IT Outsourcing: International and Domestic Ally Puzas, CEO Erica Taylor, CFO

BuckleUpBaby, Inc. BuckleUpBaby is a custom basket business, located in the heart of downtown Portland. They are fairly new and have recently been experiencing tremendous growth and are looking at expanding their business to meet growing customer needs. They currently employ 25 full-time workers and they have hired Zadel Information Systems to consult possible means for their expansion and improvement through IT outsourcing.

Issues To Be Addressed Their main concern is if they should outsource internationally or domestically.  Which would be the most cost effective?  Another concern is whether they should outsource all of their order production and tracking information, part of it, or simply one or the other.  They feel that customer satisfaction is their number one priority, and in order to handle their clients in the most efficient manner, they would like to know if they should keep all of their customer phone calls within the company, or if outsourcing these components would be beneficial as well. 

Issues Continued… What kind of IT Outsourcing services would be of greatest benefit to their company.  Lastly, if they use IT Outsourcing, will it be more costly for the company than if they did everything internally.

Information Technology Defined According to the Information Technology Association of America, IT is… “The study, design, development, implementation, support or management of computer-based information systems, particularly software applications and computer hardware”

Outsourcing Outsourcing is subcontracting a process, such as product design or manufacturing, to a third-party company. The decision to outsource is often made in the interest of lowering firm costs, redirecting or conserving energy directed at the competencies of a particular business, or to make more efficient use of labor, capital, technology and resources. Wikipedia Definition

Seven Reasons Why a Company Should Outsource Benefits of Outsourcing: Reduce overheads, free up resource Improve company focus on its core competencies and strategic imperatives Re-allocate internal resources to higher-value purposes Get access to specialized skill Address the issue of limited internal resources Improve speed and service Manage more effectively problematic functions

Finding a Balance When choosing to outsource domestically or internationally, a company’s focus should be on finding a balance between cost, performance, and risk objectives There are benefits of both international and domestic outsourcing, as well as drawbacks. Depending on a company’s needs, one is often better suited than the other

The Five C’s of Outsourcing Culture: Colloquialisms, language and life experience Convenience: Location and travel-time Cost: Overall cost Complexity: Needs of the company Customer Satisfaction: Fulfilling expectations of customers and their experience with the organization

International vs. Domestic Outsourcing Domestic (Onshore) Outsourcing: Processes which are highly manual and error-prone Benefits: Decreased travel, communication costs Time zone differences are irrelevant Close, trusting relationship can be formed at a fast pace Greater customer assurance from dealing with domestic provider

Domestic Outsourcing Drawbacks: Hourly rate is generally higher Management and control problems may arise Information exposure to third party is of a greater concern

International vs. Domestic Outsourcing International (Offshore) Outsourcing: Processes which are clearly defined and consistent among cultures Benefits: Increases IT staffing flexibility Cost savings may be realized Time-to-market and competitive advantage Greater technological agility

International Outsourcing Drawbacks: Indirect costs may be higher due to long-distance communication, training, and travel International and political risk associated with transfer of internal customer data Risk of displaced intellectual property

“Customer Satisfaction is our #1 concern.” - BuckleUpBaby, Inc. Company Culture “Customer Satisfaction is our #1 concern.” - BuckleUpBaby, Inc. Outsourcing Suggestions: Core competencies should be kept in-house Web-design and maintenance Business Processes Payroll, accounting and logistics In-house Recommendations: Assembly of products Call Center Services

Business Process Outsourcing Services InfoSourcing Specializing in Small and Medium Business Services Business Process Outsourcing (BPO) Book Keeping/Accounting Tracking Information Operations Consulting Business Process Outsourcing Services

Global Marketing Resources Web Team GMR International and Domestic Services: Offering complete internet solutions Custom website design and maintenance services Profit-oriented ecommerce website Website Maintenance Outsourcing

GateSix: Everything IT Resource Type Specific Pricing IT Specialist Services Custom Web Development Strategic Development Integrated Tracking GateSix: Everything IT Resource Type Specific Pricing

ProAce Technology Services Database Design and Programming Microsoft Certified Partner XML Technology Custom Software Development Database Development and Design

Considerations Think of the company you outsource to as a business partner Identify all core competencies and choose which processes will be outsourced Allow for customer feedback and suggestions about new processes Maintain customer confidentiality within the company while serving clients in the most efficient way