In these hard times outsourcing companies vie for cost-cutting supremacy, not world domination. While the very reasons offshore outsourcing thrives are low cost and high-level competence, there are other things that need looking into such as expenses on professional service and labor rates.

Experts agree that this is not an easy issue to confront, but Pete Quigney of EDS, an IT service provider based in Texas, believes spending too much on outsourcing procurement process may be cut back by:

1. Setting up a labor usage strategy. This design works when you clearly understand your company’s labor use and its impact on your company’s core operations. This allows you to define your company’s requirements especially where you outsource your company’s labor procurement process.
2. Set your definitions clearly. Define what do you mean by labor. Certainly you can’t use the Every man’s Dictionary definition for this. What you need to do is to be consistent about your own company’s definition of terms. To get a better and clearer view, link your outsourced labor purchases with your core corporate functions to avoid overlapping. When this is clear, you can make informed decisions on hiring new staff, purchasing labor, and training of the current team.
3. Open internal communication. When the communication line is open you can get active senior management support. The ideal flow of communication should be from top to bottom, with equal chances given to people involved in the dialogue. This allows you to stress company rules without getting misunderstood. For your part, this is your chance to communicate your goals, chances and progress reports.
4. Purchasing alignment. Streamline the process of buying with what is being bought. The process of purchasing needs to be looked into. You might want to go easy on purchasing while pushing up volume. What you need to do is look into big contracts and contract liabilities and streamline these with every purchase.
5. Simplifying your priorities. To cushion the unforeseen impact of outsourcing on your company, pick a few vital priorities and stick to them. Keep your expectations simple. Don’t go for deals that might go out of hand eventually. Keep your options open for incentives for both sides. And make sure your negotiations are achievable and practical.
6. Outsource outside the box. Think outsourcing out of the box-when you go for staff support, for instance, think beyond the outsourcing model. Get the pulse of your partner’s bill rates and offshore staff’s labor rates and settle for the least cost options. This means there’s a dozen and one ways of choosing a vendor of your match and a dozen and one ways of getting its service. Pay only the service that you need and will use.
7. Get the skills set that is quantifiable. Your offshore leased team has a set of skills that matches your company’s functions. When you have a team whose skills set are measurable you can actually compute the rate in terms of volume and purchase.
8. Set your purchasing against expenditure. It’s not only knowing who you buy from, but also knowing why you buy from them in the first place, and how much of what you spend leverages with what you can’t buy. Consider these as you go into the transaction.
9. Keep an eye on your transactions. It’s not only watching over labor transactions, but also keeping an eye on service levels, service providers, billing, and user compliance.

What not to do

To stay on the safe side (though it’s never a guarantee), you need to mull over these:

1. Never underestimate expenditure. Don’t dismiss your company’s spending by saying it’s not much. Have a look into what’s being bought and what’s needed. Chances are you’ll find that you’re purchasing more than what you spend on labor. Outline the scope of the outsourcing agreement and work within it.
2. Don’t look past savings. Streamline the saving process by getting a leg up on your spending and keeping an eye over core functions yourself. Source out the supplier and cut back on the rate. Fine-tune the process by probing on data integrity and user compliance.
3. Go for value added perks. Everyone deserves a bargain. When your cost is cut, the savings return to company capital. Improvements should be made on the level of your service provider. Make an effort to speed up service, and boost your offshore leased staff’s morale.

Outsourcing has had its fair share of success and failure. It is just that its success far outweighs its failures.