Episode 6 - Outsourcing

An explanation of outsourcing and how it can help you run your business.

Episode Transcript

Speaker 1 (00:01):
Hello. My name is Gail Kapanar and today's episode is
entitled outsourcing. Outsourcing is a business practice in which a
company has hires a third party to perform their tasks,
handle operations, or provide services for the company. The third

(00:24):
party company or provider arranges for its own workers or
computer systems to perform tasks or services on site or
at external locations. The tasks for outsourcing include information technology,

(00:48):
computer programming, computer application development, technical support, customer service, call service,
manufacturing processes, human resource tasks, financial functions such as bookkeeping,
payroll the entire departments, or hiring individual independent contractors, temporary

(01:15):
office workers, or freelancers. Outsourcing means contracting out. It is
important when you're outsourcing to focus on your business partnership.
You must be able to manage your relationships with your
business partners who are going to be conducting the outsourcing

(01:37):
for you. It's important to maintain and secure a trusted relationship,
which is more complex than establish service levels and relationships.
You must place extra emphasis on the exit clause of
the service and make sure that the third party fulfills

(01:58):
its obligations. Outsourcing is a very complex process. You may
need a warrior to help you work things out. So
what is the reason why we outsource. We outsource to
lower our costs, to improve efficiencies, to gain speed in

(02:20):
our operations, to rely on the third party's expertise. They
can do it better and faster. This is a great
function for someone who is not familiar with us a
particular function of their operation. You outsource your supporting functions

(02:45):
so you can focus on your core competencies in order
to gain a competitive advantage. Your core competencies are the
things that are very important to carrying out your business
and the things that you need know very well. If
you are unable to hire in house full time employees

(03:07):
with specialized skills would help you. And also we outsource
to shift the meeting or regulator regulatory requirements or obligations
to the third party provider. Sometimes business owners don't have
time to focus on the regulatory requirements or obligations, or

(03:32):
sometimes they don't have the expertise. That's where outsourcing comes in.
So the types of outsourcing are on shoring, which is
relocating work in your country or offshoring, relocating work overseas,
or near shoring, relocating work to bordering regions or countries.

(03:54):
So you'll have to decide where you want your outsourcing
to come from, so you will need outsourcing agreements from
job to job for freelancers. Freelancers will work for you
for a specific amount of time. It's it will be
short term, so you'll need some job to job agreements

(04:17):
for the freelancers, and then for more long term assignments,
you'll need long term agreements with clearly stated requirements for
the job, for the job or the function. Now, the
benefits to outsourcing is that you can free up your
resources to existing tasks or new projects that deliver higher

(04:42):
yields than your functions outsourced. Another benefit is that you
can streamline or shorten your production time because the third
party can work more quickly and can execute more quickly
execute the tasks. Now, there there are some risks with outsourcing.
You want to be very careful. There are heightened security risks.

(05:06):
There's a risk that your proprietary information or your sensitive
data will be transferred to the third party who's carrying
out the outsourcing. You want to be very careful that
this person can be trusted with your information and if
at all possible, do not release any proprietary information about

(05:30):
your business any of your business secrets. Do not release
those to the third party who's going to be your
outsourcing For obvious reasons, you don't want this person to
take over your business.