Usually the definition of Outsourcing is “submitting to an outside contractor at least one of Company business functions that was initially performed in house”. If this contractor is outside the customer’s country, we call the outsourcing as “offshore” or “offshore outsourcing”. In the outsourcing process, the two organizations (Customer and Contractor) may enter into a contract agreement that usually involves exchanges of services and payments.

The outsourcing practice is a familiar concept to small or medium businesses that routinely employs specific local companies to perform for them the payroll processing, accounting, distribution and some other office functions. In our informatics era, everyone is engaged in outsourcing in a way or another.

Yet, business functions outsourcing (as in manufacturing lines outsourcing) seems like a very scary and dangerous move for small or medium businesses.

The truth is that for a small company with limited resources is difficult to find the right matching partner without an offshore presence that surmounts the language and culture barrier. One cannot just enter the outsourcing process arena without knowing the rules of the game only because other companies in their industry have done it. The key to successful outsourcing is to take advantage of all the benefits of outsourcing.

A great Business Process Outsourcing (BPO) Company is the one that offers a “one-stop” package. The “one-stop” package includes the expertise to understand customer niche of the market, specifications of the outsourced product, and the manufacturing process. It also includes the offshore local resources to find the best match for the specific outsourced product, and the best prices for the raw materials (with respect to the product specifications).

The “one-stop” package BPO Company will have tools and processes expert designers (like toolmakers, R&D, Engineering expertise and such), Incoming, Work-in-Process and Outgoing specialized inspections and shipments consolidation with logistics and warehousing.

One must not forget to ask the BPO Company for the “one-stop” package to include traceability through an established and accurate monitoring reporting system, continuous dedicated contact channels, and updated information on non-conformities and delivery.

In choosing the right BPO, one also needs to consider (prior to enter into a contractual agreement) the performance, insurance, work capacity, training costs, terms and conditions, service rates or any other condition that might be considered under a contract. The contractual agreement must also be beneficial for both parties as a necessary condition for cooperation and growth.

Some short-term benefits from outsourcing include payroll reduction with at least 30%, overhead reduction (there is no need for extra office space), office supplies, computers, phones and other equipment, and released cash due to “required-only” payments.