIs) outlined in the SLA, and use these evaluations to determine whether a contract should be renewed.

Though it offers many benefits, BPO exposes an organization to some risks as well. Outsourcing your organization’s business processes to an external service provider raises questions about work quality, data security and work culture compatibility, especially when the provider is located in a different part of the world. BPO can introduce the following risks:

• Communication barriers. Language barriers can restrict business activities in offshore outsourcing, leading to poor communication and delays in service delivery.
• Increased potential for disruption. When outsourcing to other countries, issues like political instability and natural disasters in a provider’s country of operation can interrupt an organization’s business activities.
• Over-reliance on external service providers. Working with one BPO vendor for a long period of time can lead to an over-reliance on that vendor. The vendor becomes more or less a part of the organization and, if necessary, replacing them is not always easy. A vendor might take advantage of this knowledge to use the situation.
• Regulatory compliance issues. Despite being third parties, BPO companies still must comply with the client organization’s regulatory requirements. An organization risks sanction from relevant authorities when there is regulatory non-compliance. Different workplace cultures and norms might increase the chances of falling out of compliance, especially when compliance is outsourced to other countries.
• Security issues. Business process outsourcing often requires the sharing of sensitive information with vendors, which increases security risk. Most communication and information sharing is done over the internet, which is a viable entry point for bad actors. Also, despite best efforts to align security standards, it can be more difficult to ensure that a third-party vendor is adhering to data privacy protocols and security measures than it is with an in-house team. Different countries have different security requirements and data privacy policies, which can pose a threat to data security for organizations that outsource to other countries.
• Unforeseen costs. Organizations do not always accurately estimate the cost of an outsourced service. Some unforeseen and indirect costs can be incurred due to, for example, currency fluctuations, hardware or software upgrades, and delayed delivery. It’s important to consider these hidden costs when evaluating the financial implications of outsourcing.

Create business continuity for better intelligent workflows that boost agility and resiliency.

Streamline HR processes, improve productivity and help positively transform your workplace culture.

Learn how companies are creating efficiencies while also modernizing processes rather than relying on offshore outsourcing.

Read why 92% of polled executives agree that their organizations' workflows will be digitized and will leverage automation by 2025.

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Learn about how we're partnering with Deluxe to leverage our enterprise-focused Al expertise and technologies like watsonx.ai to help propel their customers and enterprise forward into the next century.

Our BPO experts can help you create business continuity for intelligent workflows that boost the agility and resiliency of your enterprise. To date, we have transformed the BPO and Business Process as a Service (BPaaS) processes of over 100,000 BPO practitioners worldwide.

Business Process Outsourcing Plan Template

What is a Business Process Outsourcing Plan?

A business process outsourcing plan is used to help organizations identify and outsource inefficient business processes in order to reduce operational costs, improve productivity, and increase customer satisfaction. It includes a series of steps and objectives that focus on streamlining processes and automating tasks to achieve desired outcomes.

What's included in this Business Process Outsourcing Plan template?

• 3 focus areas
• 6 objectives

Each focus area has its own objectives, projects, and KPIs to ensure that the strategy is comprehensive and effective.

Who is the Business Process Outsourcing Plan template for?

This plan template is perfect for organizations of all sizes and industries to create a plan to outsource their business processes. It can be used to set measurable targets, implement related projects, and optimize business processes to achieve organizational goals.

1. Define clear examples of your focus areas

Focus areas are the major areas of improvement that will be addressed in the outsourcing plan. Examples of focus areas could include optimizing business processes, increasing customer satisfaction, and enhancing collaboration. For each focus area, you should identify objectives and set measurable targets (KPIs) to tackle the objectives.

2. Think about the objectives that could fall under that focus area

Objectives are the specific goals that need to be achieved within the focus area. Examples of objectives could include reducing operational inefficiency, improving productivity, improving response times, and enhancing quality.

3. Set measurable targets (KPIs) to tackle the objective

Key Performance Indicators (KPIs) are measurable targets that can be used to track and evaluate the progress of the objectives. They should include an initial value, target value, and unit of measurement. Examples of KPIs could include reducing operational costs, increasing productivity by 10%, decreasing response time, and increasing quality score.

4. Implement related projects to achieve the KPIs

Projects, or actions, are the steps identified to help achieve the KPIs. Examples of projects could include outsourcing business processes, utilizing automation, streamlining customer support, and implementing quality assurance.

5. Utilize Cascade Strategy Execution Platform to see faster results from your strategy

Cascade’s Strategy Execution Platform is an easy-to-use solution that provides visibility and transparency into the execution of organizational strategy. With real-time tracking and analytics, you can quickly identify areas of improvement and make decisions that will help you reach your business objectives faster.

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Run » technology, how to outsource it services for your small business.

Information technology outsourcing lets a third-party provider handle your business's IT needs.

Many companies choose to outsource their information technology (IT) services to an outside vendor to save money and gain access to the latest tools and technologies. Let's analyze the biggest benefits of IT outsourcing and how to know whether you should outsource it or keep your IT services in-house.

What is IT outsourcing?

IT outsourcing involves hiring an outside company to manage part or all of your company's IT needs. These activities include providing technical support, network management, and cloud services. IT outsourcing has become increasingly common because it can help businesses save money, operate more efficiently, and access outside expertise.

