Outsourcing: How to Navigate the Details of Pricing and Costs

Outsourcing: How to Navigate the Details of Pricing and Costs

Outsourcing, when planned carefully and implemented properly, is a quick and effective way to lessen operation costs while also increasing outputs. Any company – from small businesses to start ups to mid-sized businesses to huge conglomerates – can benefit from the direct and indirect savings as a result of outsourcing one or more aspects of their business. Aside from cutting down on costs, companies gain access to an impressive talent pool and gain flexibility in terms of hiring employees, while freeing themselves of HR management to focus on core tasks.

Labor costs

The key is to choose your service provider well. Find the business process outsourcing firm that can you give skilled employees and competitive pricing. Is your potential service provider offering industry-best pricing? If not, walk away. There are more outsourcing firms in the country that can give you better pricing packages and custom solutions.

How to tell if you are looking at a good pricing package? Compare the labor costs for onshore employees and for outsourced employees. A 50% reduction on labor costs as you go from onshore to outsourced is a good start.

As always, some shopping smarts can help you along. Shop around even for just a bit, compare prices, and don’t settle for the first brand – in your case, the BPO firm – that comes along.

Other signs that the service provider is offering you a good pricing package:

  • The pricing structure is straightforward and simple. Don’t get into a contract that has a complicated pricing package; you don’t need that kind of headache. And you don’t want to get blindsided by details that you missed in the maze of a complicated pricing package.
  • At your request, your pricing package could include the salaries, benefits, taxes, and costs of support, and infrastructure. It’s easier to manage costs if you have a clearer idea of the items and individual fees that are part of the outsourcing agreement.

Price, Delivery Models and Billing Structures

Take note that when outsourcing, you should look for an excellent service provider that can deliver outsourcing packages that are custom-made according to your company’s requirements and that come with a wide range of flexible pricing models.

In most cases, pricing is affected by the kind of service you require and the outsourcing delivery model that will be implemented to get the job done. If, for example, you will use the staff leasing model, the outsourcing firm will hire, provide work space, equipment, and support to your outsourced staff on your behalf. You will then be billed either on an all-inclusive flat fee for each employee or, if you want, you can get a detailed statement of the compensation, benefits, and the fees for management and infrastructure.

When you outsource using the staff leasing offshore delivery model, pricing may also be done with the help of performance-related billing structures. Short-term projects, output-oriented projects, limited scale projects, and tasks that require a specific expertise of the outsourcing firm may also have different billing structures.

Source: Ezinearticles
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