Business process outsourcing has been evolving for two-hundred years, but it was not officially recognized as an element of business until the 1980s. Business process outsourcing was always, at least in theory, more than a time- and headache-saving strategy: it was a proven way to make and save a lot of money.
One of the newest players in the outsourcing game is knowledge. How can you outsource knowledge? That’s exactly what follows, with all the pros and cons that come along with it. Get a handle on all the outsourcing processes and terminology with this comprehensive introductory course to business process outsourcing.
An Introduction To Knowledge Process Outsourcing
Let’s begin with business process outsourcing. There has always been a desire (not a need) to outsource the repetitive, entry-level (i.e. not terribly vital) jobs to other companies. This seems to make a lot of sense, because you don’t want to trust the most important functions of your business to someone else.
A need begins to exist when a company is not capable of producing what the new outsourced companies are offering. This could be a complex service or complex product, and this is where knowledge process outsourcing comes in and pushes the original idea a little farther.
Why Do I Need It?
You might need it because these knowledge outsourcing companies are incredibly advanced at what they do. You might think you can handle all the heavy brain-work your company requires, but wait until you meet a company that specializes in data security, graphic simulation, big data analytics or one of the other emerging ideas that you don’t exactly understand, or are even planning for. With business changing so rapidly and centered so forcefully around tech, it’s becoming difficult to keep up alone. This is why you shouldn’t be as concerned about outsourcing your accounting troubleshooting as you should about your more important business processes.
For a more detailed overview of the exact processes of outsourcing, check out this course on how to use outsourcing to increase your income while decreasing your workload.
Who Runs The Show?
For the longest time, India was considered a frontrunner in knowledge process outsourcing. If you needed high-end, specialized knowledge outsourcing, you probably went to check out India. But India has the same problem it’s always had: an unfortunate time zone. Now South American countries are becoming more popular, most notably Chile and Mexico, which boast the same time zone, excellent English language skills, shorter travel times (if travel is necessary) and competitive pricing. These South American alternatives are known as near-shore outsourcing (as opposed to the off-shore outsourcing in India).
If you want to get a taste of outsourcing without going all-in, start small with this top-rated class on making money by outsourcing local SEO to Fiverr.
What Are The Benefits, Really?
The benefits of knowledge outsourcing are harder to measure compared to your generic business outsourcing, but that doesn’t mean they don’t have a formidable presence (refer to this informative post for all the benefits of outsourcing in general). In fact, the biggest immediate advantage is still cost reduction. A highly skilled team abroad costs a fifth of what it does in the States. And what you get for this low, low, low price is invaluable help in a new or established field. It can, however, be difficult to trace revenue increases directly back to knowledge process outsourcing.
Lest we forget, it’d be pretty sweet if we didn’t need an HR department for everything we do. Knowledge outsourcing allows you to increase or decrease your workforce without having to make extra hires or lay people off. This way you only pay for what you need, and since you’re already paying less than you would at home, well, it’s a good deal. And even if you do outsource to India and have to monitor different time zones, at least you have the peace of mind that while you sleep, your company is still working. But it’s the same amount of work, isn’t it? Kind of, except that if you need something urgently, you can send off the request at the end of the day and when you wake up in the morning, it’s ready.
Then What’s The Catch?
As it turns out, there is, in fact, a catch. But it’s a catch a lot of companies decide they can live with; and not only that, they’re still happier and better off with the catch. The catch, of course, is actually several catches:
- Quality Control
Ok, so you’ve just hired a team in India. Now, how do you manage them? The majority of the management takes place overseas, but a certain degree of management still needs come from the motherland. Measuring and managing performance is particularly important, especially if you are outsourcing something like customer complaint management. Can quality be controlled? Does a formal process need to be implemented? Is that even possible? In other words, there’s more to outsourcing than initially meets the eye. It’s less involved than having your own team, but…
- Tech Problems (truly)
Tech problems tend to turn up when you don’t take the necessary precautions to ensure digital security and functionality from your platform to your outsourced company’s platform. So that’s a headache, no doubt about it, but another thing you have to consider is the loss of talent. Knowledge outsourcing is not going to sit well with some people, meanwhile making others irrelevant. To make matters worse, these people are also your customers: if your client base learns that you’ve outsourced all you important functions to a place not easily accessed, they might suddenly turn patriotic on you.
You should also review the benefits and risks of “outsourcing,” whether it’s business or knowledge or anything else. This informative post on all the pros and cons of outsourcing covers all the vital basics.
- Security Breach
A certain degree of theft risk is always involved when outsourcing anything. In fact, this is one of the strongest and most common deterrents to outsourcing. Can you protect your ideas and intellectual property? Do you trust complete strangers who have no real loyalty to your company? Do you know how international law affects any complications? Even if you do, is the potential for catastrophic damage worth the risk? Even if you decide to go forward, it’s virtually impossible to completely protect yourself.
Those benefits we talked about above can disappear pretty quickly. As the values of currencies go up and down, so do your costs. And the idea that knowledge outsourcing is maintenance free is a clear farce. Even if your costs are low now, skilled labor in the world is becoming more and more valuable and other countries are not as financially troubled as they used to be. If five years from now the advantages are totally nil, then you might have been better off starting your own department from the beginning.
If you’re just getting started on your business, you have a certain advantage over established corporations. It’s not an advantage in the sense that it makes knowledge process outsourcing more efficient or reliable for you, but there are a lot of small business outsourcers now that didn’t exist ten years ago. You can integrate outsourcing from the ground up and exercise tempered control from the beginning. This allows you to get your feet wet, as it were, whether or not you ever end up diving in. Get tips on how to build your business quicker and with less money using Pete Williams’ Outsource Profit Machine.