Types of IT outsourcing

Let's look at the different types of IT outsourcing and the type of business that can benefit from each one:

• Offshore: Offshore outsourcing involves hiring a company in a foreign country to handle IT tasks. Most companies choose offshore outsourcing to cut costs, but time zone differences can present a challenge.
• Nearshore: Nearshore outsourcing involves hiring a vendor in a neighboring country. Nearshoring is another way to save money, but there are often fewer time zone differences to deal with.
• Onshore: Onshore outsourcing involves hiring a third-party IT provider that's located within the same country as your business. This option can be more expensive than offshore or nearshore outsourcing, but vendor communication can be more timely.
• Cloud computing: With this model, companies use cloud-based services provided by a third-party provider to handle various IT functions. Amazon Web Services is a good example of this service — the company offers data storage, virtual servers, and databases.
• Project-based: If you aren't ready to hand off your day-to-day IT operations, you can hire a vendor for a one-time project. For example, you could outsource the development of a new software application. Once the project is complete, your relationship with that company ends.

A quality IT provider has access to the latest technology, which can help your company stay more competitive.

What are the benefits of IT outsourcing?

Some businesses are hesitant to try IT outsourcing, but it provides many potential benefits, including the following:

• Reduced costs: It costs a lot of money to hire, train, and provide ongoing salaries and benefits to an in-house IT staff. IT outsourcing can help you save money, because you're only paying for the services you need. And it can help you save on office space and expensive equipment.
• Outside expertise: Outsourcing can give you access to experienced IT professionals with specialized skills. These individuals often have tools and training that provide a much better experience for your company.
• Expanded time: Outsourcing IT management frees up your time to focus on other areas of your business. Your employees no longer have to spend time worrying about tech issues since your IT provider can handle problems that arise.
• Scalability: IT outsourcing allows your company to change directions or scale your services more easily. A third-party vendor can typically implement IT solutions more quickly, so you can bring new products and services to market faster.
• Reduced risk: Most third-party IT providers offer 24/7 support, so your IT issues can get resolved quickly. And your provider helps manage risks like data security, compliance, and technology upgrades.
• Improved innovation: A quality IT provider has access to the latest technology, which can help your company stay more competitive.

When should businesses keep IT in-house?

IT outsourcing isn't the right solution for every business, and there are risks involved. By outsourcing your IT functions, you'll have less control than if you'd kept it in-house. You're trusting some of your core business functions to an outside provider, so you want to make sure that vendor is capable of meeting the same high standards you hold.

Evaluating your company's needs and long-term goals helps you determine whether IT outsourcing makes sense. If you prefer to have full control over decision-making and have the resources to hire and train an IT staff, keeping it in-house might make sense.

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Outsourced Computer Support Business Plan

Start your own outsourced computer support business plan

Austin Kinetic

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">.

Austin Kinetic is an information technology consulting firm serving the Austin Metro area with top quality engineers who have a keen interest in customer satisfaction.  The time is right for consulting companies to flourish.  With the recent gains in the stock market, capital is again becoming available for IT infrastructure improvements.  Austin Kinetic will position itself to win a good deal of that emerging business.  The company has been incorporated in Nevada and has acquired an operating permit for Texas.  Austin Kinetic anticipates an enviable cumulative net profit by the end of year three.

The Market Austin is known as “little Silicon valley” due to its high percentage of technology companies.  With its relatively low cost of living and ample space for expansion, Austin promises to be a strong market into the foreseeable future. There are currently over 7,000 companies that fit the aim of Austin Kinetic in the Austin Metro area, with only four major competitors.  This combination provides a rich opportunity, bolstered by the current up-turn in the area and national economy.

The Business Model Austin Kinetic will leverage the industry knowledge of its founding members to provide outstanding service to its customers.  The company will initially have as little overhead as possible with its founders working out of their own homes, using their own transportation means to reach clients.  The company will be developed with a “customer service and satisfaction first” mentality in an effort to build acceptance and a positive reputation in the local industry.

The Management Team In order for the company to be successful, Austin Kinetic must fully leverage the experience and insight of its management team, which includes Adam Authortisement, Bob Borgware, Cary Curry, Dean Dri, and Edgar Extension. The team has over forty-eight cumulative years of experience in service operations management and information technology support.  They currently hold multiple technology industry vendor certifications crossing several disciplines including both logical and physical network structure and management. Over the course of their careers, the team has served in various technical roles with Fortune 500 companies and has been successful in both large and small environments.

1.1 Objectives

Austin Kinetic’s objectives for the first five years:

• Establish and maintain at least twenty-four full time service contract customers.
• Establish an office in Austin, TX.
• Break the Big M revenue mark.

1.2 Mission

Austin Kinetic is an innovative business technology company that was founded on the belief that one company can make more than a difference, it can change the whole face of business as we know it.

1.3 Keys to Success

• Depth of knowledge.
• Breadth of ability.
• Development of a strong business relationship with customers to gain an understanding of their business and business needs.
• Ability to network in the industry.

Company Summary company overview ) is an overview of the most important points about your company—your history, management team, location, mission statement and legal structure.">

Austin Kinetic is incorporated in Nevada with an operating office in Austin, Texas. Initial staff will consist of a small group of experienced computer engineers who’s skills and experience collectively cover a very broad segment of the open systems’ distributed client/server field. The company’s initial focus will be installation and configuration projects which will be developed into ongoing support contracts.

2.1 Company Ownership

Austin Kinetic is incorporated. The major share holders are Adam Authortisement, Bob Borgware, Cary Curry, Dean Dri, and Edgar Extension.

2.2 Start-up Summary

The start-up costs for the company are detailed in the table below, and will be funded by the founder’s personal funds. There will be only small initial equipment cost as the company will be greatly dependent upon its founders’ resources. It is expected that each employee will initially cover the cost of transportation, cell phone, and incidentals that arise in the course of due business. The company will begin covering those costs as revenue streams are generated. Specific guidelines and policies will be developed prior to the sixth operating month.

Austin Kinetic will offer several support options, including hourly support services, with the option to buy in blocks of 40 hours at a discounted rate.  Blocks purchased will be valid for 180 days from date of purchase.  Additionally, semi-annual service contracts will be available.  Contract pricing will be negotiated on a per-contract basis.

