Technology Offshore Outsourcing Plan
Introduction
The act of hiring organizations to take over some business processes in an offshore country other than the country within which the business is located is termed as offshore outsourcing. The outsourcing company gets its services done in a country other than the one in which it produces the services or products that are developed/manufactured or sold by the company. Offshore outsourcing is quite different from off shoring, a process through which a company gets some of its functions carried out by its subsidiaries in a foreign nation. The practice reduces domestic investment and employment opportunities. The most outsourced services include information technology services, marketing, technical services and support as well as business process outsourcing. There exists different thoughts and ideas on outsourcing of services, and decision-making can be a little confusing to the management of business organizations.
There are various varieties of options in outsourcing and this makes decision-making more complicated. Therefore, to develop an appropriate outsourcing plan, business should clearly review the motives for outsourcing, find out the actions required in choosing better partners and designate a method for measuring critical factors of success. The initial step in outsourcing involves a review of the business’s vision. Outsourcing ventures may fail due to lack of forethought on what the business intends to accomplish through the outsourcing process or lack of focus on the direction in which the management is headed.
Evaluation on these aspects should be in line with the business’s mission and vision. An organization intending to outsource should set out objectives and goals and define its vision and mission. After this evaluation the business should look at the business functions and entities that will be affected by the outsourcing plan. After this brief analysis the business organization’s management should review the effects of outsourcing on the general mission and vision of the business. This paper reviews a potential outsourcing plan to be implemented by Riordan Manufacturing Company.
Prior to making the decision on whether to outsource or not, the company’s management should establish it core and non-core services and functions. This is an important action in defining the outsourcing plan as well as establishing the viability of outsourcing. Core company functions such as research and manufacturing are maintained within the company. These core functions may vary from one organization to another, but they basically entail the main activities carried out by the company and these are usually retained in-house. The non-core functions do not contribute to the corporate vision and mission in a direct manner.
As such they form the bulk of activities performed by the outsourced service providers. Determination of what to outsource and what not to outsource is determined by an assessment that evaluates how clients react to a service that is performed by outsourced personnel. After determining the services to be outsourced, the management should try to determine a reason for outsourcing as well as its profitability (Greaver, 1999).
Riordan manufacturing is a world plastic manufacturer with an annual revenue of about 46$ million dollars. The parent company earns revenue amounting to $1 billion dollars. Riordan’s clientele consists of motor vehicle manufacturers, bottlers, aircraft makers, the defense department and appliance makers. Riordan has plants in Pontiac, Albany, Michigan, Georgia and China. Its core functions include manufacturing, design and research into the manufacture of plastics. The company’s non-core functions may include marketing and management. As stated earlier the first step in outsourcing involves identification of business functions within Riordan, the potential to outsource them as well as the profitability or efficiency that may result from outsourcing.
There are various functions within Riordan that can be outsourced these include marketing, Riordan’s management software development, accounting services and customer care. The outsourcing of these services by Riordan will enhance quality service delivery because these will be dedicated to professionals. At the same time, it will ease the company’s management and staff engaged in the current delivery of these services. That will in turn allow them to engage in other more constructive company activities.
After the establishment of services to be outsourced within Riordan the management should plan for the actual outsourcing process. This should involve consultation efforts involving all the people that may be directly or indirectly involved in the changes that may result from the actual outsourcing (McIvor, 2005). This consultation should involve the development of the scope of work to be outsourced and a criterion to be used in evaluating the providers of the services to be outsourced. In order to tap the contribution of other staff members within Riordan the manufacturing organization can develop an advisory committee that is broad-based and more specifically including all staff members that will be affected in the outsourcing process.
The sourcing development committee will be entrusted with making of the request for a proposal and the evaluation of proposals send in by the outsource service providers. The group should be made of staff representatives from the human resource department, Information Technology department, finance department, procurement department and client representatives. The developed team should buy into the idea of outsourcing and thereafter give insight on how the process may be made a success. The group will also be entitled with the weighting of the criteria to be used in evaluation, such as technical methodology, client satisfaction, better practice application, cheaper expenses and faster services.
After the evaluation of the committee developed within Riordan’s management the company will have identified the services to be outsourced as well as the cost of outsourcing and the benefits that may accrue from the actual outsourcing. The subsequent step should involve the identification of prospective service providers from whom to seek services. The located potential outsourcing service providers should have appropriate technology abilities and a cultural fit. The selected staff that will foresee the program should attend conferences and trade shows that will enable them to get information on various companies that offer services in the outsourcing industry (Greaver, 1999).
Networks of industry professionals can also be tapped to benchmark potential companies prior to the selection process, and this helps in eliminating companies that are not a good match. Alternatively, trade publications can be reviewed for information that presents best practices information declared by outsourcing companies as well as the success attained in application. The designated advisory committee and organization’s staff should work towards reducing the potential bidders prior to the request for proposal distribution. The companies that make the cut from the assessment of stated qualifications are able to make a bid on the request for proposal.
After the selection of the company that will offer services from the bidding firms, Riordan should strive to create a good relationship with company that will offer the outsourced services (McIvor, 2005). The relation should be based on a true partnership sense and accountability. This will ensure that the organization runs its activities in a smooth manner. In order to create the right environment for a good outsourcing relation Riordan should allow the chosen company to explore Riordan’s corporate culture and business activities.
Riordan should also create a full disclosure in the sharing of information so as to enable the company work with them in an efficient and transparent manner. Riordan should also implement a training and orientation program that will help in acclimatizing the service provider to Riordan’s mode of performing business (Greaver, 1999). The company should also put in place a continuous problem resolution and monitoring process. If the management differentiates non-core and core services within its operations, clearly establish their motives for the activity as well as the objectives and goals that they aim at, and establish evaluation criterion, outsourcing should become a powerful tool in Riordan’s business.
Conclusion
Outsourcing is a common practice in the present world organizations strive to lessen the non-core business services that they handle so as to create more time to dedicate to other core services. Outsourcing creates room for more dedication to core services and cuts down the costs of operations if the services are procured from companies that offer low service charges.
Additionally, it brings about professionalism because it allows the selection of highly qualified and quality companies. Riordan has greatly expanded by establishing plants in various states in the United States of America as well as other countries such as China. This expansion calls for decentralized units that can offer it services such as marketing.
Riordan is a world producer of plastic made materials, however; its activities are centered within the production zones. Business processes such as marketing should be localized within the respective markets in which Riordan’s products are sold. This necessitates the use of outsourcing in accomplishing such functions that may involve market research. The outsourcing of information Technology services such as software development is also a possible venture for Riordan Manufacturing. Riordan’s plan to outsource starts with the identification and differentiation of its services. The identified services should be those that the company can comfortably outsource without compromising the company’s vision and mission by placing their provision in other hands.
The placement of such services in the hands of a third party should also not affect the quality of services and the business touch between the company and the clients. Once chosen, Riordan should establish a committee that will foresee the establishment of a plan that be implemented in the actual making of the outsourcing process. The plan should include an evaluation of the cost, feasibility and professionalism that will be resultant.
The next step should involve the identification of potential service providers that will offer the selected services to Riordan. The potential companies should be able to provide these services at an affordable rate. Thereafter, the company should establish a mutual relationship that will allow the chosen company to carry out its work properly. This should be enhanced through orientation and training programs meant to make the chosen company familiar with Riordan’s way of conducting business.
References
Greaver, F. M. (1999).Strategic outsourcing: A structured approach to outsourcing decisions and initiatives. AMACOM Division American Management Association.
McIvor, R. (2005).The outsourcing process: strategies for evaluation and management. CambridgeUniversity Press.
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