Lesson One - Some Myths and Truths Behind Outsourcing

From Offshore Outsourcing World

Before we go into the myths and truths behind outsourcing, you may want to read about how this concept has already been defined. The following links provide basic FAQs:

• The Outsourcing Institute
• CIO.com's Outsourcing Research Center
• Outsourcing Law
• Computerworld's Outsourcing Knowledge Center

Now, let's proceed to the less frequently answered questions. In this lesson, we debunk the peskiest myths about outsourcing.

MYTH:

Outsourcing means hiring workers from another country.

TRUTH:

Strictly speaking, "outsourcing" just means hiring private contractors to handle projects for your company, whether or not these contractors are based in another country.

Offshoring is a kind of outsourcing. This is the term used to distinguish projects that are being outsourced to overseas contractors.

Outsourcing jobs to local contractors may also be referred to as onshoring.

MYTH:

Outsourcing jobs to other countries means job loss on the local front.

TRUTH:

Not in most cases. Many of the companies based in first-world countries set aside a budget for paying offshore workers. This means the payroll and workload of onshore laborers remain "as is."

There have been cases of layoffs however, but a good long look at the global market will show that it is not because of outsourcing, but an increase in production levels all over the world, that has prompted certain companies to pursue cost-cutting measures.

MYTH:

Only big companies can afford to outsource. It's much too big a risk, I'm just running a small business here

TRUTH:

Big companies may have been hiring onshore and offshore contractors for a long time, but as more and more outfits realize the potentials of the outsourcing trend, more and more avenues for profitable ventures are opening up to owners of small and medium enterprises.

Many contractors now offer specialized services to different kinds of businesses, making allowances for the investor's financial capabilities.

Let's examine, for example, the experience shared with us by Michael Calderone. As his retailing company, SmilesCoffee flourished, his need for good customer service representatives also grew. But Calderone was strapped for cash at the time, he opted to outsource this project.

The road to finding the right contractor was rocky, but now nine friendly and helpful call center agents from the Philippines are attending to Calderone's customers, for a fee that Calderone himself found to be a true bargain.

SmilesCoffee may have been stabilized by the project move, but Calderone stands strong. He spends a lot of energy and time in keeping in touch with his offshore correspondents, like any good entrepreneur would. As a result his offshore consultants continue to do well for him.

With solid proof that small and medium enterprises stand to earn from offshoring, will you still let your inhibitions get in the way?

Your first goal as an entrepreneur is to earn more while spending less. Without adopting an aggressive attitude, you stand to lose.

Now that we've answered a lot of the myths about outsourcing, let's move on to the next lesson. In this, we seek the answer to one basic, life-changing question...

Next: Is outsourcing right for your business?

• Outsourcing Debate Tainted by Myths, Misconceptions by Radley Balko (at FOX News)
• by Steven Marlin (at InformationWeek)