• Project work will be billed and estimated on a per-project basis.
• Web and ASP hosting will be billed on a per-system basis.

Operating systems supported (limited to current and three previous revisions): 

• Novell NetWare
• Red Hat Linux

Hardware supported (hardware configurations must be validated by OEM):

• All open desktop, server, storage, and network systems.
• Dell, ADIC, Storagetech, and HP tape drives and libraries.
• Additional hardware will have to be reviewed on a per-case basis.

Software packages supported (Restricted to implementation and initial configuration):

• Microsoft Exchange
• Lotus Notes/Domino
• SUS Messaging Center
• Microsoft SQL server
• Veritas Backup Exec / Net Backup
• Legato Networker
• Additional packages will have to be reviewed on a per-cases basis.

Service offerings: 

Austin Kinetic has several pre-set packages available for general monitoring of a customer’s network equipment and applications.  The packages are categorized by the type and use of equipment to be monitored. An initial one-time setup fee of $500 will be required per physical site at the onset of any service agreement. This amount is not affected by the number of systems to be monitored at the designated physical site. The customer will be required to provide Internet access to the monitoring server. Out-of-band notification can be added for an additional $50 per month plus a one-time, per-physical-site, $150 initial setup fee.

Basic Server Management*  $350 per month Austin Kinetic provides professional management of operating systems, including Windows, NetWare, Red Hat Linux, and Solaris. This service is perfect for companies that want to manage their own applications, but not deal with the ongoing hassle of tuning, securing, and maintaining the operating system. We will take the burden of ensuring you get the proper services for your specific server and operating system.

• A system audit to document your architecture and suggest improvements
• 24/7 technical support of the server and operating system from experienced engineers
• Security and bug patch notification for the operating system, and when approved, a service call will be scheduled for installation.*
• Monitoring the network availability of one IP.
• Monitoring the server’s disk usage, processor usage and load average
• Visibility into Austin Kinetic’s trouble ticket system via a secure portal

Application Server Management Services*   $450 per month. Ensuring your applications are available and running at peak efficiency is a 24/7 responsibility. Austin Kinetic offers comprehensive application monitoring and management so your customers and employees will be able to use your applications without significant unscheduled interruption. We offer a complete range of management services tailored to remove the burden of ensuring your applications are up and getting the proper maintenance. 

• A system audit to document your architecture and suggest improvements 
• 24/7 technical support of the server, operating system and applications from experienced engineers 
• Security and bug patch notification for the operating system and applications, and when approved, installation
• Monitoring application and network availability
• Monitoring application response time
• Monitoring the server’s disk usage, processor usage, and load average
• Visibility into Austin Kinetic’s trouble ticket system via a secure portal 
• Periodic activity reports

* Except for the initial system audit, service time to repair or otherwise service the monitored system is not included in this monitoring agreement.

Database Server Management Services*  $500 per month. Ensuring your Oracle, MySQL, and MS SQL 2000 databases are configured and maintained properly is a time-consuming task for IT departments. Austin Kinetic can augment your internal skill set with comprehensive database server management. We offer a broad range of management services and will take the burden of ensuring you get the proper services for your specific server and databases. Typical database services offered by Austin Kinetic include:

• 24/7 technical support of the server, operating system and database from experienced engineers 
• Security and bug patch notification for the operating system and database, and when approved, installation 
• Monitoring database and network availability 
• Monitoring database response time 
• Monitoring the server’s disk usage, processor usage and load average 

Network Device Management Services*  $450 per month. Network devices – firewalls, load balancer, routers, switches and hubs – must be properly configured and maintained to ensure network security and reliable operation. Austin Kinetic offers a broad range of network management services and will take the burden of ensuring you get the proper services for your specific network.

• A network audit to document your topology and addressing scheme 
• 24/7 technical support of the network devices from experienced engineers
• Security and bug patch notification, and when approved, installation 
• Maintaining the security of firewalls 
• Monitoring bandwidth usage 
• Monitoring network device availability and performance 
• Visibility into Austin Kinetic’s trouble ticket system via a secure portal  

Benefits of Security Management Services (Priced determined on a per-site basis.) Maintaining the security of your Internet-based systems is more important and more time consuming that ever. Austin Kinetic removes the burden of protecting your systems by offering 24/7 security management that combines intrusion detection and vulnerability scanning. We also will not burden your existing hardware as a pre-configured 1U server is installed in your network to handle the intrusion detection and vulnerability task.

• Identify misconfigured firewalls
• Catch attacks that firewalls legitimately allow through (such as attacks against Web servers) 
• Document hacker attempts that fail 
• Watch for insider hacking 
• Identify users installing unsecured software on their machines 
• Recognize unauthorized machines using the network
• See incorrect IP space utilization

Austin Kinetic will ensure your intrusion detection and vulnerability scanning system is properly installed and maintained. This includes configuring the system, testing the pattern matching, updating scanning profiles, monitoring 24/7, reporting suspicious activities or vulnerability, and providing a monthly report.

Data Backup*   $50 plus a one-time setup fee of $150 per backup server. There will be an additional $100 per-site, per-month charge if tapes are required to be kept off-site.

Protecting your organization’s data is critical. Austin Kinetic will manage your data protection system to ensure that your data is protected by tape backup. While Austin Kinetic cannot be held responsible for lost data, we will ensure that validated and tested backups occur on a regularly scheduled basis. The customer will be responsible for procuring and installing the necessary hardware. Austin Kinetic will configure and monitor the backup software, monitor and test backup jobs, and perform needed file restoration.

* This service does not require the $500 site setup fee.

