The outsourcing industry typically encounters two types of investors. Those who are willing to outsource few of their business operations, and know how to do it, and, those who nourish an inclination to outsource, but also harbor doubts because of stories about potential that portray outsourcing disasters. This (second) group of investors, falls into the category of people who would want to see for themselves if outsourcing will work for them, without relying on unreliable third party information strewn all over the internet. This means, they are willing to take the risk, but want to form their own opinion out of experience, and not draw conclusions from the contents of studies, websites and blogs.
“Selective Outsourcing” is aimed at building trust and establishing compatibility between the investor and the outsourcing partner before any long term agreement is reached with mutual consent. This means, while the outsourcing partner works on specific modules, the investor retains control over the overall function. Payroll Management is an excellent example of Selective Outsourcing. Payroll is classified as an HR responsibility. The concerned personnel has to account for each salary component such as leave policy, performance pay, overtime compensation, increment policy in accordance to labor laws, etc. for every employee in the system. The figures need to be meticulously entered and painstakingly double checked to avoid any mistakes, all under the pressure of delivering the completed report before 72 hours of salary due date. Many companies are wary of outsourcing their complete HR operations, but are more than willing to outsource the payroll management.
Payroll Management is time consuming, repetitive and a critical time-bound task. The HR department is under tremendous pressure.This creates a backlog at other HR functions. By selectively outsourcing their payroll management system, companies have saved time, money, and valuable man-hours that can now be channeled towards other HR activities that directly affect the company’s overall performance, such as recruitment and induction training, workforce management, grievance redressing and welfare schemes.
Selective outsourcing is also considered to be the most practical way of identifying the right kind of outsourcing partners. Let us consider a case, where you, as the Investor (or Small Business owner) have a series of graphic demands. With several self proclaimed graphic experts all over the internet, it gets hard to identify, who is actually qualified. In this situation, instead of handing over the complete list graphic needs to a certain “expert”, you can check them out , by having them handle just a part of your graphic needs, eg. a logo, a banner, an icon. Each will be considered as a separate project. This will allow you to evaluate your “graphic expert” on the following grounds:
Reliability:- Does the person deliver what has been promised ?
Acceptability: – Does the end product meet your requirement?
Compatibility: – Does the process of deployment and delivery suit both of you?
Communication: – Are response time and other things satisfactory to both?
In other words, Selective Outsourcing allows the investor to see beyond the “all or nothing” approach to outsourcing, and to see the development of customer specific strategies that are tailor made to suit the investor’s needs.
Steve Cameron, senior vice president of managed services at Steve Cameron, senior vice president of managed services at Siemens Business Services on his interview with IT Business Edge says,
“The number-one benefit our clients are seeking is cost savings through the innovative application of the selective service. This also gives the client transparency in the cost structure because of the fixed scope of the selective IT element under management”
t has been noted that about 80 % of Irish businesses use Selective Outsourcing in one way or another. The Outsourcing Evolution remarks that several companies struggle with the costs associated with printing and have opted to use selective outsourcing to fulfill their needs by using the services of Outsourcing partners like Ergo
A Survey conducted by Watson Wyatt predicts that steadfast growth in Selective Outsourcing will be seen among small and medium sized business in the coming years. Companies need to step back and take a broader look at how outsourcing can work towards the overall benefit of business by employing the Selective Outsourcing Model.