Market Analysis Summary how to do a market analysis for your business plan.">

The Information and Technology Service industry is expected to grow at 8.58% per year through 2010.     –U.S. Department of Labor (2003) http://www.bls.gov/iag/iag.services.htm

We will be primarily focusing on mid-sized companies with 500 or fewer employers.  These companies typically do not have large internal IT departments and could benefit the greatest from our offerings.

4.1 Market Segmentation

The information in the market analysis table gained from the U.S. Census Bureau, http://factfinder.census.gov/servlet/GQRGeoSearchByListServlet?ds_name=E9700A1.  Though the data is based upon 1997 data, it is representative of the local market’s potential.

4.2 Target Market Segment Strategy

Austin Kinetic is interested in servicing companies that are large enough to show direct P&L benefit from information technology investment, but not large enough to maintain their own permanent IT staff.  The business groups targeted in the market analysis table represent the largest groups in our target area that fit our interests.

4.3 Service Business Analysis

Austin Kinetic is in the business of satisfying companies’ information technology infrastructure needs.  We will provide service at various levels from consulting to installation. Services will be sold on a per-customer/case basis with heavy personal interaction between Austin Kinetic sales representatives and prospective customers.

4.3.1 Competition and Buying Patterns

In this industry that Austin Kinetic, word of mouth and reputation are king. While a limited amount of highly focused marketing will be effective, most contracts are gleaned from social contacts and networking.

Strategy and Implementation Summary

Austin Kinetic’s initial funding will be from its founders’ personal funds. Word-of-mouth and industry networking will be Austin Kinetic’s key source of clients. The company’s success will be based upon the service and satisfaction of customers to the point that they willingly refer new business.

5.1 Competitive Edge

From the onset, Austin Kinetic will have over 20 years of cumulative experience in the information technology field with a very broad range of hands-on experience. This, combined with a keen sense of customer service and satisfaction, will differentiate Austin Kinetic from its competitors.

5.2 Marketing Strategy

5.3 sales strategy.

Sales will focus a bit less on building relationships and more on solidifying confidence in Austin Kinetic’s competencies and skills. Our primary focus will be to answer the question, “how can Austin Kinetic best meet a customer’s information technology needs?” Delivering this answer in a clear, concise proposal allied with competitive pricing will be the key to closing deals.

5.3.1 Sales Forecast

Sales are forecast with an emphasis on project work at the onset. In the first few months, we will be primarily occupied in conducting short-term one-day to one-week projects while building Austin Kinetic’s reputation and brand name. Within the first six months, Austin Kinetic will have signed three annual service contracts, doubling that by the end of the year and each semi-annual period thereafter. Sales contracts will be set period contracts paid by monthly installments.

As a service business, our only direct costs would relate to the time spent by employees in responding to customers’ needs. Our employees are all paid a set salary, and not by hourly billing, so we have no direct costs of sales; these salaries can be found in the Personnel Plan.

5.4 Milestones

Austin Kinetic will have very simple marketing milestones geared toward industry networking and beginning to build name recognition.

Web Plan Summary

Austin Kinetic’s Web presence will not only serve as a medium for the company’s marketing message, but also will serve as an important tool for our customers. Customers will be provided with the ability to manage and monitor their accounts from anywhere that has access to the Internet. Additionally, consultants in the field will be able to track time and work journals through the site as well as develop and print immediate job estimates.

6.1 Website Marketing Strategy

Austin Kinetic’s Web presence will be utilized as a tool to assist the company’s overall marketing strategy. It will serve as a point of reference for information about the company and its services, and in a small part, lend credibility to the marketing message.

6.2 Development Requirements

Austin Kinetic’s site will reside in a two-tier environment. A back-end database will be utilized to manage customer data. The site will be developed with the assistance of a contracted professional developer.

Management Summary management summary will include information about who's on your team and why they're the right people for the job, as well as your future hiring plans.">

At the outset, Austin Kinetic will maintain five part-time employees, its founders. These employees will be responsible for all aspects of the business and serve in both managerial as well as technical roles.  As the business grows, additional engineers will be hired. We anticipate that during the fourth year of operation, the original five employees will be free from any technical duties and concentrate solely on their management responsibilities. At this time, Austin Kinetic will look to add a full-time sales and marketing manager as well.

7.1 Personnel Plan

Business permitting, Austin Kinetic will maintain a staff of five engineers through most of FY 2007. A secretary will be hired at the start of FY 2006 to assist with telephone and office management. At the end of FY 2007, an additional engineer will be brought on board as workload dictates. Beginning FY 2008, the original founding members will be transitioned from field work and into management, replaced by additional engineers.  Additionally, a full time marketing/sales representative will be hired. 

Compensation projections were made with annual merit increases of 5% for staff and 15% for the founders. The table also shows a profit sharing plan starting in the second year, based on 5% of the previous year’s net profits. These bonuses will be divided equally among staff members, including owners.

Financial Plan investor-ready personnel plan .">

Austin Kinetic will initially grow with project work, beginning to build service contracts from the six month point forward. The company will increase its project work to 2,560 man hours per month and increase its service contracts count by six each year. The initial growth will be financed primarily out of the pockets of its founders. The company will fund all growth from the cash flow of the business, remaining debt-free.

8.1 Important Assumptions

At the onset, the founding members of Austin Kinetic will take on much of the financial burden of running the company. There will be no need for dedicated office space until FY 2006 when we expect to open an office in Austin. Until then, Austin Kinetic will compensate travel-related expenses, if any, incurred in the course of business. The only foreseen recurring expenses will be voice mail services, marketing, insurance, Internet access, and Web presence. The lion’s share of funds will be held by Austin Kinetic to develop cash reserves for future expansion and a business climate buffer.

Customers will be billed on an hourly basis of $120. Engineers will be paid a salary, plus $25 per hour for on-call and overtime. Employees who establish the new project/contract will be paid a 5% bonus of the total project / contract price. Business call time of cell phones will be reimbursed.

8.2 Break-even Analysis

The table and chart below show our break-even analysis. As a service business, we have no direct cost of sales. Our break-even point ni the first year is therefore equal to the amount needed to cover our operating expenses, including payroll. We will reach break even, in the third month.

8.3 Projected Profit and Loss

In the first year, we will be based out of the founders’ homes. Adam Authortisement has renovated his garage for use as a meeting space and general office, when we need to get together as a group. Utilities in the first year represent the cost of home high-speed Internet access for all five employees ($45 each per month). This access is necessary for communications between personnel and for file transmission for all project and service work. 

After the first year, it will be more cost-effective and attuned to our growth to rent a space in downtown Austin, where we can consolidate equipment, combine utilities, and have a central location for our work and our secretary. Office space rented beginning FY 2006 is forecast to be $2,500 per month.

After the first month, Marketing and Promotion expenses are set at 5% of the previous month’s and year’s sales.

8.4 Projected Cash Flow

We have no sales on credit; all service accounts and projects are paid in advance, in installments. We anticipate no problems with our cash flow. By staying debt free and keeping expenses down, we expect a significant positive cash balance by the end of the first year.

8.5 Projected Balance Sheet

Our Balance Sheet is quite solid. We will build our asset base slowly over the first five years, expensing most of our computer and hardware equipment to offset taxes, since they will need replacing every two to three years.

8.6 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile ratios based on the Standard Industrial Classification (SIC) code 7379.02, Computer Related Consulting Services, are shown for comparison.

8.7 Long-term Plan

Austin Kinetic anticipates maintaining a steady profit percentage and plans to build cash reserves to an amount which would cover operating expenses for twelve months should any catastrophic event occur.  This will be a moving target and be recalculated on an annual basis as the business cash flow changes.  There has been no pre-set limit placed upon Austin Kinetic. Its founders see the possibility of expanding the company into a global force ranked equal to today’s top Fortune 500 companies.

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Grow Your Small Business by Outsourcing Business Processes

Achieve greater efficiency and operational performance by outsourcing non-revenue-generating tasks to a trustworthy partner.

Table of Contents

Small businesses have many compelling reasons to outsource, including saving money, improving performance and avoiding recruitment headaches. Despite the obvious benefits, many businesses aren’t sure how to get started with outsourcing, so they may be hesitant to proceed. 

However, when you choose the right outsourcing partner , you can affordably streamline your business processes and operate more efficiently. Outsourcing can also provide personnel who have specialized skills that would be too cost-prohibitive to maintain in-house. We’ll explore how outsourcing works and how you can successfully outsource specific functions so you can focus on engaging customers and growing your business. 

What is outsourcing?

Outsourcing is the process of hiring an outside company or independent contractor to perform tasks that an in-house team member would otherwise perform. 

What are the types of outsourcing?

There are several outsourcing types, including these three popular models:

• Onshoring: Onshoring means hiring a contractor or company located in your country. For example, you might hire a marketing company based in your city or another city in the U.S. Onshoring can be convenient but may not save a business money.
• Nearshoring: Nearshoring means hiring a third-party individual or company in a country near your location. For example, if a U.S. company hires a manufacturing facility in Mexico to produce its products, it’s engaging in nearshoring. Nearshoring can be a convenient and cost-saving solution.
• Offshoring: Offshoring is when you hire a nonemployee or firm in a country far from your company’s headquarters. For example, a U.S. company might hire a virtual assistant in the Philippines or contract with a call center in India. Offshoring can bring significant savings but may involve challenges with communication and time zone differences. 

What business tasks can be outsourced?

Successfully outsourced tasks are typically low-impact and repeatable functions that consume significant time and resources. For example, accounts payable , accounts receivable , customer service, shipping and logistics, market research , human resources and administrative tasks are frequently outsourced.

Consider the following business task outsourcing categories: 

• Process outsourcing: Process outsourcing involves delegating entire business functions — such as sales, human resources, customer service and IT support — to external providers. Although process outsourcing can significantly reduce salary and training costs, it also carries the potential risks of diminished control and reduced quality.
• Professional outsourcing: Professional outsourcing involves using an outside attorney, accountant, financial advisor or IT company. In this scenario, you get access to highly educated and trained professionals, usually temporarily or part time. You’ll save money because you won’t have to hire a full-time employee, but you’ll have to share that person’s time and attention with other clients.
• Logistics outsourcing: Logistics outsourcing involves using an external shipping company to ship goods. It can also include warehousing, packing and inventory management. For example, Amazon sellers use Fulfillment by Amazon for these functions. When done well, logistics outsourcing can speed up order fulfillment and reduce costs. However, it can have the opposite effect if the third-party logistics company is low-quality.
• Manufacturing outsourcing: Some countries — including China, India and Vietnam — have much lower manufacturing costs than the United States. With manufacturing outsourcing, a business contracts with an outside factory and provides specifications for product manufacturing. This outsourcing process typically involves offshoring and can produce significant manufacturing cost savings. However, it also introduces risks, such as supply chain distribution disruptions, loss of control over production processes, and concerns about ethical issues, including the treatment of workers in outsourced factories. 
• Project outsourcing: Companies may contract with an outside business to handle a specific, limited-time project. For example, a business may hire a web developer to create a website or a market research company to conduct a viability study on a proposed new product. Project outsourcing tends to be onshore because it allows for easy communication and control.

How does the outsourcing process work?

If you’re thinking about beginning the outsourcing process, follow these five steps:

1. Decide which tasks to outsource.

The first step is to decide which workflows to outsource and which to keep in-house. Businesses typically approach outsourcing from one of the following viewpoints:  

• Outsource back-office tasks. Many companies outsource back-office tasks that are crucial to operations but don’t help a business grow. For example, while you can’t neglect accounting, human resources, payroll and other support roles, these functions don’t bring in new clients and revenue. Routine tasks, while necessary, can distract an in-house team’s time and attention.
• Outsource tasks for specific skills or projects. Businesses also outsource tasks that require talent or skills they don’t have in-house. Often, these outsourced tasks have firm start and end dates and may include minor upkeep. For example, business owners may choose to outsource website design and development instead of dedicating an employee or adding the project to the IT team’s tasks.  

Outsourcing works best when you have specific goals and structured processes and know precisely which functions you want to offload. Take time to prepare to ensure the partnership succeeds.  

2. Write the outsourced function’s job or project description. 

Detail the precise functions you want the outsourcing company or independent contractor to perform. Consider these best practices: 

• Set and clarify the task expectations. A detailed write-up will help you clarify your internal expectations so you’ll know if the outsourced resource is meeting them during your relationship.
• Set the job parameters. Be specific about what you need from your outsourced partner and when you need it. For example, if the outsourcing company is in another time zone and you need work performed during your local business hours, add this information to the job description.
• Find a partner with the right skill set. Consider the qualities, talents, knowledge and proficiencies that your ideal outsourcing partner would possess, and set these expectations clearly in the job or project description. For example, you might state that your outsourced accounting provider must understand generally accepted accounting principles (GAAP) . For tasks that involve verbal or written communication, such as blog writing or customer service, you might specify that your provider must have an excellent command of the English language.

Post your job or project description on freelance sites such as Upwork and Fiverr, or create a request for proposals (RFP) and send it to certain companies. When you include your expectations and requirements in the job description, many less-qualified companies won’t apply, meaning you won’t spend as much time sorting through and assessing applications.

3. Assess your outsourcing candidates.

Once you post your job description or issue an RFP, you’ll start getting responses. They may be as simple as a Fiverr candidate sending a description of their skills and prices or as detailed as a custom proposal from an established company. 

When you assess the applicants, consider these factors about the candidate or company: 

• How closely do their skills match the job description requirements?
• How long have they been in business? 
• How experienced are they in doing this sort of task? 
• What kinds of certifications, reviews or other social proof do they have to back up their credibility? 
• How well do their responses show that they understand the job or project? 
• How is their communication? Is it clear, understandable and free of errors?
• How are the price and value compared with those of other outsourced providers?

After you review the applications and proposals, choose the company or candidate you feel is the best fit. 

4. Manage and communicate with your outsourced resource.

Designate a point person to interact with the outsourced resource. At first, this will involve setting expectations and familiarizing the resource with the company’s people and processes. 

Depending on the task, you may need to consider giving the outsourced company or candidate access to parts of your computer network. If so, set up restricted usernames on your network for security reasons. Other outsourced partners may only need to send in their work via email or tie their phone system into your customer service process.

5. Track your outsourcing partner’s tasks and expenses.

To stay on top of project timelines and costs, ask outsourcing partners to use time-tracking software you can access. They should track their time for each task to give you an idea of their time and monetary efficiency. 

Tracking tasks and expenses can help you determine when more communication is needed and whether outsourcing with this particular company is working.

How does outsourcing help grow your business?

Outsourcing allows companies to focus on their customers and leverage internal resources for growth. Here are a few ways outsourcing can help grow your business: 

• Outsourcing cuts employment costs. Outsourcing significantly cuts employment expenses, including costs for recruitment , salaries and benefits (since outsourcing companies don’t need employee benefits packages ). There are no employment taxes to pay, and outsourced employees typically have their own computers, office space and other overhead costs taken care of.
• Outsourcing lets you allot more money to revenue producers. Outsourcing leads directly to greater efficiency because it allows companies to hire top talent in their critical revenue-producing areas, including sales, marketing and core operations. At the same time, companies save money on routine-but-necessary tasks, like bookkeeping, customer service and data entry. Because money is freed for revenue-producing employees, the company can attract top performers in areas where excellent employee compensation is essential. These individuals will be more likely to stay with your company for the long term.
• Outsourcing brings more value for your dollar. High-quality outsourcing partners that use offshore talent can often deliver exceptional performers at a lower cost. Outsourcing also means you don’t have to worry about hiring and retaining employees and investing in employee training because the outsourcing partner handles those functions.
• Outsourcing offers lower rates for repetitive tasks. An outside company or freelancer can often handle tasks such as data entry and invoicing at lower rates than you’d pay your in-house employees. Having fewer employees can also save you money on office rent. 
• Outsourcing saves money on equipment and technology. Many companies need customer support help, but building an in-house call center would be a waste of resources. It might make sense to outsource with a call-based customer support company with the infrastructure, training, hiring protocols and management process already in place. 

6 keys to effective outsourcing

Every company outsources differently, but these tips can help any business customize its outsourcing strategy:

• Set clear efficiency goals. “Growth” and “increasing efficiency” are very broad goals. Be specific about your intentions: Are you trying to cut certain costs, build a particular team, or free up resources for a specific initiative? Consider how outsourcing workloads in one area can free up resources and energy in another. How will that help your company deliver more value to customers? Whatever the goal, it should guide where, when, why and how you choose to outsource.
• Plan for change. Outsourcing will fundamentally change your company’s makeup. That’s an exciting opportunity, but it requires planning. Begin preparing your staff, workflows and company structure to facilitate your plan. You’ll need to outline processes around the tasks that will remain in-house and determine how your team’s workflow will change.
• Get buy-in from key stakeholders. It’s essential to gain buy-in from key members of your organization, including department heads and board members. Before you present outsourcing as a strategy, ensure that you know the answers to some challenging questions. Who will spearhead the strategy? How will this affect your current team? Where will you use the cost savings? How long will the process take from start to finish?
• Choose the right outsourcing partner. Outsourced services are only as good as the partner that provides them. You want a flexible partner who is willing to integrate into your team. To know whether a provider will be a good fit, read testimonials and ask for references. Quality providers will happily engage in one-on-one conversations and provide detailed proposals. If applicable, the provider should ask you to visit its facility. Don’t move forward until you’re confident you’ve found the right outsourcing partner.
• Define outsourcing success. Excellent outsourcing partners commit to specific performance standards, but it’s up to you to define them. Decide which metrics and benchmarks matter. Your key performance indicators (KPIs) will vary depending on the service you outsource. For example, if you’re outsourcing creative talent, you might use a predetermined quality score. With invoicing, turnaround time could be the key metric. Additionally, ask the provider to determine its own KPIs. Agree on how often the partner will update you with results. Hold your provider accountable for weekly, monthly or quarterly results, depending on your needs.
• Start outsourcing slowly. Instead of outsourcing an entire department, start with a pilot project that requires less upfront investment. This approach also lets you observe the outsourcing partner’s effectiveness before you commit completely. Great partners will be flexible with your terms and want to prove their worth.

Outsourcing can help you increase productivity and save money 

If your goal is to evolve and expand, imagine how helpful it would be to function with leanness and agility. By engaging with an outsourcing provider, you’ll work with high-caliber professionals for reduced costs. Outsourcing is a big decision and an endeavor you must approach with careful consideration and planning. However, in the end, many companies find the results 100 percent worth it.

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Canadian court approves Red Lobster restructuring plan, company will exit bankruptcy

A Canadian court has cleared the reorganization plan of Red Lobster that will see the seafood chain exit bankruptcy. 

Justice Peter Cavanagh of the Superior Court of Justice in Toronto on Tuesday granted an order that recognizes and gives force to the plan approved by a U.S. bankruptcy judge last week.

• Top business headlines, all in one place

The future of the chain, best known for its expansive seafood offerings, Cheddar Bay biscuits and family-friendly atmosphere, was thrown into question when its Florida-based parent company filed for Chapter 11 bankruptcy in the U.S. in May and shuttered dozens of restaurants. 

The restaurant had been hit by pandemic disruptions including supply chain issues, cost inflation and reduced demand that lingered after restrictions lifted, while it also faced more specific challenges such as its money-losing endless shrimp promotion. 

The restructuring is expected to allow all 27 restaurants in Canada to remain open as part of the roughly 544 total locations that will stay in operation. That's down from 578 as of May. 

"The plan, when implemented, will continue the operation of Red Lobster’s restaurants in Canada, preserve the employment of the RL Canada’s employees, and maintain the value of RL Canada’s business for the benefit of all stakeholders, including landlords, suppliers, and customers," the company said in a Sept. 9 report ahead of the hearing.

U.S. approval of the restructuring plan was, among other conditions, contingent on the plan's approval by the Canadian court.

The restructuring will see a lender group led by asset manager Fortress acquire the business, a new CEO being installed and a commitment of more than US$60 million in new funding.

Under terms of the acquisition, which is expected to close by the end of September, the chain will continue to operate as an independent company.

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The plan to exit bankruptcy includes setting up a fund where unsecured creditors and litigation claims can apply for compensation. 

Red Lobster was founded in 1968 in the U.S. and expanded into Canada in 1983. The chain employs about 2,000 people across Ontario, Manitoba, Saskatchewan and Alberta.

With files from AP. 

This report by The Canadian Press was first published Sept. 10, 2024.

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• Venice & North Port

Tervis Tumbler Co. filed for bankruptcy last week. Everything we know about cuts so far

Last week’s Chapter 11 bankruptcy announcement from Venice-based Tervis Tumbler Co. made waves in the business community, and questions still linger as the company enters bankruptcy court proceedings.

Tervis hasn’t revealed exact details of layoffs, downsizing or other cost-cutting measures, but bankruptcy documents obtained by the Herald-Tribune paint a picture of a company in decline. Everything we know so far about what’s next for the drinkware giant — and how it got here in the first place:

Is the Tervis Tumbler going out of business?

Tervis’ bankruptcy application doesn’t mean it’s ceasing operations.

Chapter 11 bankruptcy is often referred to as “reorganization” bankruptcy , and it allows a corporation to continue operating while restructuring its budget and drafting a plan to pay back its creditors. The filing renders Tervis a “debtor in possession,” which describes a corporation or individual that has filed for bankruptcy but remains in possession of its assets.

Tervis has filed documents to continue its operations in bankruptcy court, petitioning for authority to utilize its at least $7.85 million in cash collateral to secure the almost $5 million it owes to its creditors. The company offered a lien of its assets to its primary creditor, United Community Bank, to continue operating, and it submitted a budget plan to the U.S. Bankruptcy Court through the beginning of December.

The company appeared in bankruptcy court Monday at Tampa’s Sam M. Gibbons U.S. Courthouse to present the petitions.

How many employees will Tervis Tumbler lay off?

Tervis hasn’t officially announced how much of its staff it will lay off, but bankruptcy documents show the company will slash its bi-weekly payroll from $305,000 to $205,000 — almost a 33% decrease — by the first week of November. Its healthcare and 401k match budgets will shrink by similar margins, per the plan, and a store rent budget of $75,000 per month will disappear by the beginning of October.

The company noted that layoffs are expected but that it intends to retain “a core group of employees in every department,” according to a press release.

“Our company needs people,” Tervis CEO Hosana Fieber said. “We intend to keep as many employees as we can in each department to continue our operations.”

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Tervis employed as many as 700 people in the late 2010s, but that number has since shrunk to around 140, per bankruptcy documents. The payroll decrease indicates as much as a third of these employees could be impacted by the layoffs.

The Worker Adjustment and Retraining Notification Act — or WARN Act — requires companies with 100 or more employees to issue a notice of layoffs within 60 days of the layoffs taking place. Violations render the company liable to each affected employee for pay and benefits for each day the warning isn’t issued.

As of Monday afternoon, no such notice from Tervis has been published on the FloridaCommerce website.

Market competition, pandemic fallout fueled Tervis Tumbler's recent struggles

As a private company, Tervis’ year-over-year profits aren’t publicly available, but bankruptcy documents and market trends indicate a decline.

The product has fallen behind other drinkware brands like Yeti and Stanley, which have found substantial success in pop culture and on social media. Tervis’ plastic drinkware has fallen out of favor and replaced by the popular stainless-steel Yetis and Stanleys, and though Tervis attempted to capitalize on the shift by introducing its first stainless-steel tumbler in 2018, other brands have still dominated the market.

Legal trouble had also loomed over Tervis before last week’s bankruptcy filing, with the company partially attributing its struggles to a “burdensome lawsuit” in a press release. Packsize LLC, a packaging manufacturer, sued Tervis for breach of contract and unjust enrichment in July, alleging the drinkware company failed to pay outstanding amounts relating to a service agreement between the two companies.

Tervis notified Packsize it could no longer afford its services in May and terminated the agreement, but Packsize maintained Tervis owed more than $115,000 in invoices and additional costs the manufacturer incurred from collecting its equipment from the Tervis facility. The case was closed last week in light of the bankruptcy, and the court ruled that it can’t proceed until Tervis obtains debt relief.

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Pandemic-fueled changes in workplace practices, which saw many employees begin working from home and office attendance take a hit, have also impacted the company. Tervis had originally considered vacating its North Venice headquarters in 202 1 amid this shift, and though it held off for another two years , it sold the facility at 201 Triple Diamond Blvd. to real estate investment firm Buligo Capital in August 2023.

The 12.5-acre manufacturing space went for almost $15.5 million, per property records, and it’s l isted on Buligo’s website as an industrial asset in “the desirable ‘Sarasota Outlying’ submarket” planned for “an aggressive leasing program and capital improvements” in the future. The facility is still listed as Tervis’ principal address, per the Florida Division of Corporations, though the company indicated it intends to close the facility.

When was Tervis Tumbler founded?

Founded in 1946, Tervis has been under the ownership of the Donelly family and based in southwest Florida since the 1960s. The company specializes in predominantly plastic insulated drinkware, which keeps beverages hot or cold for longer and prevents bleeding seen from traditional cups.

Members of the Donelly family are still active within in the company, with court documents listing board chair emeritus Norbert Donelly and board chair and former CEO Rogan Donelly, Nortbert’s son, as company stakeholders. Tervis tapped Fieber to replace Rogan Donelly , who’d been CEO since 2016, last October ahead of “future growth.”

Rogan Donelly said the company filed the bankruptcy application to prepare for impending changes.

“Tervis has been around for 78 years and has weathered various economies by adjusting to market conditions,” he said. “This difficult business decision was one that we made in order to preserve the company’s legacy and better the company for the future.”

Contact Herald-Tribune Growth and Development Reporter Heather Bushman at [email protected] . Follow her on Twitter @hmb_1013.

Recommended

New starbucks boss lays out plan for first 100 days: ‘we’re refocusing’.

New Starbucks boss Brian Niccol on Tuesday outlined his plan to turn around the struggling java giant – vowing to “reestablish the brand as the community coffeehouse.”

In his first week at the helm, Niccol said in an  open letter  he would initially focus on US stores delivering drinks and food on time and elevating in-store experience for customers,  many of whom have griped about long wait times for their pricey lattes.

There needs to be a clear distinction between “to-go” and “for-here” services at Starbucks locations,  the former CEO at burrito chain Chipotle Mexican Grill wrote.

Starbucks  named Niccol as its CEO last month  to replace Laxman Narasimhan less than two years after he was hired for the top job. The company faced intensifying pressure from activist hedge funds and a monthslong sales decline.

Niccol said he would visit stores to meet with suppliers and partners in his first 100 days in order to work out kinks in the company’s supply chain and mobile app.

“In some places – especially in the US – we aren’t always delivering. It can feel transactional, menus can feel overwhelming, product is inconsistent, the wait too long or the handoff too hectic,” Niccol wrote. “These moments are opportunities for us to do better.”

The company will make sure stores are designed with comfortable seating and “inviting places to linger” to re-establish its reputation as a community cornerstone, Niccol said.

“We’re getting back to Starbucks,” he said. “We’re refocusing on what has always set Starbucks apart.”

Starbucks shares rose 1.2% on Tuesday.

Niccol has been widely praised for orchestrating a turnaround at Chipotle that boosted the burrito chain’s stock by more than 50% over the past year. 

Starbucks shares rose 25% – a record percentage jump – on the news of his hire, while Chipotle shares dropped.

Over the summer, Starbucks deployed a Siren System plan – which includes equipment upgrades – across US stores to help cut down wait times and boost efficiency.

Niccol also mentioned improvements to be made in its international divisions.

He said Starbucks needs to “capitalize on its strengths” in its China business, as competition from more affordable coffee rivals has damaged Starbucks’ share of that market. Its China division’s comparable sales have fallen for two straight quarters.

Niccol said Starbucks will also try to  “dispel misconceptions” about the brand in the Middle East  as boycott campaigns linked to the war in Gaza have targeted the coffee chain.

Starbucks has also encountered pressure from  activist investor Elliott Investment Management  this year to improve its business as the company’s sales lagged.

With Post wires

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